However, analysts believe that the popularity of hotel company flotations and the bullish forecasts for the market will push the price and market value towards the top end of the range.
One analyst said: "You've had the Millennium and Copthorne flotation as well as Macdonald Hotels and others are sure to follow. It is a very opportune time to come to the market."
Jarvis Hotels operates 62 hotels in the three-star category. It focuses on the business, conference and short-break leisure market and also runs the Sebastian Coe Health Clubs.
The company will use the fresh funds to reduce its pounds 112m debts to pounds 60m. This will cut gearing from 182 per cent to 29 per cent. Management, led by founder John Jarvis and David Thomas, plan to add around 600 bedrooms to the existing 5,000. Acquisitions are also expected.
Jarvis was created in 1990 following a management buy-in of the 41 Embassy Hotels from Allied Breweries. Its second large deal was the purchase of 20 hotels from Resort Hotels in 1994.
The group's occupancy levels are relatively low at 64 per cent, though the company says this is improving from a low base under previous owners. Its room rates have improved from pounds 36 to pounds 39 in the last year.
Mr Thomas did not give specific details of current trading but said it was "encouraging". Last year the company made pre-tax profits of pounds 9m on sales of pounds 102m.
Three-quarters of the company's equity is owned by the venture capital groups Candover and Electra, which are selling a third of their holdings. Chief executive John Jarvis is selling almost a million shares, which will net him pounds 1.4m. David Thomas, deputy chief executive, is selling 330,000 shares, which will raise pounds 500,000.
Jarvis has timed its flotation well as the hotels industry is kindly viewed by investors at the moment and forecasts are for strong product demand. Pannel Kerr Forster is predicting strong demand into the next century. As relatively little new capacity is being added to the market, this will benefit the existing operators. Additionally, demographics are on the side of companies such as Jarvis, which operate the kind of leisure breaks that are popular with older age-groups. Stakis, the hotels company which reported results earlier this week, says some of its customers take 17 such breaks a year.
Mr Thomas confirmed the optimistic view: "It's a good, upbeat market at the moment. Demand is continuous and there is relatively little new capacity."
The pricing values the company on a historic price/earnings ratio of 16. This is not considered cheap but is more competitive than the Millennium and Copthorne listing which was heavily over-subscribed.
The Jarvis listing is a placing with 10 per cent of the shares reserved for intermediaries, who have until 20 June to register their applications. Six share shops are handling the issue on behalf of smaller shareholders, including ShareLink in Birmingham. Dealings in the shares are expected to commence on 28 June.Reuse content