Von Essen Hotels has fallen into administration with debts of more than £250m.
What do you think will happen to the portfolio now? Will it be bought outright or broken up? And what will be the fall out for staff or suppliers around the group's 28 properties?
More generally, what does this tell us about the state of the country house hotel space at the moment?
Let us know what you think.
It most certainly worries me as an independent in this sector. However, until the reasons become clearer, I am not going into full blown panic mode.
The first quarter of this year has been tough, worse than same period last year, however a few green shoots have appeared in April and, our Summer Wedding Season is at an all time high.
A continued focus on profitability is essential, as is keeping a watchful eye on developments such as these.
Will the Von Essen group be broken up? Your guess is as good as.....Probably. Is that a good thing? Possibly it is for us independents.
Anthony Lloyd
Fallowfields Hotel and Restaurant, Oxfordshire
www.fallowfields.com
Hi Mark,
The Von Essen debacle was a train crash waiting to happen for years.
They have hoovered up every single decent country house hotel in the country in the last decade or more, and tried to make it into some kind of chain.
The trouble is that country house hotel guests are very loyal to owners and when the guests see a hotel taken over by a group, they move on to another privately run hotel instead.
They know what we know - namely that private owners will always run hotels better than large organisations.
Von Essen also was very suspect in payments to its suppliers, something we have rigidly adhered to for over 65 years.
There have been so many examples of UK chains that have grown quickly and equally as quickly have collapsed into administration. Queens Moat, Regal, are but two - they are based around the business model of assuming that the price paid for a hotel is its minimum value, and then borrowing against that assumed value to buy the next one, and so on. This works brilliantly in a market that is constantly rising in value. This house of cards collapses of course the moment that hotel values fall down as they have done dramatically since 2007.
The effect on the Country house hotel sector of the collapse of Von Essen is primarily in the realm of hotel values - with some 28 quality properties likely to come to market over the next few months, I would have thought that this could only depress values further from their already woeful point of 40% below 2007 values. I don't see how one company could buy the lot and make a business case for doing so as it was always an ill assorted group of hotels, which I think would be worth more broken up, than as a whole.
I don't think one can infer from the Von Essen debacle that the country house hotel sector generally is in terrible shape - this was more the specifics of a badly run hotel chain that overpaid for its hotels, and underpaid its suppliers, and didn't keep up with the interest payments to its banks. There are plenty of examples of well run small hotel companies in the UK that are doing, if not brilliantly, at least ok in this depressed market.
Kind regards,
Andrew Beale
Managing Director Beales Hotels
www.bealeshotels.co.uk
andrewbeale@bealeshotels.co.uk
Andrew, Anthony, thanks for your interesting comments. Interested to hear from country houser operators on how they are currently trading. I'll be this patch of good weather is helping ...
I have slightly mixed feelings about this.
It's terrible when a group crashes and jobs are lost, but clouds have a tendency to have silver linings.
Mine is that The former CEO of Von Essen Nick Romano & Nina Basset have started mentoring me in a venture I have.
www.primanox.org