Staff left in limbo as One Devonshire awaits buyer

Few hotels in Scotland have received as much praise as One Devonshire Gardens in Glasgow. But all the compliments in the world could not stop the commercial reality of its parent company collapsing last year. Ben Walker reports on who might buy the hotel from the receiver.

Since the collapse last year of Residence International, owner of Glasgow's prestigious One Devonshire Gardens hotel, the road for Jeanette Montgomery, the hotel's managing director, has been a rocky one. Her future hangs in the balance while receivers KPMG decide on a new owner.

Montgomery had the misfortune to merge her profitable Devonshire hotel with its neighbour One Devonshire Gardens just months before Residence International collapsed with debts of £22m. She explained: "We thought it was the correct move to make at the time. We wanted to expand. Hindsight is a great thing."

The man behind the defunct Residence International is Brian Martin. At the time the two Glasgow hotels merged he had said: "From a business perspective, it's more efficient to run a 41-bedroom establishment than two separate properties."

Martin established Residence International in 1995 with a timeshare development in Edinburgh. He went on to buy property in Paris as well as One Devonshire Gardens, and then took over its smaller neighbour at number five. Under the agreement, Montgomery and her business partner Patrick Newall paid nearly £300,000 for an 18 % capital share in the new, larger hotel business valued at £3.5m.

Less than six months later Residence International had gone into receivership. Montgomery stands to lose more than £50,000 of her savings, as well as no longer having her own hotel business. She said: "It's devastating for me. I ran the Devonshire hotel successfully for 13 years and now, in just three months, I've lost everything. Because the hotel is being run by receivers, a lot of cuts have been made. Six staff members have been made redundant. It's not a very nice time. We're being kept in the dark about what's going to happen."

Blair Nimmo, who is handling the sale for KPMG, said that there were four bidders for the 41-bedroom Glasgow hotel and the 30-suite Edinburgh Residence, which are being sold as a package. He said that the deadline had been extended to tomorrow (22 March) to give a late entrant, whom he would not name, time to submit a bid.

It is understood that one of the four bidders is the Town House Company, which wants to add to its three hotels in Edinburgh: Channings, the Howard and the Bonham.

Montgomery confirmed that another bidder is her business partner Newall: "Hopefully, we'll get back to the five-star property we all knew and loved," she said.

The third bidder already declared is believed to be Martin himself, who is making a bid to regain control of the very same properties he lost to receivership. Montgomery said: "I don't want to deal with Mr Martin… I don't think he'd want me around. I would have to go elsewhere."

Montgomery's lesson was hard learnt, but her message to other independent hoteliers thinking of expansion is now clear: get personally involved in potential business ventures; check the people out; and don't let the lawyers take over.

KPMG is expected to choose the new owner by the beginning of April.