Stakis to focus on four-star market after hotel sell-off

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Stakis, the hotel and leisure group which bought the Metropole hotels from Lonrho last November, is to sell eight of its portfolio as it moves to concentrate solely on the four-star sector. Stakis plans to use the proceeds to invest in all three of its operations - hotels, casinos and its new health and leisure division.

David Michels, chief executive, said that although the eight three-star hotels were profitable they did not fit the strategy of concentrating on four-star, full-service hotels.

The hotels being sold are in Corby, Falkirk, Glasgow Airport, Leeds, London Harewood, Nottingham, Paisley and Perth. In total, they have nearly 800 bedrooms, leaving the group with around 7,000.

Stakis said it hoped to realise pounds 35m-pounds 40m from the sale, a figure analysts regarded as conservative. Andrew Holland, an analyst at Kleinwort Benson, said the likely buyers would include Jarvis, the hotels group which floated last year but has seen its shares perform poorly. Regal Hotels might be ruled out following its recent pounds 64.5m purchase of 13 three-star hotels from Whitbread.

Mr Holland said the planned sale was logical. "If and when the next hotels downturn comes, it is the three-star hotels that would probably suffer most. You need to be top end or in budget hotels."

Richard Cole-Hamilton, chairman of Stakis, said: "The major acquisition of Metropole has been completed, a comprehensive transformation is under way within the casino division and the potential of health and leisure is beginning to be tapped."

He was speaking as Stakis reported an 86 per cent rise in half-year pre- tax profits to pounds 22.2m. The five Metropole hotels contributed pounds 11m in their 19 weeks under Stakis ownership. Room rates in Metropoles improved from pounds 63.80 to pounds 70.28 and occupancy was up from 60.6 to 64.9 per cent.

Profits from existing Stakis hotels, stripping out the Metropole deal, were more than 20 per cent ahead at pounds 20.7m. Casino profits fell from pounds 5m to pounds 3.8m largely due to the sale of the Barracuda club in London. On a like-for-like basis, casino profits were pounds 1.2m ahead.

The Living Well health and leisure business, which was acquired last May, contributed profits of pounds 600,000 from its seven clubs.

Group sales were pounds 141m compared with pounds 95.8m in 1995/96. Stakis shares closed 2p higher at 99p.