Ownership issues hung over the publication of Thistle Hotels' preliminary results on Monday.
An anticipated £600m offer from principal shareholder Brierley Investment for the remaining 54% of the equity it does not control failed to materialise on Monday. After years of press speculation that it wanted to offload its interest in Thistle, Brierley announced on 21 February that it was considering a bid.
Thistle chief executive Ian Burke declined to comment on reports that some directors were taking legal advice, as they feared any offer could undervalue the group.
Meanwhile, Jersey-based Orb Estates, which in January decided not to pursue a possible offer for Thistle, mooted in November, has since revealed that it is in talks to sell the 37 hotels it bought from Thistle in April 2002 for £598.6m.
Burke expects the 30-year management contracts Thistle negotiated for those hotels to transfer to any new owner.
The loss of profits from the 37 Orb hotels, along with continuing tough market conditions, saw pre-tax profits at Thistle's 56 properties fall by 43% to £27.9m in the year to 29 December 2002, down from £49.1m the year before. Total turnover dropped by 38% to £190m, from £305.3m in 2001.
Turnover at its 18 owned or leased hotels (16 of them in London) dropped by 6.8% to £151.1m, from £162.2m in 2001, while gross profit fell to £55.4m from £63.8m in 2001.
Thistle boosted occupancy both at its 22 London hotels (up by 1.9 percentage points to 75.9%) and at provincial hotels, which increased occupancy by 0.5 percentage points to 67.7%. However, new competition slashed occupancy by 13% at its biggest hotel, the Thistle Towers in London.
Average room rates tumbled by 10.5% in London hotels to £73.33 and by 1.1% in regional hotels to £55.53. Revpar also fell, by 8.2% to £55.66 in London and by 0.4% to £37.59 in the provinces.
During the year, Thistle reduced operating costs by 5% and reduced capital expenditure to £8.5m, from 2001's £38.3m spend.
Turnover during the first eight weeks of the current financial year grew by 1% in its owned and leased hotels, but Thistle has detected "no perceptible improvement in economic conditions worldwide".
By Angela Frewin