In a brief set of results for the six months to 30th April 2010 Hydro Hotel Eastbourne has reported that tough trading conditions sent revenues down by 5.4% to £1.4 million. This was a result of business customers holding back on spending on hospitality and private customers remaining cautious over discretionary spending,. The loss for the period was £199,285, from a loss of £238,528 in the first half of the previous year. On the balance sheet net assets were £3.24 million, just under £3 million of which were tangible.

In an attempt to boost sales the firm, whose sole asset is the Hydro Hotel in Eastbourne, has recently introduced a wider range of bar meals in its conservatory and installed new conservatory furniture. Nine guest bedrooms have been renovated, the ladies ground floor facilities have been refurbished and new boilers have been installed. Hydro is currently improving its Wi-Fi offering to provide complete coverage, with the first half hour free for guests, chargeable thereafter. It is also looking into replacing the TVs in guest bedrooms with the latest flat screen digital technology. On the outlook the firm continues to see challenging times ahead. Encouragingly, increased visitor bed night numbers were noticed during May and June.

At the current mid-price of 850p Hydro is capitalised at £5.1 million, a circa 57% premium to net assets. The company continues to be loss making which also makes us wary about whether the group will be able to maintain last year’s 27p dividend. Until we receive further evidence of a return to spending from its customers and its investment in upgrading hotel facilities paying off we see no reason to invest. Avoid.