View from City Road: Savoy must swallow its pride

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From the kitchens, where microwave is a dirty word, to the marketing department, the Savoy group is out of touch.

Gourmets and those who hate overcrowded hotels should be pleased. The City, of course, knows the Savoy has never been in such urgent need of a commercial link with its arch-rival Forte.

The Savoy is a company whose taxable profits of pounds 725,000 last year would have looked even sicker without the pounds 291,000 benefit of selling an ageing lake of Chablis from its cellars.

What other disposal profits will the Savoy produce next week when it reports results for the first half of the year? Any takers for a lorry-load of hand towels, embossed By Appointment to Her Majesty Queen Victoria?

The Savoy should eavesdrop on the conversations of the well-heeled business people and analysts who dine at its restaurants. Commercially, they say, the Savoy has to run fast to stand still and is unlikely to reclaim pole position at the upper end of London's hotel market.

While the name is still internationally recognised, competitors have far more effective marketing whose costs are spread over a larger volume of business.

The Savoy's old guard, headed by Giles Shepard, needs help but still cannot stand the modern chaps from Forte despite the years of formal truce with the Forte family in which they have been sharing a boardroom table with Rocco.

Image has become a far greater issue than independence, and is clearly getting in the way of business sense. How much longer can this go on?

That depends on the Hon John Sinclair, a non-executive director and representative of three key Savoy trusts which hold sway more than 36 per cent of the votes of the antiquated two-tier share structure. Forte only has 42 per cent of the votes despite owning 68 per cent of the shares.

Mr Sinclair's votes could be the catalyst for a plan, proposed by Morgan Stanley, to combine the Savoy group in a joint company with Forte's own 'Exclusive' hotels such as the Grosvenor House. He should grab the opportunity.

Meanwhile, Fawlty Towers may be taking over the Savoy first, judging by the company's slap over the wrist at the weekend for Sir Michael Richardson, a non-executive director who accidentally revealed the existence of a secret board report on future strategy.

Funnily enough, Sir Michael is rumoured to be a Forte favourite for the chairmanship of a joint company. And did he not say on Friday he was looking for a new chairmanship after he steps down from Smith New Court at the end of the year? Sir Michael should be checked in now.

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