Holidaybreak’s pre-tax profits are 9% below expectations for the year ending September 30, 2008.
The group, which includes tour operating brands Superbreak, Explore Worldwide and Keycamp in its portfolio, reported a drop in pre-tax profits for the full year from £40 million in 2007 to £32.4 million and increased net debt, up from £146.5 million to £161.3 million. The group said the results reflected the extra refinancing costs involved in buying new education businesses PGL and NST.
Group revenue for the year is up 19% from £357.9 million to £455.1 million this year.
Chief executive Carl Michel said the group’s hotel and adventure travel divisions had failed to meet expectations.
Sales for Superbreak in its hotel division slowed after May 2008, which the group linked to the end of popular exhibitions in London such as the Tutankhamun Exhibition. Revenue for the division was £149.9 million, up from £139 million last year, but operating profit was down from £17 million last year to £15.5 million this year.
Sales for hotels next year are 15% down, reflecting weaker demand into London and for short breaks in general.
Michel said: “The area where we were less prepared was hotel breaks. Customers are clearly holding back a bit at the moment. But we think hotel rates will fall and we will have some good offers for customers.”
He is hopeful that new theatre shows due to open soon in London, including Oliver, Priscilla Queen of the Desert and Sister Act, could re-ignite the domestic short breaks market.
Margins have also been hit in the adventure travel division as a result of geopolitical events and fuel cost increases, with operating profits down from £6.6 million last year to £4.8 million this year.
The camping division, however, has experienced its best operating profit for five years at £101.1 million compared to £102.8 million last year. Next year’s bookings are in line with expectations, on a 4% capacity cut.
“Camping is value for money and we think it will do well next year,” said Michel. Overall, Michel said the group expected a “satisfactory 2009”.