Savoy Group seeks overseas sales partners
Tuesday 27 February 1996
The link is aimed at improving the profitability of the luxury hotels group, which has seen its occupancy rates lag those of competitors in the past five years.
Meanwhile, Granada, which owns 68 per cent of the Savoy Group, is within days of reaching a deal on the sale of the White Hart hotels to Regal, the hotels group, sources close to the sales talks said.
The White Hart sale was agreed between Regal and Forte in January for pounds 122m, before Forte succumbed to a pounds 3.8bn hostile bid from Granada. Regal has given Granada until next Monday to agree the sale.
"This is the crunch week," a source close to Granada said. Added a source close to Regal, "the talks continue and we are likely to see some conclusion by Friday".
Granada's chief operating officer, Charles Allen, is poised to take a final decision on the sale, which has been delayed while he and his advisers review the price and terms of the deal. It is believed that Granada is holding out for a higher price.
There is still a possibility the hotels will be kept by Granada, and integrated with the mid-market properties won following the takeover of Forte. Granada has undertaken to sell hotel assets worth about pounds 2bn, including the Heritage and Meridien chains, to help reduce debt taken on to finance the Forte acquisition. Granada is also selling the stake in the Savoy, but will work with the Savoy board to identify buyers.
Analysts have encouraged Mr Allen to accept the Regal offer. "Granada needs to make progress in the sale of the hotels," said one leisure analyst. "They should take the cash on offer."
The search by the Savoy Group for international marketing partners could be concluded within a few weeks, Mr Pajares said. "We have been at a disadvantage because many of our competitors have international sales offices," he said. "We are now looking at different options, including strategic alliances with companies that do not have a London presence."
His comments followed the release of the group's results for 1995, showing pre-tax profits up 158 per cent to pounds 11.5m and turnover up marginally to pounds 92m.
Revenues-per-room, at more than pounds 200 a night, exceeded the industry average but occupancy rates have been disappointing.
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