Jarvis to sell hotels after profits fall

06 June 2000
Jarvis to sell hotels after profits fall

Jarvis Hotels is to sell nine of its properties and re-brand 39 others following a 2.2% drop in the company's pre-tax profits.

The 39 hotels, with a total of 4,500 bedrooms, will be brought under the existing Jarvis International flag and a new Jarvis Premier Collection flag for country house properties. Those being sold are smaller hotels "that no longer fit the Jarvis flag".

The announcement came as Jarvis reported a fall in pre-tax profit from £32.4m to £31.7m during the year to 25 March. This excluded the impact of new accounting rules introduced this year. If this are taken into account, pre-tax profit fell by 6.4% to £27.8m.

But turnover grew by 11.4%, following the addition of 10 new hotels during the year.

Chairman John Jarvis said the fall in pre-tax profit reflected a poor millennium trading period and a bad start to 2000. Average room rate increased by 3.1% from £50.01 to £51.56 but occupancy slipped from 68.3% to 66.7%. The result was a 0.6% increase in revenue per available room (revpar) to £34.40.

Jarvis added: "The hotels have had an encouraging start in the first few weeks of the new financial year. Taken together with our continuing programme of investment in our chain and the new brand strategy announced today, the group can look forward to the future with optimism." Since the start of the financial year, revpar has increased by 7.1% when measured against the same period in 1999.

The nine hotels earmarked for disposal are: the 30-bedroom Fleece Hotel in Cirencester; the 59-bedroom Marina Hotel in Ramsgate; the 53-bedroom Crewe Hotel in Crewe; the 52-bedroom Alma Lodge Hotel in Stockport; the 64-bedroom Greyhound Hotel in Leigh; the 61-bedroom Springfield Hotel in Gateshead; the 27-bedroom Royal Oxford Hotel in Oxford; the 57-bedroom Mount Hotel in Wolverhampton; and the 50-bedroom Clayton Lodge Hotel in Newcastle-under-Lyme.

The 39-bedroom George Hotel in Lichfield is already under offer.

Once these are sold, Jarvis will have 62 hotels with about 6,300 bedrooms between them. The average size of hotel will rise to 103 bedrooms.

After the re-branding exercise, Jarvis will have 26 Jarvis Internationals with some 3.800 bedrooms, 13 hotels with about 700 bedrooms in the Jarvis Premier Collection, and 23 Jarvis mid-market hotels with about 1,800 bedrooms.

There were two major developments for Jarvis during the year. It entered into operating leases to run nine hotels in England and Scotland owned by insurer Norwich Union, a deal that added 940 bedrooms to the group. It also spent £70.2m on buying a 377-bedroom hotel in London, now renamed the Jarvis International, Regents Park.

The Royal Hotel in Cardiff was sold.

Jarvis spent £19m on extending and improving some 1,000 bedrooms and hotel facilities. At the Jarvis Penns Hall Hotel in Sutton Coldfield and the Jarvis Grand Hotel in Leicester, a total of 43 new bedrooms were added.

The company has planning permission to add a total of 50 bedrooms and 12 meeting rooms to its hotels in Farnham and Leatherhead, both in Surrey. It also plans to refurbish and re-brand the Jarvis Piccadilly Hotel in Manchester, subject to planning permission.

by David Shrimpton david.shrimpton@rbi.co.uk

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