Von Essen hotels goes into administration
The Von Essen hotels group has been placed into administration following rising debts, reported to stand at over £250m. The group, which operates such renowned spa hotels as Royal Crescent in Bath and New Park Manor in the New Forest, has 27 properties across the UK and one in France. Its financers appointed administrator Ernst & Young to handle the process after Von Essen failed to meet the terms of its loan repayment deal. Commenting on the news, Tim Smith, a director with hotel valuation and consulting organisation HVS London, said, '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.' He added: 'Each of the group's 28 hotelsis 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 netincome to support the infrastructure of a group. There is little in the way ofeconomies of scale to be factored into their operations. '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 willbe 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.' In its last published accounts, Von Essen posted a loss of £3.2m for 2009.