Forte rethink as roadside suffers

By Dominic Walsh

Happy Eater, the roadside restaurant chain acquired by Forte in 1986, is being wound down in favour of Little Chef as Forte fine-tunes its latest branding strategy.

Reporting its financial results for the six months to the end of July, the group revealed it had converted 14 Happy Eaters to Little Chefs during that period. There are now fewer than 50 units, compared with more than 80 when it bought the chain.

Richard Power, Forte's communications director, said changing road patterns had forced a rethink of the company's roadside business, such that all future development would involve only Little Chef.

Overall, the restaurants division, which includes Welcome Break, lifted sales by 7% to £306m (excluding disposals) and operating profits by 7% to £32m. But weak leisure demand will make it difficult for last year's second-half performance to be matched.

In hotels, worldwide sales rose by 6% to £515m, with operating profits showing a 14% jump to £92m. The recently acquired Méridien chain added a further £75m to sales and profits of £4m, and its merger with Forte Grand in June is expected to produce cost savings of £12m a year.

In terms of performance, the London hotels market again proved one of Forte's strongest sectors, with average achieved room rate seeing a 13% rise, largely thanks to improved rates from the inbound leisure market. Total sales in the capital rose 7% to £120m and profits by 13% to £34m.

Elsewhere in the UK, hotel profits advanced 13% to £44m on turnover up 7% to £213m, principally from the commercial market as domestic leisure continued to be hit by fragile consumer confidence. There was a 4% rise in rates and a one-point occupancy rise.

Internationally, profits rose by 27% to £14m on sales up 5% to £179m, though in Paris, where Forte has 2,500 bedrooms, it was hit by the strong franc and the economy.

The Forte group as a whole reported a profit before tax up 39% to £75m, excluding one-offs such as profits from the sale of its remaining stake in Gardner Merchant. Total sales of £975m were up 14%, or 6% on a like-for-like basis.

The group also last week confirmed speculation that it was trying to sell its 490-strong US Travelodge business, of which about 350 are franchises. The business has a book value of about $150m.

There was no news on the planned disposal of White Hart Hotels in the UK, which is valued at about £140m, though a decision on the future of Crest is expected soon. Sources close to Crest suggest the brand will not last beyond this financial year. Mr Power declined to confirm this, but said "the end of Crest as we know it" was a "strong runner".

Mr Power also revealed that Richard Carrick, sales and marketing director of tour operator Airtours, has been appointed new worldwide marketing director.

• Forte has won a contract to manage the 110-suite Moscow Golf and Country Club from the end of October. It will become part of Exclusive Hotels.