De Vere chief rejects call to split up company

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The Independent Online

The new chief executive of De Vere Hotels has shrugged off calls from one of its biggest shareholders to break itself up, but promised to take a fresh look at the group's investment priorities.

Carl Leaver, who joined from Whitbread's Travel Inn in September, warned the 10 per cent shareholder Guinness Peat Group yesterday that he would not be bullied into splitting the company's upmarket hotels arm from its leisure interests. "Neither I nor the board will be bounced into making any decisions of such importance," he said.

But Mr Leaver did pledge to rein back spending on the group's four and five-star De Vere-branded properties to enable the roll out of its mid-market Village sites to be speeded up. He said the overall returns achieved by the De Vere hotels were "not good enough", admitting under-performing sites would be sold. Seven De Vere sites needed "radical action", he said.

"I was brought in by the board with the specific brief of improving De Vere's rates of return, so my priority is entirely aligned with our major shareholders," Mr Leaver added. He said he would seek less capital intensive ways of expanding De Vere in the future, such as taking on management contracts for other operators. "We will look at things afresh," he said.

Guinness Peat has pledged to appeal directly to other investors for support for its plans, possibly by calling an extraordinary meeting, unless it is satisfied with Mr Leaver's progress. The activist investor, which failed to secure backing for similar proposals two years ago, could not be contacted for comment yesterday.

Mr Leaver said he was ultimately targeting a "national network" of Village sites and plans to open a further five new properties by the end of 2005. The group currently has 14 Villages, which combine 100 or so bedrooms with a fitness club, pub/restaurant and café.

His comments came as the group posted a small rise in annual profit and said recent booking trends were "more encouraging". Pre-tax profit for the year to 28 September fell 20 per cent to £30.8m, although excluding exceptional items it rose 5 per cent to £39.7m.