The owner of Crieff Hydro says a planned investment of up to £30 million across its portfolio of hotels is currently on pause.
Stephen Leckie is the chairman and chief executive of Crieff Hydro Family of Hotels.
As well as its flagship Crieff Hydro, it also operates Peebles Hydro in the Borders and three hotels in the Highlands.
‘Making money is tough’ says Crieff Hydro owner
Speaking as the firm’s accounts for the year to February 2023 were published, Mr Leckie said it had been a challenging period.
While turnover rose by almost £8 million year-on-year, from £28.6m in 2022 to £36.4m, pre-tax profits fell from £3.1m in 2022 to £418,657.
Mr Leckie said that was down to cost pressures in all areas, from energy bills to staffing.
Mr Leckie recently said the national living wage hike will cost his business £750,000.
He said: “Making money is tough. We’re not doing it to buy a yacht in the Caribbean, we’re doing it so we can reinvest.
“We want to spend on our customer experience, on our buildings, training for staff, but if we’re not making money, we can’t do that.
“We have an ambition to continuously improve so we can offer our staff and customers better. If you’re not making profits, it changes the focus.
“We really want to make more money but the waves keep washing over us ever bigger.
“The business, and the whole industry, is feeling it.”
Crieff Hydro plans to invest £20-30m on hold
Mr Leckie said as a result, plans for investments across the hotels have been put on hold.
“Plans for investment and growth has to be delayed until one day, we hope, we get in a position where we’re making more money.
“We had plans to invest £20 to 30 million across the company into expansion. We simply cannot do it if we’re not making money.”
Mr Leckie, who is also president of Scottish Chambers of Commerce, said it has been a challenging period for his family.
His wife Fiona and their children are involved in the running of the business.
“It has had its strain on everyone involved,” he added.
“That’s the big challenge about being in business, you’re risking everything you have and sometimes you see no light at the end of the tunnel.
“It is so worrying. You fear for your income, for your family’s income and for your employees.”
Challenges in current financial year
Mr Leckie said while the start to the current financial year had been promising, occupancy rates had dropped since the October school holidays.
He said: “The challenge is that discretionary spending is down quite a bit, which impacts our activities particularly in Crieff and Peebles.
“Since the summer, rates and volume have dropped right off.
“We had a reasonable first six months of the year, but the profile now has changed completely.”