The Courier & Advertiser (Fife Edition)
Fife hotel is worthless, according to operator
Firm writes down paper value of King Malcolm Hotel to zero in results as it looks to get back to profitability
A 48-bedroom hotel in Fife has been written off as worthless by its owner.
Difficult trading conditions has seen the book value of the loss-making King Malcolm Hotel in Dunfermline recorded as zero by its owner Peel Hotels.
The London-based company’s decision to write off its investments in the Dunfermline hotel and the 68-bedroom Strathdon Hotel in Nottingham meant it took a £1.16 million hit in its accounts for the year ending January 28.
The recently filed accounts shows revenue in the hotel group — which operates a portfolio of nine hotels across Britain — fell from £16.79m to £16.08m last year.
Writing off the value of the two hotels meant the firm went into the red, recording a £735,000 pre-tax loss compared to a £575,000 pre-tax profit in 2017.
Company chairman and major shareholder Robert Peel said the King Malcolm Hotel’s profitability had been impacted by a recent rent rise and the end of construction of the Queensferry Crossing.
He said: “The impact of our last rent review has taken its toll so, from a cashflow point of view, it’s been tough, particularly in the winter months.
“The year before last it was camouflaged somewhat because we had the benefit of the bridge’s construction and other major projects like the aircraft carriers, which helped a lot.
“On an underlying basis, like a lot of hotels in the area, we are feeling the pressure.
“At the year-end we took advantage of writing down the value of the leaseholds of the King Malcolm and another hotel in Nottingham to reflect the fact they don’t make any profit.”
Mr Peel said his priority was to renegotiate the lease agreement with the landlord.
“We lease the land and the building and I’ve asked the landlord, a Londonbased investment company, to drop the rent,” he said.
“We did invest money in the Dunfermline hotel last year – we refurbished 14 bedrooms – it’s not as if we are abandoning ship by any means.
“We’ve got an excellent manager and lovely staff there and we have very good customer satisfaction levels.
“My main aim is to try somehow to de-gear that hotel of some of its costs so that it can be profitable, the most important of which is to try to do a deal with the landlord. In the meantime, writing it off is a prudent step.
“It may be that in a year’s time the hotel is profitable and we have to write something back into our books to reflect that. But it’s only fair to our shareholders that we reflect the true position.”
It may be that in a year’s time the hotel is profitable and we have to write something back into our books to reflect that.
ROBERT PEEL, CHAIRMAN, PEEL HOTELS