LONDON-Beleaguered hotel chain Le Meridien is to revalue its global portfolio ahead of a possible sell-off. The international hotel chain has appointed Atis Real Weatheralls and Insignia Hotels to carry out a full valuation of the company's 51 hotels as part of a refinancing strategy.
Analysts estimate the current value of the business at £700 million ($1.1 billion) but the Le Meridien has estimated debts of £1 billion ($1.6 billion) compared with a purchase price in 2001 of £1.9 billion ($3.1billion).
Since then the downturn in economies around the world, fear of terrorism, the impact of the SARS virus and the Iraq war has led to a dramatic fall in the tourism and which has hit trading hard. The scale of the crisis in the hotel industry was underscored last week when rival Inter-Continental became the latest hotel group to issue a profits warning.
It also emerged last week that Le Meridien had breached its banking covenants and shareholders had decided to write off the value of their investments and turn over control of the company to its lenders. The UK's leading bank, the Royal Bank of Scotland (RBS) is facing losses of £100 million ($165 million) and Japanese bank Nomura has written off £213 million ($350 million). Other investors in Le Meridien – which include Abbey National and venture capitalist Alchemy Partners – have also written off their losses.
First signs of the scale of the crisis at Meridien emerged in January when The Sunday Telegraph reported that Meridien was struggling to pay the rent on 12 properties, including the Waldorf and Grosvenor House hotels in London, it had sold and leased back to RBS in a £1.25 billion ($2 billion) deal intended to finance the acquisition. The terms of the leases were renegotiated.
Then in March Meridien revealed it was looking to sell more properties to raise £300 million ($490 million) to repay debt. Now it looks as if further disposals could be on the way. Meridien operates 51 hotels. Of these, 43 are in Europe, including the UK, and eight are in the Far East and America.
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