Malmaison owner plans £100m expansion of boutique hotels
The owner of the Malmaison and Hotel du Vin is planning to raise £100m to fund further expansion of the boutique hotel chains.
The owner of the Malmaison and Hotel du Vin is planning to raise £100m to fund further expansion of the boutique hotel chains.
Marylebone Warwick Balfour (MWB), the property company which also controls the Liberty department store, plans to raise a combination of both debt and equity to finance five new Malmaison venues and five new Hotel du Vin sites. It plans to have a total of 25 hotels by 2007.
The expansion plans were announced as MWB reported an increase in the value of its assets of 15 per cent to £172m over the six months to the end of December and a 51 per cent increase in earnings before tax, interest and amortisation to £16m.
Richard Balfour-Lynn, the chief executive of MWB, said growth was driven mainly by the success of its Malmaison chain, which it took over in 2000. Malmaison saw occupancy levels rise 5 percentage points to 80 per cent over the period and its average room rate increased to almost £100 a night.
Mr Balfour-Lynn also said the £66m acquisition of Hotel du Vin in October last year had been a success, producing nearly £2m of profit in the first three months of ownership. "Hotels now account for 74 per cent of our business. For a time after we bought Malmaison, we didn't want to spend money on it while we worked out what was the best way to push the brand.
"Now we have a great management team in place and the hotels are getting better and better. It has found its identity again and is proving strong competition for the traditional four-star hotel brands," he said.
While new Hotel du Vin sites are planned in university towns such as Durham and Exeter, Malmaison is aimed at larger cities. A new Hotel du Vin in Henley-on-Thames opened in March and a new Malmaison in Belfast opened in December. Further Malmaison openings in Oxford and Liverpool are planned.
Separately, Liberty, the department store in London's Regent Street that is controlled by MWB, reported its interim losses had widened as it ramped up its investment in new design talent and marketing. Its pre-tax losses grew to £2.3m from £2m the previous year despite having one of the better Christmases on the high street. It reported a 14 per cent surge in Christmas sales and, in contrast to other retailers, it said sales in February and March had continued to soar.
The group, which intends to change its name from Retail Stores to Liberty, said its plans to slash its £50m debt mountain through a sale-and-leaseback of Regent House had attracted "strong interest". It also wants to sell its office building, Lasenby House.
The long-term aim of the MWB management is to demerge the three businesses and return cash to shareholders. The group also pocketed £75m from the sale of its Howard Hotel on London's Victoria Embankment in November, and is in the process of selling its stakes in London's Park Lane Marriott hotel, the West India Quay Marriott in London and the Radisson hotel in Glasgow.
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