THE St Andrews Old Course Hotel slumped deep into the red last year under new ownership - notwithstanding the return of the Open Championship to the world-famous venue.

A pre-tax profit of GBP766,934 in the last nine months of 2004 turned into a loss of nearly GBP1.3m in calendar 2005, accounts filed at Companies House show.

The five-star Old Course Hotel at St Andrews, with its golf resort and spa, was owned by the Japanese company Kosaido Corporation for more than 10 years before it was snapped up in October 2004 by the US-based Kohler Company. Kohler also owns Whistling Straits in Wisconsin, which hosted the 2004 USPGA Championship.

That year seemed to represent something of a turnaround for the hotel, after two bad years when the business was laid low by the September 11, 2001, terrorist attacks on the US and general economic weakness in America.

Last year's loss is surprising given that St Andrews staged last year's Open, which was estimated to have boosted its coffers from corporate hospitality alone by about GBP900,000. Moreover, the 6800-yard Duke's course had made a small profit in 2004/05, according to the company, the first since it opened in 1995.

The company's income from continuing operations last year amounted to GBP9.5m, a decline on a like-for-like basis compared with revenues of GBP8m in the last nine months of 2004.

The company did not respond to a request for comment. In the annual report, however, the directors said they regarded the "performance and future prospects" of the business as "satisfactory".

Part of the reason for the sharp decline in trading performance appears to be a big rise in the employee wage bill, which climbed by GBP1m to GBP3.8m for the year, even though the number of staff remained static at 225.

The company's eight directors, in sharp contrast, took just GBP10,000 in fees between them in 2005, according to the accounts. As well as Herbert Kohler, the US kitchens and bathrooms magnate who owns the hotel, the board also includes Sir Michael Bonallack, former secretary and captain of the Royal and Ancient Golf Club, and R&A chief executive Peter Dawson.

The company also posted a loss of GBP141,693 in 2005 on the disposal of fixed assets and saw its bank interest bill more than double on an annualised basis, to more than GBP330,000.

Last year, the Old Course Hotel underwent a GBP12m refurbishment with the aim, according to hotel manager Jonathan Stapleton, of making it "one of the great resort hotels of the world". On taking over Herbert Kohler extended the spa, with 11 treatment rooms, and restored the number of bedrooms to 146, including 32 suites. The spa facility was also upgraded to offer - among other things - a swimming pool with waterfall, thermal suites, Japanese salt inhalation steam experience, plunge pool, ice fountain and monsoon showers.