Expansion on cards for Sleep Inn chain

Hotel group CHE hopes to raise more than £5m to expand its Sleep Inn hotel chain and upgrade several of its other properties.

CHE Group, which operates 57 hotels under the Sleep Inn, Comfort, Quality and Clarion names in the UK, France, Germany and Belgium, plans to raise the money by selling 14 million new company shares.

Chief executive David Cook said this had been the first opportunity for the company to do this.

"The group has had a bit of a troubled time over the past two or three years. We needed to be confident that the market for the hotel sector was improving generally before we could go to the City to raise some money," he said.

About £1.7m of the funds will be used to buy six new Sleep Inn properties. Cook said the group was at the final stages of discussions on three of the hotels, but would not give details of their whereabouts.

He added that the properties, which will be developed by third parties before being leased to and operated by CHE, would be scattered all over the country alongside arterial roads and motorway junctions.

CHE plans to spend a further £2.3m on adding air conditioning to 1,000 of its Quality hotel bedrooms, with the final £1m being used to upgrade meeting and conference facilities at six of its Quality hotels.

The group said it expected business to improve across all of its brands in the current financial year as a result of these changes, its franchise and management expansion, and a better economic and political climate.