PRE TAX profits at Ryan Hotels have increased by 43 per cent to £2.8 million, as the company has achieved a higher yield from guests and shifted the mix of its business.

Turnover at Ryan Hotels for the year to January 25th increased by 7 per cent to £26.6 million, but the group's overall room yield grew by 13 per cent from £47 to £53. Operating margins increased from 17 per cent to 19 per cent. The board has recommended a final dividend of £1, bringing the total dividend for the year to £1.50.

The chairman, Mr Conor McCarthy, said the company had successfully shifted the focus of its business away from lower yielding tour groups and other block business. Commercial, retail sales and branded products now account for the vast majority of the hotel group's turnover, he added. "We now own close to 80 per cent of our own business, Mr McCarthy said.

Operating profits increased from £4.2 million to £5 million while finance costs were static at £2.2 million, the company's gearing fell from 44 per cent to 40 per cent, reflecting a 5 per cent reduction in bank debt from £18.9 million to £18 million. Ryan's revenue reserves were increased by 55 per cent to £5.2 million. The results were slightly ahead of forecasts and shares in Ryan Hotels closed 3p higher at 39p.

During the year, Ryan Hotels invested £1.2 million in the group's eight hotels. Most of the investment was at the Galway Ryan where the lobby area was upgraded and a new leisure centre added. The bar at the Galway Ryan is also being upgraded as part of an additional £1 million capital spend this year.

Work has already begun on a new £500,000 conference facility on Cathal Brugha Street adjacent to the Gresham Hotel in Dublin.

Ryan Hotels have also applied for planning permission to build a 120 bedroom extension at the rear of the Gresham which will include a car park with 160 spaces. Mr McCarthy said the company expected to receive a decision from An Bord Pleanala on the proposed expansion by mid July. If approved the expansion would cost about £6 million.

Ryan Hotels' occupancy rates fell from 77 per cent in 1994 - which is effectively full, according to Mr McCarthy - to 75 per cent last year, but this was due to the changing mix of business.

"The way forward is not in occupancy levels but in the rate paid," said the finance director, Mr Patrick Coyle. Irish room yields were up 17 per cent last year, while the company's three European hotels had a slower growth with yields 3 per cent higher.

The company said its Irish business was healthy and its Brussels and Amsterdam hotels had a strong year. But its Carat hotel in Hamburg continued to experience difficult trading conditions. Ryan's European director, Mr Domenico Venosi, said the Carat was in intensive care but would be put back on track.

During the past 12 months, Ryan Hotels shifted its debt from a 50-50 split between Irish and foreign borrowings to 70 per cent Irish.