Jurys cheers market with 39% interim profit rise

THE Jurys Hotel Group expects record profits for the year to the end of next April after reporting a 39 per cent increase in half year profits. The interim results showed a big improvement in the yield generated by the group's hotels in Ireland and Britain.

Jurys produced half year profits of £7.9 million and analysts with Dublin broking firms are now expected to upgrade their current full year profit forecasts of around £12.5 million.

References by chief executive Mr Peter Malone to improved trading in the first two months of the second half of the year and the strong improvement in margins in the half year from 23 per cent to 27 per cent cheered the market and Jurys shares were in demand yesterday, rising 10p to 292p - an all time high.

Growth in the near term will also be boosted by an expansion of the group's chain of hotels. The lower price Inns in Limerick and Belfast are expected to be operational from next April while Jurys has also applied to the local planning authorities to increase the size of its proposed Inn in London from 168 to 208 rooms.

And with the Irish market at a level where Jurys will find it difficult to expand further, Mr Malone said the group would like to expand its chain of Inns in Britain while still looking for acquisitions in northern Europe. With gearing of just 9 per cent and bank lines of credit in place, Jurys is in a strong financial position to fund any expansion.

"We would like to expand the Inn concept in the UK and want to go into other cities like Manchester, Birmingham, Edinburgh, Glasgow and in London again." Jurys already operates hotels in London, Bristol, Cardiff and Glasgow and its chain of hotels will total 16 when the London Inn is completed, compared to just three hotels at the beginning of the decade.

The latest results show a continuation of the trend where an increasingly higher proportion of Jurys' turnover is generated from the corporate sector. Jurys now derives about 75 per cent of its turnover from the corporate sector and 25 per cent from tourism compared to a 60-40 split five years ago.

The strong profit growth is the result not just of sales growth but also of increasing yield generated by the hotels. Room prices rose by around 9 per cent last year and Jurys is planning to increase the room rates at its Christchurch and Custom House Inns in Dublin from £51 to £55 from next March.

Mr Malone said that the boom in hotel construction in Dublin would not necessarily have a negative impact on Jurys and cited the ability to increase room rates from next March as a reflection of the group's ability to meet competition.

He also emphasised the decision of Stakis to build a large hotel in Dublin as a sign "that there is room for the professionals" in the Dublin market.

Overall, in the half year, turnover was up 17 per cent to £29.3 million - mainly through organic growth but also including a full six month contribution from the Cardiff hotel. Earnings per share jumped 21 per cent to 14.5p while the interim dividend has been increased 13 per cent to 2.6p per share.