Savoy may close as £220m refit fails to drum up trade

The Savoy was a favourite rendezvous for brokers, bankers, bounders and Hollywood's best. And, for a time, it was a home away from home for the artist Claude Monet, stars Marilyn Monroe and Frank Sinatra, and Sir Winston Churchill.

But now the five-star central London hotel, which last year reported pre-tax losses of £53m, could be at risk of breaching the terms of bank loans if business does not improve, and may close.

The Savoy's owners, Breezeroad Limited, said last week that the "material uncertainty" over finances could "cast significant doubt as to the group's ability to continue as a going concern".

Should an uplift in business fail to materialise, the company which took over the hotel in 2005, controlled by the Saudi billionaire, Prince Al-Waleed Bin Talal, and Lloyds Banking Group, could default on their loans.

Founded in 1889, the Savoy remained open through world wars, austerity and strikes, but closed in 2007 for a large-scale refurbishment. Originally scheduled to cost £100m and take 17 months, the hotel eventually re-opened in 2010, the re-fit having cost £220m.

The hotel was home to the first celebrity chef Auguste Escoffier and its main restaurant, The Savoy Grill, is where Laurence Olivier is thought to have met his future wife, Vivien Leigh. But it lost its Michelin star when it closed in 2007. Now run by chef director Stuart Gillies and head chef Andy Cook, the Grill re-opened in 2010, to mixed reviews.

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