Bass windfall may spark hotel spree

Bass is keeping an open mind about what to do with the £2b it is likely to get if, as widely expected, it sells off its brewing arm in the next few weeks.

Chairman Sir Ian Prosser confirmed last week that a sale of Bass's brewing interests was the "more likely outcome" of the strategic review announced by the company in February.

Rumours are rife that Bass will invest the proceeds in buying a major international hotel group, such as Starwood.

But a Bass spokesman said the company had "a fairly open view" on how to best use the proceeds. "We will still look at cherry-picking individual hotel sites and small hotel chains," he said.

Bass last week announced pre-tax profits up by 25% at £324m for the 28 weeks ended 15 April. Turnover increased by 11.2% to £2.5b.

Operating profit at Bass Hotels & Resorts grew by 21%, while operating profit at pubs and restaurants rose by 31%. In brewing, the increase was just 3%.

Prosser said the rise in hotel profits was driven by a strong performance from Inter-Continental and Holiday Inn and Express hotels in the USA, which outperformed their competitors.

During the period, Bass Hotels & Resorts completed two major acquisitions. In January it bought 59 hotels in the Asia Pacific region from the Southern Pacific Hotels Corporation. It also agreed to buy the remaining 90% of Bristol Hotels & Resorts.

Taking these acquisitions into account, the group expanded from 2,799 hotels with 457,000 rooms to 2,965 hotels with 480,000 rooms. Hotels turnover was $972m (£660m), an increase of 11.7%. Operating profit grew by 18.4% to $238m (£161m).

In pubs and restaurants, turnover rose by 21% to £894m, but like-for-like sales fell by 1.3%. Food sales increased by 11.5% to £175m.

by David Shrimpton