Killyhevlin Hotel sales rise to £6.8m but pre-tax profits down
Sales at the firm behind Co Fermanagh’s Killyhevlin Hotel have risen to £6.8m though pre-tax profits have more than halved to under £0.5m.
The hotel said the steep fall in pre-tax profits was partly down to an increase in spending on refurbishment, while an insurance policy payment of £800,000 had inflated pre-tax profits a year earlier.
In remarks in a strategic report as part of its accounts, Killyhevlin Hotel Ltd described the hotel industry as “highly competitive”.
It hit out at “aggressive pricing” by travel websites, which it said was hitting the industry, and said it had increased investment in its facilities in response to pressure from the sites.
Sales at Killyhevlin Hotel rose from £6.43m to £6.84m in the year to September 30, 2016.
But pre-tax profits fell from £1.6m a year earlier to £482,000. Operating profit fell 37% from £735,347 in 2015 to £462,415 — a fall of £272,932.
The firm told the Belfast Telegraph it had spent around £719,337 on refurbishment compared to £365,328 the year before — an increase of £354,009. There was a further capital expenditure spend of £520,000 on a new conservatory and 14 lakeside lodges.
Jacqueline Wright, director of Killyhevlin, told the Belfast Telegraph: “Over the last 24 months, management at the Killyhevlin Hotel have embarked on a substantial investment programme to help enhance and extend customer facilities.
“Key improvement projects have included a substantial refurbishment programme of restaurants, lounges, bars, conference and function rooms, with the addition of a conservatory as well as 14 new lakeside lodges, which will be completed in March 2017.”
She added: “We are confident that these enhanced facilities will make a substantial contribution to the future financial performance of the hotel and are in line with our strategy of continuous reinvestment in our facilities.”
But the strategic report added: “Aggressive pricing of hotel rooms via comparison websites has continued to suppress room rates.
“This has highlighted the need for the company to continue to invest in hotel facilities to sustain repeat business and reduce the use of discount websites.”
Websites such as hotels.com and booking.com take reservations for hotels — often at a lower rate than the hotels themselves will offer through their own website. The hotels pay commission to the websites.
Janice Gault, chief executive of the Northern Ireland Hotels Federation, said hotel booking websites such as booking.com and hotels.com - as well as price comparator website Trivago - could provide a useful marketing platform to hotels. In addition, they had large advertising budgets, which hotels could not compete with.
“They certainly do give you a marketing platform to get into international markets that you wouldn’t otherwise get into,” she said.
“If you think Mary Jane from Kentucky will be able to find you without being on such a website, you may be wrong.”
But she said hotels frequently tired of paying commission to websites and opted to leave them - but would then see a fall-off in trade and return to the websites.
Hotels had a choice as to what percentage of their inventory would be available to the sites, she added.