EARNINGS AT the Jurys Inns chain of budget hotels are expected to fall by more than 30 per cent this year as a result of the impact of the recession on trading and other costs associated with running the heavily indebted business.

It is understood that the owners of Jurys Inns are projecting that its earnings before interest, tax, depreciation and amortisation (Ebitda) will come in at about £27 million for this year. This compares with £43.2 million in 2008.

In spite of this, Jurys Inns has continued to expand its network of hotels.

It opened seven new properties in 2009, including in Prague, its first location outside Britain and Ireland.

This brought the number of hotels in the network to 30 and added about 1,500 bedrooms to the chain.

The company has also announced plans to open four new hotels in 2010, in Portsmouth, Glasgow, Newcastle and Bradford.

Sources said some of the new hotels opened in the past year had not yet performed to expectations, citing Exeter and Derby.

Its new property in the Scottish city of Aberdeen, which opened about three months ago, is however believed to have performed strongly. A spokesman for Jurys Inns declined to comment.

Jurys Inns was bought from the then Jurys Doyle hotel group by the Derek Quinlan-led Quinlan Private in 2007 for €1.16 billion.

Quinlan subsequently sold a 50 per cent stake to the Oman Investment Fund.

In July this year, Jurys Inns completed a £60 million fundraising sourced from its owners and a group of banks.

Quinlan Private and the Oman Investment Fund each put up £15 million each.

A group of banks comprising Anglo Irish Bank, Ulster Bank and AIB provided an additional £30 million. This extended its debt funding out to December 2014. It owed £602 million to the banks at the end of 2008.

Latest accounts for Vesway Ltd, Jurys Inns’ parent company, stated that it had exited its then interest rate SWAP contracts, a move that cost it £31.9 million. This cost will be reflected in its 2009 accounts.

The move will save it £15 million a year in interest costs.

Vesway reported an after-tax loss of £22.2 million on turnover of £133 million in 2008. Its interest bill ran to £41.6 million.

Jurys Inns operates 7,000 bedrooms and employs about 2,000 staff.