Banks back Macdonald's five-year expansion plan

Macdonald Hotels has set up a joint venture with the Royal Bank of Scotland and the Bank of Scotland to build and operate up to 10 four-star hotels in city centres throughout the UK.

The joint venture has secured funds of £100m and is in advanced talks to acquire its first four sites, in Sheffield, Birmingham, Leeds and Glasgow. It is also the frontrunner for a site along the M4 corridor near London.

Macdonald Hotels is investing £5.2m over five years to take a 15% stake in the venture. It will have a 10-year management contract at each hotel, with an option to extend. The properties will be completed within five years and branded as Macdonald hotels.

News of the joint venture came as Macdonald Hotels reported its financial results for the year to 2 April. Turnover was up by 7% at £60.6m, underlying operating profit rose by 5% to £15.1m, and underlying pre-tax profit increased by 8% to £13.8m.

The group now owns or manages 79 hotels and resorts in the UK and Spain, with a total of 5,000 bedrooms and turnover of more than £150m a year.

Chief executive Donald Macdonald said: "The group has performed well through what have been difficult trading conditions in 1999."

Web site: www.macdonaldhotels.co.uk