Caribbean chain Elegant Hotels Group suffered a slump in profits in a “challenging year” for Barbados.

Profits after tax fell by 6.1% to $9.2 million in the year to September 30, 2017 despite a 5.1% rise in revenue to $59.9 million.

While arrivals to Barbados were up 6.4% year-on-year for the January to October 2017 period, this was the first full year of a rebased sterling/US dollar exchange rate.

This had a negative impact on the owner and operator of seven hotels and a beachfront restaurant on Barbados as the group’s rates are priced in dollars while about 75% of customers are from the UK.

“This affects both the rates the group is currently able to achieve at some of its properties, as well as demand for Barbados as a luxury tourist destination,” the company said.

It was necessary to discount rates at certain of its properties on a targeted and tactical basis.

“This has inevitably affected the profit margins of the business, but the group believes that the pricing environment is now much more stable. As such, these market conditions should be seen as the new normal,” the group added.

The group reviewed the pricing strategy for some of its properties in response to the weakening of sterling.

Rates were discounted on a targeted and tactical basis in certain cases in order to drive occupancy in the context of the rebased market.

“There are also both opportunities and challenges in relation to changes in the demographic of visitors,” the company said.

“The number of older, repeat guests is declining so attracting new guests is an area of growing focus. An increasingly important market for us is the millennial segment, including families and ‘double income no kids’, who tend to value experiences and sustainability and for whom repeat visits are less common.

“As a result, when we are refurbishing our properties we continually focus on appealing to this segment as well as our more established guest-type.”

Recent data from the Barbados Tourism Marketing shows that tourist arrivals from the UK have grown 0.7% year-on-year for January to October 2017, down from growth of 2.2% for 2016.

Demand for luxury accommodation from UK travellers has declined despite the overall increase in numbers, and the “villa and value market” have tended to benefit from increased visitor arrivals, the company said.

However, Elegant Hotels Group described trading since the start of the new financial year as remaining in line with market expectations, with bookings currently tracking ahead of the same period last year.

CEO Sunil Chatrani said: “The group delivered a solid performance in 2017 against a background of changed market conditions.

“The team remains firmly focused on delivering our strategy, and we are pleased with the operational progress that has been made during the year.

“We have continued to strive for day-to-day excellence, and have invested in our people and systems to ensure that our hotels continue to provide exceptional guest experiences.

“We have also successfully expanded our sales and marketing presence in the US in order to drive further growth in visitor numbers from that market.”

He added: “During the year we acquired another hotel in Barbados, in the form of Treasure Beach. We also expanded outside of the island for the first time through a management contract and a sales and marketing agreement on hotels in Antigua and St Lucia, respectively.

“Trading since the start of the new financial year has remained in line with market expectations, and our bookings are currently tracking ahead of the same period last year. As a result, the group remains confident in its prospects for full year 2018 and beyond.”