REGAL Hotel Group says it will have to make redundancies as part of a cost-cutting measure after announcing a drop in pre-tax profits of almost £6m.
The group wants to eliminate overlaps with the 25-property County Hotels which it bought in January for £116m, by streamlining its head office and hotel operations. Since Regal bought County it has sold off three of its properties, in Southampton, Ware and Stevenage.
A review is under way to determine the number of jobs which are expected to go. Regal has closed County Hotels’ head office in Windsor.
Regal announced gloomy half-year pre-tax profits for 1999 of £1.7m, compared to £7.44m for the same period last year, and blamed the fall on spiralling payroll and operations costs. It also paid out £650,000 to former chairman Charles Vere Nicholl, who left in January.
The company’s turnover for the period increased by 5% from £53.5m to £56m, and room yield increased from £26.01 to £27.19.
The group has already announced it wants to sell a number of hotels which do not fit its new Corus brand image and is due to scrap plans to move into a new head office in Newbury Business Park.
It has also already scrapped a master franchise agreement it had brokered with Carlson’s Country Inns and Suites and has begun its Corus rebranding exercise.
Unveiling the interim results, Regal chairman professor Arthur Li said: “Although overall sales and several key operating ratios have improved, results have been significantly impaired by increased costs relating principally to labour and depreciation within the hotel portfolio.
“We have made progress towards a number of actions to reduce costs and improve trading performance. We have successfully launched 17 hotels on our Corus brand with a further 12 to follow during the remainder of the year.
“In the last eight weeks we have seen a slightly improved trading situation to that in the first half of this year. We are cautiously optimistic about this trend continuing for the remainder of the financial year.”