Pressure on Malmaison and Hotel du Vin to slash price tag

Published on Saturday 23 August 2008 14:01

THE owners of Malmaison and Hotel du Vin may have to lower the asking price for the two chains if they are to be third time lucky in their bid for a sale, according to City analysts.

Marylebone Warwick Balfour (MWB), which is understood to have contacted Bank of America to sound out interested parties in acquiring the two chains, has set a sale price of 650m – a discount of 50m from last year. It is understood it is attempting to sell the Malmaison chain for 350m and Hotel du Vin for at least 300m.

But analysts say that the discount may not be enough, and the owner could be facing a similar situation to last year, when a sale failed to materialise.

One City-based leisure analyst said: "MWB has already cut the price by 50m, and I am not sure this is enough. I could envisage a situation where a sale possibly doesn't happen.

"By putting it on the market it is quite a brave move, because if they don't sell it this time it begs the question where do we go from here?"

In June last year, MWB attempted to sell the underlying assets to Vector Hospitality, a real estate investment trust, but the sale fell through when a lack of investor appetite and fears of a property slump forced Vector to scrap a proposed 2bn flotation.

MWB, which also owns 68% of the department store Liberty, then moved to appoint Bank of America to sell the whole business outright, which attracted interest from investors including Quinlan Private, R20, Lydian Capital and Permira.

It was also rumoured that the American hotel operator Marriott International was close to agreeing a 700m deal, only for it to fall through.

Both brands have expanded rapidly since the sale fell through and it is believed the strong roll-out potential of the chains supports the high price.

In November, Malmaison will open its 12th site in Aberdeen, while Hotel du Vin has three more openings in the pipeline over the next four months in Poole, Newcastle and Edinburgh, taking its total to 14.

In November, the chief executive of both brands, Robert Cook, said he wanted to expand the brand overseas.

He said: "Post-MWB, the growth for us is in Europe, the USA and the Middle East. That has to happen."

A spokesman for MWB said he could not confirm the hotel chains were for sale.