Queens Moat restructuring will cost an extra pounds 10m

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The Independent Online
ANOTHER pounds 10m has been added to the bill for restructuring the Queens Moat Houses hotel group. Total provisions for advisers' and bankers' fees, assuming the long- awaited restructuring happens by Christmas, stand at pounds 42m.

Andrew Coppel, chief executive, said: 'We have spent a long time on this restructuring, longer than anyone had anticipated. We are confident we will get there.

'We have 74 lenders and the key is to get them facing in the same direction on the same day. We are nearly there, but not quite.'

He declined to discuss the contents of the proposals for restructuring QMH's pounds 1.49bn of debts, on which the interest bill runs to slightly more than pounds 2m a week.

Disclosure of the restructuring provisions was made in yesterday's results for the half-year to 3 July, showing a further recovery in trading. Operating profits from ongoing operations were pounds 17.9m against pounds 7.1m.

'We believe the results demonstrate we are getting to grips with both sides of the profit and loss account,' Mr Coppel said. 'We have started to build business and the customer base. Queens wasn't a hotel company but a property company. Today this is a fully fledged hotel company.'

The company's trading performance, however, remains at the mercy of its precarious financial position. Trading profits were turned into a retained loss of pounds 66.4m, up from pounds 45.9m, after pounds 51.4m of interest charges, pounds 27.4m of various exceptional costs and pounds 7.4m of preference dividends.

Turnover from continuing operations rose from pounds 166m to pounds 207m. Occupancy levels in the core group of 44 British hotels improved by 6 percentage points to 57.3 per cent, although that gain was mainly offset by a reduction in rates charged for each room. Trading in Europe remained difficult.

Mr Coppel said QMH had started to reap the benefit of a different approach to management, which had involved 'a major, major cultural change'.

He added: 'Fifty per cent of managers have been changed. There were one or two who had passed away at their desks but nobody had noticed.'

Central purchasing for food and drinks had saved pounds 5m a year. 'The chef no longer tucks into our steaks on a Saturday afternoon,' Mr Coppel added.

Despite the financial problems money is being spent on upgrading the hotel estate, some of which was 'rather tatty'.

Half of the 8,000 rooms in British hotels will be refurbished this year. The cost of each refitting is about pounds 1,500.