Owner of Aberdeen and Inverness hotels says minimum wage increase contributed towards loss

Macdonald Hotels has reported a loss with a rise in the minimum wage and higher utility costs playing their part.

The group – whose luxury hotels include Norwood Hall in Aberdeen, Drumossie in Inverness, and Pittodrie House near Inverurie, lost £3.8 million for the year ending September 28, 2023.

The loss comes despite an increase in sales to £128.9m from £121.9m.

But the company directors said rising costs “presented a challenge” with wages and utilities the “two main costs” to the group.

Increase in Macdonald Hotels costs

The strategic report accompanying the accounts said: “Rising costs in the period, particularly in utilities and staff costs, presented a challenge in terms of profit conversion, especially given they represent the two main costs to the group on an annual basis.

“Whilst electricity and gas consumption reduced by 7% in this period the cost of utilities increased by over 10%.

“This, coupled with a 10% increase in national minimum wage in April 2023, markedly increased the groups cost base in this period.”

However, it said a further increase to national minimum wage in April this year was helped by a “substantial reduction” in gas and electricity prices due to a new contract.

The loss compares to a profit of £44.4m in 2022, when the company was boosted by the sale of Macdonald Holyrood and Manchester hotels which totalled £45.8m.

Growth in turnover and occupancy

Sales also grew 6% across hotels and resorts thanks to “increased occupancy”.

Leisure clubs also saw “continued growth” with more than a 15% increase in spa revenue.

Staff numbers swelled to 2,709 on average last year, from 2,272 in 2021-22 which saw the wage bill increase from £44.5m to £46.5m.

Pittodrie House Hotel told The Press & Journal last year how cost-of-living, increasing food costs and rising staff wages were all proving a challenge for the industry.

Despite that the hotel, in Chapel of Garioch, near Inverurie, has benefited from a sharp upturn in meetings, events and other corporate business during the past six months.

In May last year the group successfully refinanced its existing debt, signing a £51.3m five-year facility with Barclays and Bank of Scotland.

What other hotels does Macdonald have in its portfolio?

Bathgate-based Macdonald is one of the UK’s largest independent hotel groups. Its portfolio boasts many operations in the Highlands.

These include Aviemore Resort, comprising Morlich Hotel, Aviemore Hotel, Highlands Hotel and woodland lodges.

Macdonald’s Spey Valley Resort, in Aviemore, Lochanhully Resort, in Carrbridge, and Ness Side Estate, near Inverness, all offer self-catering accommodation.

The hotel chain, majority-owned by Donald Macdonald and his family, is looking to develop many of the sites within its existing portfolio of 27 hotels and nine resorts.