Apex Hotels eyes London growth after profits jump

Apex managing director Angela Vickers said the firm had overcome challenging conditions. Picture: Toby Williams

Apex Hotels is eyeing further growth in London after its most recent opening in the city helped to drive a 25 per cent surge in annual profits.

Managing director Angela Vickers also said the Edinburgh-based group was gearing up for a fruitful festive season, with Christmas bookings at their highest levels in several years.

Vickers told The Scotsman that the company, which has eight establishments, faced “challenging” conditions in the summer of last year, as demand in London was lower than normal either side of the Olympic Games, but trading during the event itself was “very strong”.

She added: “Despite the unpredictable nature of the business during the early part of the year from events such as the Jubilee and London Olympics, the group has once again demonstrated solid growth in turn-over and in profitability.

For the year to the end of April, the firm reported a pre-tax profit before one-off items of £7 million, up from £5.6m a year earlier, on turnover 21 per cent higher at £50.6m.

Occupancy rates improved to 81.4 per cent, one percentage point higher than a year before, while average room rates grew 6.1 per cent to £115.45.

Apex has four hotels in Edinburgh and one in Dundee. Its third London hotel, off Fleet Street in the city centre, opened in March 2012 and generated turnover of £10m in its first full year of trading.

Vickers said: “We remain focused upon a programme of ongoing investment in the current portfolio, together with the pursuit of additional growth opportunities.”

As well as keeping an eye out for possible office conversions, she said the group could look at buying existing hotels in need of refurbishment to add to its current eight-strong portfolio.

She added: “London works particularly well for us, so that would be a key city, and we’ve looked at Glasgow in the past, but the problem there has been that rates haven’t been as strong as you’d get in Edinburgh or London. But rates are becoming stronger, so that’s an opportunity too.”

The latest figures from accountancy firm BDO show Scotland’s hotel sector enjoyed “healthy” trading in September, boosted by particularly buoyant conditions in Aberdeen, where visitor numbers were swelled by an oil industry trade fair.

Apex, which employs about 840 people, recently refinanced its debt with RBS, comprising senior term debt of £69m and a revolving credit facility of £10m.

Kevin Havelock, regional director of commercial and institutional banking at the state-backed lender, said: “The management team at Apex has delivered an excellent performance for the year, with a clear focus on the future growth and ongoing success of the business.”

The group was also able to reduce its borrowings by £35m after selling the ground leases for four of its hotels, with the option to buy the properties back for £1 each at the end of a 150-year term.

Vickers said bookings for Edinburgh’s Hogmanay celebrations remained buoyant, while demand in London is also picking up the city seeks to attract more people to its New Year events.

She added: “This is the busiest we’ve been for the past three or four years, and we’re virtually full for Christmas day.”