Stand-off at the Savoy
A family split is threatening to derail bid talks. Jonathan Standing reports
Sunday 29 March 1998
Julian Wontner, son of former Savoy chairman Sir Hugh Wontner and a beneficiary of the trusts that hold 58 per cent of the Savoy's controlling B shares, has spoken out against what he sees as moves to change forever the exclusive image of the chain's hotels: the Savoy, Claridge's, the Connaught, the Berkeley and the Lygon Arms.
The group, whose flagship Savoy Hotel was the first in London to offer full electric lighting when it opened in 1889 and which has been a benchmark for service for decades, is seeking a buyer to help it keep pace with the rise of the global hotel chains.
A flurry of acquisitions by companies such as Bass in recent months has put more hotels into the hands of fewer operators, who can offer instant reservations worldwide at a range of hotels to fit all requirements.
"Savoy needs to be linked to a worldwide reservation and marketing system to go head-to-head with other five-star chains competing for exclusive clients," said Melvin Gold, director of hotel, leisure and tourism services at Pannell Kerr Forster, a management consultant.
"The current management has done an excellent job of moving Savoy into the 20th century, even the 21st century," he added. "They have turned it into an upmarket hotel that meets the needs of the travellers of today."
That is precisely what Julian Wontner does not want to happen. Mr Wontner sees himself as the defender of the Savoy of old - the exclusive, genteel watering hole of the privileged classes who sip their tea in leather armchairs between rows of potted palms. He railed at the current management - "Bankers, not hoteliers" - for turning the hotel into what he said was a place where staff incapable of good service wait on guests who would not appreciate it anyway.
"The sort of people who stay at the Savoy now would ring down and ask the hall porter to order a pizza from the outside," Mr Wontner said. "Are those the sort of people you want to have at the Savoy?"
Mr Wontner, who friends say has an artistic and colourful personality, vehemently opposes a sale. "I question the validity of the discussions that are going on with Baring without family permission," he said in an interview. Baring Brothers is advising the Savoy on the bid talks.
Mr Wontner will not reveal his plans. He said he had ways to prevent a sale, although his position as simply a beneficiary of the controlling trusts suggest otherwise. "I'm not going to say what I will do. Why give away how many tanks you have?"
Mr Wontner said the press had been "misled" into reporting that the Wontner family was a willing seller. He said reports that Lady Wontner and Ramon Pajares, Savoy managing director, had been in discussions over the sale were completely untrue.
Savoy declined to respond to Mr Wontner. The company said last week that it was in bid talks but provided no further details. Lord Thurso, who heads the trust that owns the controlling shares of the group, was not available for comment.
Four of the bidders are understood to be US property investment companies Starwood Hotels & Resorts Trust, Meditrust, hotel operator Patriot American Hospitality and investment company Blackstone Group.
The company said it had a responsibility to look after shareholders interests and will be looking for further opportunities to capitalise on the value and reputation of the Savoy name - both in the UK and overseas.
Any buyer will have to work out how to divide the proceeds of the sale between the holders of Savoy A and B shares. Under a complicated two-tier system set up by Sir Hugh to safeguard his inheritance and provide a strong defence against takeover bids, B shares have 20 votes for each A share. Granada Group owns 68 per cent of the A shares and the 42 per cent of the B shares that the family does not have.
Granada declined to comment. Reports last week said the company had offered to increase the proportion of any sale price the B shareholders would get from twice to six times the value of A shares' entitlement.
Whatever the outcome of the bids, the group will provide its owner with a strong source of revenue. Pre-tax profits last year were pounds 22m, well over expectations as demand for rooms surged following a pounds 70m refurbishment.
Copyright: IOS & Bloomberg
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