Peel Hotels hit by VAT rise and downturn

12th Oct 2011 09:00

AIM-listed Peel Hotels swung back into profit but said its market was extremely challenging and it would not pay an interim dividend.The company announced pre-tax profits of £32,998 in the 28 weeks to 21 August, compared to a loss of £7,000 a year earlier.Accommodation revenue per available room fell 1.8% with occupancy down 0.7% and average room rate down 1.2%. Peel said it had been unable to recoup the additional 2.5% VAT from customers as it continued to operate in an "extremely challenging economic and competitive environment".The UK-focused hotelier said the its bank had cut its overdraft facility in half, and while it had had ample time to plan for these reductions, the reduced facility precluded the payment of an interim dividend.Instead Peel said it was increasing the discount shareholders could claim at its hotels."We are prepared for a continuing tough trading environment in the short term and look to contain our costs but we expect the additional activity caused by the Olympics next year will help us grow our sales and improve our profitability," said chairman Robert Peel.The company is also becoming increasingly involved in a number of special promotions by making its hotels available on third party websites, Peel said.