De Vere, owner of The Grand hotel in Brighton, said increased demand from business travellers had contributed to a steep rise in pre-tax profits.

Conference bookings were still sluggish but the leisure group planned to capitalise on a steady recovery in the hotels market after three-years of decline.

De Vere pledged to open more of its mid-market Village hotels and offer more rooms at its existing estate, which includes the seafront hotel in Brighton.

Talks were also taking place to manage a string of top golf courses in Europe to take advantage of the trend for UK golfers to travel abroad for their sport.

Pre-tax profits rose 35 per cent to £41.6 million on turnover, which increased by 3.1 per cent to £321.8 million for the year ended September 26.

The group said it had achieved the results despite the impact of the Euro 2004 football tournament, poor weather and the £1 million programme to restore The Grand to its original 1860s style.

It said: "Encouraged by current trading and our strategic progress, we believe the prospects for the year to be good."

Like-for-like turnover from hotels rose three per cent to £187.9 million, while margins improved due to tight cost control of its food and drink offerings.

In June, De Vere saw off a bid from the Guinness Peat Group (GPG) for a partial takeover of the group.

GPG announced in March it was offering £118 million to add 25 per cent of shares to its current ten per cent stake.

However, it failed to persuade shareholders to back its campaign to force the sale of De Vere's upmarket hotels.

The company, spent £1.3 million defending itself from the offer, as well as taking part in the auction for Premier Lodge, the chain of 141 hotels and 19 pubs bought by Whitbread in July.

Chairman Peter Daresbury expressed delight at the group's progress in the face of the offer from GPG.