Activities

Menzies Hotels is the privately owned operator of a nationwide chain of four-star hotels, having sold off its smaller and three-star properties in 2003 and 2004.

Its mixed portfolio includes city-centre sites, country house hotels and coastal resort hotels. Eight hotels incorporate Menzies’s Waves-branded health and leisure clubs.

The group also has 18 timeshare apartments in Bournemouth next to the Menzies Carlton hotel and is building seven new apartments alongside the Welcombe hotel in Stratford-upon-Avon.

Timeline

• 1992: Former Thistle Hotels executive Nick Menzies founds Menzies Hotels and Leisure. The first property is the Lion hotel in Belper, Derbyshire, followed by the Angel in Market Harborough, Leicestershire.
• July 1994: Menzies buys its third property, the New England hotel in Boston, Lincolnshire. It negotiates a £10m funding package to fund further acquisitions with a venture capital syndicate made up of North of England Ventures, 3i and Summit Equity Ventures.
• 1995: Menzies buys 18 timeshare units in Bournemouth. Its £1m acquisition of the Royal Kings Arms in Lancaster from Principal Hotels in September raises Menzies’s portfolio to eight properties.
• November 1996: Menzies buys 10 hotels with an asset value of £20m in a deal with the Royal Bank of Scotland that doubles its portfolio to 19 hotels. The newcomers include Flitwick Manor in Bedfordshire.
• 1998: The group, which now numbers 21 hotels, withdraws from a planned flotation on the London Stock Exchange in April because the disappointingly low share price would leave it below its planned market capitalisation of £30m-£50m. In October, it announces plans to sell four smaller, provincial properties to focus on its larger three-star and four-star properties with 50 or more bedrooms.
• December 1999: Menzies buys four hotels from the Royal Bank of Scotland for £7m which it has managed for the past three years. They include the Leofric hotel in Coventry and the Baron’s Court hotel in Walsall.
• August 2000: The 18-strong group secures extra funding of up to £30m from new backer BancBoston Capital, which acquires a 55% stake for £11.5m in cash. The deal leaves Menzies with a 45% stake in the company. BancBoston and Indigo Capital promise another £10m in loans and shares.
• 2001: The group buys three Hilton hotels in Newcastle, Bath and Edinburgh for £26.75m in May and sells two smaller hotels for £2.8m. It raises £72m with the Bank of Scotland in May to fund its acquisitions.
• June 2003: Menzies puts two three-star hotels on the market. It sells the Angel hotel in Market Harborough for about £1.5m and the Royal hotel in Scunthorpe for £1.2m
• August 2003: Menzies buys the trophy Welcombe hotel and golf spa in Stratford-upon-Avon for a rumoured £16m, taking its total tally to 19 properties.
• 2004: Menzies sells three non-core three-star hotels in Scunthorpe, Lancaster and Bournemouth for a combined £5.8m.
• November 2004: Menzies abandons talks with a potential investor that would have given the company £200m to spend on doubling the size of the company to 28 hotels.
• December 2004: Japanese venture capital firm Nikko Principal Investments (which already has an interest in RoadChef) buys an 80.4% stake in PMH Holdings (Menzies’s parent company) in a deal that values Menzies at £120m. Founder Menzies reduces his share to 17% but continues to head up the company.
• January 2005: The group commences a £4.6m investment at the Welcombe hotel that will add a spa and seven luxury timeshare apartments by March 2006.
• May 2005: Menzies buys the Best Western Milton hotel in Glasgow, which becomes the Menzies Glasgow hotel.

Financial snapshot

Full Year

Turnover: £38.6m (2004: £38.1m)
Pre-tax profit: £5.3m (2004: £3.4m)

Financial year end: 31 January 2005

Operating data

Figures for the year to 31 January 2004:

Revpar: £39.38 (2004: £35.34)
Occupancy: 60% (2004: 61%)
Average room rate: £65.10 (2004: £58.24)
Food and beverage accounted for 40.2% of turnover
Revenue from leisure grew by 8%

Payroll as a percentage of turnover: 32.9%
Number of employees: 1,333

Number of hotels: 15 (all four-star)
Number of bedrooms/suites: more than 1,300
Number of timeshare units: 18, with seven under construction

Menzies Avant, Oldham
Menzies Baron’s Court, Birmingham-Walsall
Menzies Belford, Edinburgh city centre
Menzies Carlton, Bournemouth
Menzies East Cliff Court, Bournemouth
Menzies Flitwick Manor, near Woburn in Bedfordshire
Menzies Glasgow
Menzies Leofric, Coventry
Menzies Marine, Salcombe, Devon
Menzies Mickleover Court, Derby, East Midlands
Menzies Prince Regent, Chigwell, East London - hotel and conference venue
Menzies Silverlink Park, Newcastle-upon-Tyne
Menzies Stourport Manor, Stourport-on-Severn, near Kidderminster, Worcestershire
Menzies Waterside, Bath city centre
Menzies Welcombe Hotel and Golf Course, Stratford-upon-Avon, Warwickshire

Strategy

“Following the acquisition by Nikko Investments, our plans are to acquire further quality four-star hotels in the UK. We have not set a precise number of hotels we are looking to acquire but we certainly envisage the group growing to more than twenty hotels over the next twelve months.”

Source: company statement, October 2005

Key directors

Chairman: Nicholas Menzies
Commercial director and company secretary: Tim Penter
Sales and marketing director: Crispin Scott
Operations director: Jonathan Worsdale

Contact

Bakum House
Etwall Road
Mickleover
Derbyshire
DE3 0DL

Tel: 0870 242 3100
Fax: 0870 242 3126

E-mail: info@menzies-hotels.co.uk
Website: http://www.bookmenzies.com