Rocco Forte Hotels has put the Lowry Hotel in Manchester on the market for GBP40m, less than a year after withdrawing it for sale after six years without a buyer.
The sale of the hotel, which is viewed as an anomaly within the group, is expected to help fund the company’s expansion into Europe.
The company is looking to retain the property through a management contract, but will also consider vacant possession. Sources close to Hotel Analyst said that interest in the site was building.
Manchester is currently trading strongly, with STR Global reporting occupancy of 77% for 2013, matched the previous high in 2006. The increase came despite a 58%r rise in the number of rooms i the city over the same period.
Richard Power, director at Rocco Forte hotels, told the Manchester Evening News: “Until now we had been testing the market, but now we are into a full sale process. Our preference is to sell the building but retain the management contract, because it's a really good team at the Lowry, but we will look at whatever bids come in.
“The sale comes because we have been reviewing our brand and we are looking to focus our ownership of hotel buildings on international markets. Whilst the Lowry is the market leader in Manchester around 98% of its business is domestic, unlike the rest of our property portfolio.”
Last year saw the company’s Abu Dhabi site rebrand and re-open as Hilton Abu Dhabi Capital Grand, less than two years after opening. In an interview at the time of the opening, Forte suggested the going would be tough initially, with several other five star hotels opening in Abu Dhabi around the same time.
Last year also saw poor trading mean the end of the group’s presence in Prague, following a spat with owners and comments from the company that it was planning to pull out of the city because of a weak business and leisure market.
For the year to 30 April 2012, the company reported a GBPP9.3m pre-tax loss, a slight reduction from the previous year’s GBP9.6m. Turnover increased from GBP148.6m to GBP185.3m.
During 2008 RF Hotels agreed a restructuring deal with the Royal Bank of Scotland, its primary lender, to reduce its debt load. As part of that deal, the company sold its Richemond hotel in Geneva for 155m Swiss francs in 2010.
Despite the setbacks, the 11-strong company is continuing to push ahead with expansion, with hotels planned in Jeddah, Marrakech, Cairo and Luxor. Founder Sir Rocco Forte told The London Times that the sale of the Lowry would be the last disposal for the group. He added: “With the financial crisis we were hit very hard and had to batten down the hatches. Now sales levels are ahead of where they were before the crisis and we’re starting to motor quite well again.”
HA Perspective: [by Katherine Doggrell] The downturn was not kind to Rocco Forte, as, although the luxury end of the market bore up well, the company suffered in the wake of some unfortunate location choices. There has been no official word on the Cairo and Luxor hotels, but with the current political issues in the region, and both hotels being government-owned, it is unlikely that they will be opening soon.
Manchester, although less of a war zone, is not a location synonymous with luxury, or one to fit into the ‘London – Paris – New York’ mindset of the cosmopolitan traveller. The company has decided to take advantage of the sudden rush to deals in the UK regions and is prepared to give up its flag in return for the cash if needs must.
But who will buy their wonderful hotel? There is not the same trophy appeal of a luxury hotel in Manchester as there is in London and fewer international businessmen to show it off to should you acquire it. The hotel has, according to The Times, been seeing average room rate of GBP170 and occupancy of more than 70%. Not glamorous, but, if the right price can be agreed, solid.