Forte's shares, up by 70 per cent over the past year to 227p, have lost a lot of their income appeal. The yield, an attractive 5 per cent when Forte bit the bullet and cut its final dividend in April, is now down to 4 per cent on an unchanged 7.5p payout for the current year.
Forte yesterday came in with bottom-of-the-range interim profits of pounds 37m, and its accompanying view on trading prospects had analysts quickly reining in forecasts for the current year by 10 per cent to pounds 90m.
A prospective p/e of 33 is significant, less because it is anticipating a vast recovery in profits than because it underlines how long it will take Forte to restore earnings to a level where dividends can grow again - two years at least.
An increase in occupancy levels, which offset another fall in achieved room rates in London hotels, is the only cheery feature to date. Recovery in provincial hotels is slower while Continental outlets, where Forte is reluctant to disclose occupancy levels, might as well be promoted as the Marie Celeste chain.
And against expectations, the company's Happy Eater and Little Chef roadside restaurants have attracted fewer customers. A timely tinker with the menus, which boosted spend per head, did increase the divisions' profits but a further fall in traffic numbers would be cause for concern.
Forte Airport Services raised its contribution from pounds 8m to pounds 12m, but the margin, albeit up from 4 per cent to 5.8 per cent, hardly sets the pulse racing. Neither does the performance of the Kentucky Fried Chicken fast-food restaurants, which are being hit by a discount-led push for market share by Burger King and McDonald's.
And then there's Harvester, which has increased sales, but soaked up a large amount of marketing spend. It is for sale but Forte, as it did with Gardner Merchant, is holding out for the best price.
The company may be disappointed. The rumoured pounds 1.2m price for each outlet is twice the amount, allowing for refurbishment, paid by Scottish & Newcastle for Chef & Brewer.
There is no rush since from a financial point of view Forte can weather the depressed climate in its mainstay hotels business. But it may yet regret not playing the rights issue hand, which would have erased much of its hefty interest bill - pounds 51m in the half-year.
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