The dramatic collapse of the Von Essen hotel group into administration, with debts of £250m, has highlighted the struggle that regional hotels have experienced during the recession.
Meanwhile, it has been suggested that potential buyers for the 28 country house properties affected by the collapse of the hotel group's holding company - founded by Andrew Davis in 1996 - include Tosca Penta Investments, the private equity firm that came close to injecting up to £150m into the company earlier this year to help it expand from 32 to 75 hotels.
Clive Hillier, chief executive of Vision Hospitality Asset Management, said that while hotels in London had ridden out the recession well, the performance of regional hotels had been virtually flat.
"This, coupled with the inflationary pressures of rising rates, as well as increasing food and fuel prices, has created a very challenging time for regional hoteliers," he said.
Richard Barnard, hotel consultancy services partner at PFK, said that groups like Von Essen had really suffered from the loss of mid-week training and conference business from corporate companies.
"These hotels can't survive on weekend leisure business alone," he said. "Cash is king. When the cashflow dries up, it is inevitable you will default on your loans."
Kit Chapman, owner of the Castle hotel in Taunton, said the failure of Von Essen was due to the fact that the group was composed of highly individual properties which require a proprietor with personality to survive.
"Mr Davis's grand ego-fest was misconceived from the start," wrote Chapman in his blog, A West Country Innkeeper. "Running a small, luxurious country house hotel as part of a group is not the same as operating, say a Four Seasons hotel where systems dictate and there is a sophisticated infrastructure in place to support a big luxury brand."
Barclays and Lloyds Banking Group called in administrators from Ernst & Young last week after Von Essen failed to make interest payments on its £250m debt and breached a convenant.
Ernst & Young has since confirmed that Charles Prew, who joined Von Essen last month to oversee the company's plans to more than double its portfolio, will continue in his role as chief executive. He will report to David Duggins who has been appointed to take over from Davis, the chairman and founder of Von Essen.
Four hotels - the Forbury in Reading; Llangoed Hall in Powys; Hunstrete House, near Bath; and Verta, the group's first London hotel which opened last year - are owned by separate companies headed by Davis and are not affected by the administration.
Meanwhile, the remaining 28 hotels are continuing to operate normally. It is unlikely that a single buyer will acquire the entire group, with private equity firms and individuals likely to be keen to bid for specific properties.
Hotel Verta, Von Essen's first London hotel, is not affected by the administration
VON ESSEN: COUNTING THE COST
1996 Former commercial lawyer Andrew Davis starts up Von Essen with the aid of a trust fund set up by his Austrian aunt, the Countess Von Essen. The three founding properties are Mount Somerset, Taunton; Congham Hall, near King's Lynn, Norfolk; and New Park Manor, New Forest, Hampshire
2003 Von Essen buys four luxury country hotels in the Cotswolds for around £16m (Buckland Manor, Lower Slaughter Manor, the Elms Hotel, Washbourne Court Hotel) as well as Lewtrenchard Manor in Devon, Dalhousie Castle near Edinburgh and Sharrow Bay in Cumbria
2005 Von Essen buys Luxury Family Hotels for around £20m (Woolley Grange in Wiltshire, Fowey Hall in Cornwall, Moonfleet Manor in Dorset and Ickworth Hotel in Suffolk)
2005 Six suppliers suspend trading with Von Essen after not being paid by the company
2006 Von Essen loses High Court battle with Cotswold hotel owners Lord Roy and Lady Daphne Vaughan over defaulting on completion accounts
2010 Von Essen opens its first new build property, the 70-bedroom Hotel Verta in Battersea, London, costing £50m. The company also buys Llangoed Hall, its second Welsh property
2011 Von Essen goes into administration
By Janet Harmer
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