The luxury Perthshire hotel resort which will host the Ryder Cup later this year saw pre-tax profits more than halve in 2013.
Newly published accounts show that earnings before tax at Diageo-owned Gleneagles Hotel fell from £591,000 in 2012 to £262,000 in the year to June 30.
The fall in profits, which the hotel said was related to expenditure on a major new spa development ahead of the Ryder Cup, came as revenues increased by £2.1 million during the year to £38.83m.
Operating profits, which strip out costs relating to preparations for the golf match, increased by 69% in the period to £852,000.
The millionaires’ playground will be the focus of the world’s gaze in September as the US and Europe teams roll into town for the showcase match.
The last UK-based match at Celtic Manor in Wales in 2010 delivered more than £80m of economic benefit to the region, and the Gleneagles event is expected to generate up to £100m for the Scottish economy.
Finance director David Kemp said Gleneagles had enjoyed continuous investment since 2010, when preparations for the Ryder Cup began.
He said business volumes in the current financial year had improved as various investments began to pay off and excitement built over hosting one of the world’s most prestigious golf events.
“In the 2013 financial year we started a £5m upgrade to our club facilities, which included a complete redesign and refurbishment of our pools and changing rooms,” Mr Kemp said.
“This upgrade resulted in a fixed asset write down of £648,000 and is the reason why our profit before taxation of £262,000 is lower than the previous year.
“We have been delighted with the very positive feedback from guests and members on our new club offering following its completion in January of this year.
“Our performance for the year included growth in room sales of 4%, while the average room rate remained in line with the previous year.
“The room sales growth in 2013 arose mainly from increased numbers of celebration events and corporate meetings, although the majority of Gleneagles’ customers continue to be families and friends enjoying holidays and short breaks.
“Our food and beverage operation experienced an excellent year, with growth in revenue of 8% reflecting the recent investment in the restaurants and bars at Gleneagles for example, the £3m refurbishment of the Dormy Clubhouse in 2011.”
During the year to June, the hotel employed 619 full-time staff and retained a further 250 on a part-time basis a marginal overall increase on the previous year.
Total remuneration costs including salaries, pension contributions and other costs grew during the year from £15.18m to £15.56m.
The company operating the resort, Gleneagles Hotels Ltd, had four directors in office during the year but the emoluments of Deirde Mahlan were paid by Diageo plc, while those of Peter Lederer were paid by another group company.
Managing director Patrick Emslie and Mr Kemp collectively received remuneration packages totalling £497,000 during the year exclusive of pension contributions, an increase from £374,000 in 2012.
The inidividual highest-paid director received a package of £290,000 in 2012, up from £215,000 the year previous.