Granada lifts prices in service stations

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GRANADA, the leisure conglomerate, has raised prices at its Welcome Break motorway service stations just weeks after taking control of them in a deal that gives it a monopoly on some stretches of motorway.

The Office of Fair Trading has allowed Granada 15 months in which to sell off the 21 Welcome Break stations, which were acquired as part of its recent takeover of Forte.

Barely four weeks after it formally took control, it has raised prices by between 1 and 2 per cent on various lines, including motel rooms, restaurant meals and shop items. In some cases, prices for a room overnight have risen by almost 6 per cent.

At the time of the takeover, Gerry Robinson, Granada's chief executive, pledged to boost profits of the enlarged group by improving the quality of service and bumping up prices.

Graham Wallace, chief executive of Granada's leisure and services division, said the move was inspired by management of Welcome Break itself and was only to pass on cost increases to customers.

He said there would be news of disposals "when the time was right". Last year, Granada paid pounds 125m to buy Pavilion Services Group, the only other significant independent motorway service operator, bringing the number of service stations it owns to 27. The deal made it the UK's largest motorway services group.

Rival operators believe there is little point in complaining to the OFT. One analyst said it was unlikely there would be any disposals before the summer. "Why sell the service stations when you can bump up profits, and achieve a higher selling price?" he asked.

Before the offer for Forte closed, Granada announced that it was in talks with Whitbread over the sale of Welcome Break. However, there has been no news for several weeks, confirming suspicions that all disposals have been postponed.

For the time being, Granada can enjoy an undisputed monopoly of motorway service stations in many areas. For example, drivers on the M4 from London to the Severn Bridge face a simple choice: Granada - or Granada. The Granada Lodge Heston Services, just outside London, offers a double room for pounds 49.95.

Prices for the next two Granada Lodges are pounds 39.95 a night. But the Welcome Break Membury Services recently raised its price from pounds 34.50 to pounds 36.50 a night.

The last service station on the M4 before the Severn Bridge, the Severn View Pavilion, was bought by Granada last year. There, too, the room price is pounds 39.95.