Hotel groups steal a march

Large numbers of independent hotels are degenerating into slums, according to the latest research by leisure analysts at Kleinwort Benson Securities.

The report, Quoted Hotel Companies: The World Markets 1995, says the gap between properties operated by the big groups and hotels under independent control is widening into a chasm.

The size of a hotel chain has re-emerged as a key to its success, it says, with larger companies performing materially better than the smaller chains or individual hotels.

The problems faced by the smaller operators are brought into relief by contrasting the profits performance of the new lodge hotels with older, full-service properties.

Paul Slattery, who leads the hotels and leisure research team at Kleinwort Benson, said that 10 bedrooms in a lodge hotel produced the same profit as 18 bedrooms in the small, "old-style" hotels. He added: "In the main, the older properties are in tertiary locations, lack investment and have a poor quality of management."

The report, the ninth annual review, notes that for the first time the number of bedrooms operated by hotel companies listed on the Stock Exchange fell. The total number at the end of 1994 was 122,548 bedrooms, down 1.1% on last year.

During 1994, these quoted companies disposed of 134 hotels and added 102 new properties. The bulk of disposals were "obsolete" hotels, while about half the new properties coming on stream were lodges.

Kleinwort Benson estimates that there are a further 18,000 bedrooms in the UK operated by quoted companies that are either on the market or would be sold given the opportunity.

A further drop in the number of bedrooms operated by quoted companies is predicted as the large companies, such as Forte, Bass and Ladbroke, focus on developing their businesses outside the UK.

The report says the gap between corporates and independents is being further exacerbated by the strength of the big players in London, which is leading the country out of recession.