Regus set for a good day at the US office

One man's pain is another's pleasure. That's the case for Regus, the serviced office operator, headed by former hot-dog salesman Mark Dixon. The demise of major competitor HQ Global Workplaces, an American company, could mean Regus's troubled US division can get back into shape.

Regus had been intending to merge with HQ Global only last June, but investors weren't keen so it was scrapped. That was a lucky escape: HQ Global filed for Chapter 11 bankruptcy protection last week.

Tough pricing and an economic slowdown delivered harsh conditions for the serviced office sector last year, but now Regus may be able to put its prices up again, at least on the other side of the Atlantic. It is understood HQ's problems had meant it was heavily discounting, forcing the entire sector to do the same.

"It is clearly regrettable HQ has to file for Chapter 11, but what we expect is that it will introduce a welcome return to price stability in the US," said a spokesman for Regus. "Ultimately we would hope to be able to increase prices to reflect a fair return on our investment." He said it was too early to say whether Regus would bid for any parts of HQ.

Last year Regus expanded rapidly in the US, but, as the recession bit, revenues slumped. In the Americas revenue per work station fell by a half, its worst result around the world. The area also posted a £58m loss, compared to a £32m profit in the UK and Ireland.

The stock market took kindly to the news of HQ's demise. Regus's shares were up 10 per cent over the week to finish at 34p. This compares to a high of 392p a year ago. Regus has changed its business model to cope with the economic downturn, and intends to expand through franchising agreements.