Hotel chain Marston is launching a major investment programme, including a new-build 120-bedroom hotel in Nottingham, after failing to attract a suitable buyer.

A deal with early frontrunner Dawnay Shore Hotels fell through with the company not prepared to pay the £175m price tag.

Chairman and managing director Chris Scragg said Marston's shareholders had concluded there was "a considerable upside" to maintaining ownership.

Marston, which instructed the agent Christie & Co to market its 15-strong portfolio in September, will now invest in renovating and refurbishing its portfolio, with the Nottingham hotel due for completion in early 2006.