Activities

Privately owned London & Edinburgh Swallow is the operator of a mixed portfolio of hotels and inns, tenanted pubs and managed pubs and restaurants.

It is the largest hotel group in Scotland and the fifth largest in the UK, with approaching 140 properties, ranging from coaching inns to luxury hotels. In 2005 it was ranked as the ninth-largest pub company in the UK, with about 600 tenanted and leased properties and 150 managed houses.

The company started as the London Inn Group, but was until last year known mainly through the name London & Edinburgh Inns, its principal trading subsidiary. The majority of its hotels operate under the Swallow brand name, which the company purchased from Whitbread in 2003. Its pubs are unbranded.

No freeholds are held by the operating companies within the group. Instead, freeholds are held by separate companies, usually backed by wealthy individuals. Investors include property moguls Mark Pears and Tony Khalastchi.

Since early 2004 the company has largely abandoned acquisitions in the pubs market in favour of hotel transactions. It has also started buying golf courses, of which it owned seven as of March 2006.

Timeline

• 1996: London Inn Group is founded by Alan Bowes
• November 2000: The group acquires 47 pubs from Greene King for £7m
• September 2003: The company takes control of 13 Swallow hotels with a total of 1,148 bedrooms from Whitbread in a £52m deal, backed by property tycoon Leo Noé. At the same time the group buys the rights to the Swallow brand name for £5m.
• December 2003: The group acquires 252 pubs from Punch Taverns for £57m in a deal backed by Mark Pears
• Early 2004: London Inn Group snaps up pub groups Valley Inns for £3.4m, Tager Inns for £2.5m and Western Castle for £3m, adding a total of 30 pubs
• February 2004: launches React Inns, a new management company for problem pubs headed by Mick Sheridan, with an initial 16 outlets
• March-April 2004: Seven hotels are bought from Macdonald Hotels for about £30m
• April 2004: Three four-star hotels are bought from Marston Hotels for about £18m
• December 2004: The group purchases three four-star hotels in the Scottish Highlands from Morton Hotels for £10m-£12m
• June 2005: The company acquires the 56-strong Yorkshire-based Publico Pub Company for £20m
• July 2005: The group buys eight hotels from Corus for £32.9m
• August 2005: Twenty hotels (17 in Scotland, three in England) are acquired from North British Trust Group for £61m
• March 2006: The company acquires the 85-bedroom Carnoustie Hotel, Golf Resort & Spa in Scotland
• March 2006: The group buys the three-strong Freedom of the Glen hotel group in the western Highlands of Scotland.

Operating data

Number of hotels: approaching 140
Number of managed pubs: about 150
Number of leased and tenanted pubs: about 600

Group figures:
Projected turnover for 2006 (calendar year): about £350m
Projected profits for 2006 (calendar year): about £30m

Swallow:
Turnover 2005: about £80m
Profit 2005: nearly £8m

Tenanted pubs:
Turnover 2005: £40m-£45m (projected)
Profit 2005: about £3m (projected)

Year end: 31 August 2005

Number of employees: about 8,000

Strategy

The company plans to concentrate on acquisitions in the hotel market at present, as it believes property in the pubs sector is currently overvalued and sees the forthcoming ban on smoking as having a dramatic effect on pubs’ trading. The aim is to double the number of hotels managed by the group by early 2007 and ultimately become the largest hotel group in the UK, with ambitions to move into Ireland as well. Acquisitions can be either small groups or individual hotels. The company is also targeting the leisure market, investing in leisure facilities at existing hotels and buying golf courses.

Source: executive chairman Alan Bowes, March 2006

Chief executive

Peter Gray

Key directors

Executive chairman: Alan Bowes
Head of pub division: Gerry O’Boyle
Head of tenanted and leased pubs: Danny Rogers
Head of React Inns: Mick Sheridan

Contact

5th Floor, Meadow House
Medway Street
Maidstone
Kent
ME14 1HL

Tel: 0870 770 0777

Website: http://www.swallow-hotels.com