Granada to raise pounds 1bn from hotel sales

Granada Group is confident of raising at least pounds 1bn from the sale of its 17 Forte Exclusive Hotels, the company's chief executive Charles Allen said yesterday.

He added that would-be buyers, whose initial bids were received last Friday, would be given six to eight weeks to review confidential documents and visit hotels before a final list of five or six bidders was established.

"We expect to have all the sales completed by December," Mr Allen said. "There has been a huge level of interest, and already we have had indications that bidders are prepared to pay a premium for these properties."

He declined to discuss individual amounts for each hotel, or to confirm the names of potential buyers. Speculation has centred on hotel groups as well as wealthy individuals, such as the reclusive Barclays brothers.

According to documents seen by the Independent, the Grosvenor House is expected to raise at least pounds 300m on its own. Granada is forecasting pre- tax profits at the flagship luxury hotel of pounds 33m in 1998/99, compared with about pounds 24m this financial year. Nightly yields are expected to rise to pounds 160 a room from the current pounds 112, under a profit enhancement plan.

The information is contained in the confidential sales memorandum sent out to 70 potential bidders. Granada declined to comment on the details.

The hotels disposal programme is part of Granada's plan to sell off unwanted assets gained when it won its hostile pounds 3.9bn bid for Forte earlier this year. In addition to the Exclusives, which include the Hyde Park Hotel, the Westbury hotels in London and New York, and Brown's, Granada is also selling Forte's 21 Welcome Break service areas, its 68 per cent stake in Savoy Group and its 25 per cent holding in Alpha Airports.

Analysts said yesterday that the pounds 1bn figure for the Exclusives was achievable, although one cautioned that Granada's own profits forecasts for the properties depended heavily on the hotels cycle. "Changes in Government policy on interest rates, an increase in terrorism, a fall in tourism - all of these could affect the profit," said one leading leisure analyst.

Mr Allen said the company was confident of being able to sell all the earmarked assets within the next 18 months, as previously stated. The Savoy stake will probably take the longest to sell, he added, because of the need to work closely with existing management to find a suitable owner.

He reiterated that a trade buyer was the most likely bidder for the Alpha stake, although he assumed that any deal would be accompanied by a bid for the whole company.

Granada has produced profit enhancement plans for all the Exclusives, and is working with general managers to increase yields. According to the sales memorandum, the Westbury Hotel in New York is forecast to drive profits from about $4m to about $8.2m by 1999, with nightly revenues per room rising to $191 from $152. The Hyde Park Hotel is expected to see pre-tax profits rise more modestly, from about pounds 6.9m currently to about pounds 9.4m by 1999.

Granada has also introduced higher prices and additional services in its Travelodge budget hotel chain, which the company intends to keep. Mr Allen confirmed yesterday that the higher prices initially pushed occupancy levels down by up to 4 percentage points, although he said these had recovered, even as yields have increased.

It also emerged yesterday that Granada is in negotiations with its banks to lower the financing charges on certain Forte properties, including the leaseback arrangements at the Travelodge hotels.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones