Savoy revalues its five hotels at pounds 400m

The Savoy Group took a big step towards becoming "a normal company" yesterday, revaluing its five luxury hotels, including Claridge's, the Connaught and the flagship Savoy itself, at almost pounds 400m. Until now the company, which also owns the Lygon Arms in Worcestershire and a handful of central London restaurants, has merely acknowledged that the value of its hotels was considerably greater than the out-of-date figures in its books.

The revaluation, which boosted the Savoy's shareholders' funds from pounds 91m to pounds 372m, was announced along with sharply higher profits for the year to December before a one-off write-down of overvalued assets that sent the company to a reported pounds 24.3m loss.

The Savoy's hotels shrugged off the distraction of a pounds 60m refurbishment programme, designed to reverse years of underinvestment, to record operating profits of pounds 15.7m, one-third higher than 1995's pounds 11.8m. Margins jumped from 13.2 to 17.1 per cent as occupancy rates of 84 per cent outstripped the previous year's performance and that of its five-star London rivals.

Sir Ewen Fergusson, the former diplomat who combines the chairmanship of the Savoy with that of Coutts, said: "As the year's achievements make clear, we have begun reaping the benefit of two years' unremitting effort to achieve excellence and improve standards for our guests."

Ramon Pajares, the group's Spanish managing director who was brought in two-and-a-half years ago by Sir Rocco Forte, admitted the revaluation of the hotels was the latest initiative to "make this a normal company". He denied the move was anything to do with the stated intention of 68 per cent shareholder Granada to sell its stake.

When Granada acquired Forte at the beginning of last year, the television and leisure group said it would sell the stake as part of a planned clear out of Forte's luxury hotels. Since then, it has sold only a handful of Forte's Exclusive hotels and made no progress in finding a buyer for the Savoy stake. Any sale is complicated by the need to find a buyer acceptable to the Wontner family which controls the company through its holding of the Savoy's voting shares.

Mr Pajares said the refurbishment programme was almost complete. He added that 22 per cent of the group's rooms had been unavailable during the year, a total of more than 57,000 room nights representing more than pounds 8m in potential revenue.

A major success, according to Mr Pajares, had been the restoration of two penthouse suites at Claridge's which, despite a cost of pounds 2,100 a night (plus VAT but excluding breakfast), had been occupied for more than 80 per cent of the time since they opened.