Tim Smith, director of HVS London, the hotel consultancy, has issued the following statement regarding today’s news that von Essen Hotels has fallen into administration. If you would like further comment from Tim please either call me on 07973 789853 or Tim on the numbers below.
“The von Essen group has long been the subject of informal speculation largely due to the large number of hotels acquired in a relatively short space of time, the reliance on up-market guests wanting to stay in provincial UK locations, and the reported prices paid for the hotels.
“Each of the group’s 28 hotels is an individual gem in its own right and it is always questionable whether such hotels, especially ones as small as von Essen’s, can produce enough net income to support the infrastructure of a group. There is little in the way of economies of scale to be factored into their operations.
“However, it is a sad day as von Essen had found a successful and 21st century use for some stunning and important properties. It further proves that the provincial UK hotel market is still very tough and price sensitive and whilst there remains demand for such properties, perhaps not to the level to cover the substantial costs of running such high quality hotels and the upkeep of such historic buildings.
“Hotels in most of the UK provinces are still struggling to produce pre-recession levels of occupancy, and room rates are still well down; it is unlikely that von Essen’s hotels will have been able to buck the operational trends which no doubt contributed to their demise.
“It is unlikely that there would be a single buyer in the offing for the entire collection, and it is equally unlikely that such a buyer would be willing to pay a premium for a significant number of hotels in this category. The more likely scenario is that the group will be split with interest and demand for the core assets as a smaller portfolio with others sold individually. The problem will be finding investors prepared to satisfy the requirements of the National Trust for properties such as Cliveden.
“The failure of any hotel company inevitably reflects badly on the sector, raising questions concerning liquidity, gearing, performance and profitability, even in respect of those hotels which are performing well.”
Tim Smith, director, HVS London.
Tel: +44 20 7878 7729
Mobile: +44 77 2578 1043
