By Scott Wright
CRERAR Hotels has fallen into the red after losses linked to the sale of three properties combined with a “dramatic adverse impact” of business closure caused by the first coronavirus lockdown.
The Edinburgh-based hospitality group swung to a pre-tax loss of £1.9 million for the year ended March 28, 2020, from a £7.6m profit the year prior, accounts newly filed at Companies House show.
Crerar said the sale of the Ben Wyvis Hotel in Strathpeffer, the Craiglynne Hotel in Grantown-on-Spey, and the Eight Acres Hotel in Elgin, under a strategy to slim its portfolio while increasing the quality of its remaining hotels, resulted in a loss on disposal of £1.34m.
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The sale of the hotels raised £4.5m, with the cash earmarked for refurbishment works at its Loch Fyne, Golf View, Oban Bay and Isle of Mull hotels. Following the sale of the Eight Acres Hotel, the last of the three disposals, in February last year, Crerar was forced to close the doors after national lockdown was announced on March 23.
“During March 2020, the unforeseen impact of Covid 19 had a sudden and dramatic adverse impact on impact on the business, as government instructions on mandatory closure came into force,” director Nigel Dearnley writes in the accounts.
“The inability to trade in any guise meant all income ceased overnight, and whilst the business managed to negotiate to offset some of its fixed costs with suppliers, negotiated salary reductions for all key employees, along with the government assisting with staffing costs through the furlough scheme, the cash drain on the business has been consistently high throughout the period of forced closure.”
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Crerar was able to open its hotels in a “restricted format” from July to October.
This allowed it to generate cash profits that will help it to “reduce the overall impact” of the fallout from the ongoing crisis, albeit those profits were “substantially less” than in comparable periods in prior years.
In July, the company agreed a £4.2m overdraft facility with Santander under the Government’s coronavirus business interruption loan scheme.
Mr Dearnley states that it is difficult to accurately predict the ongoing impact of Covid-19 in the short and long term. But he said the board remains “confident that despite this uncertainty, the measures that have been taken to protect the business will still enable the completion of the majority of the portfolio’s refurbishment works without the need to fully utilise the overdraft facility.”