Regal in talks to buy hotel rival

REGAL HOTELS, the three-star hotel group that abandoned plans to go private late last year, yesterday confirmed that it is in talks to buy privately controlled County Hotels for about pounds 120m.

County Hotels is one of Britain's largest privately held hotel chains, with a portfolio that includes 25 properties including Burnham Beeches, the occasional residence of the England football team. Most of the hotels are in the three-star category and fit well geographically with Regal's chain.

County Hotels, a pounds 91m management buyout from Queens Moat Houses in 1997, is controlled by a venture capital consortium led by Duke Street Capital, the private equity firm which had reportedly hoped to float the business last year.

Regal, based in Newbury, Berkshire, has been upgrading its portfolio of 91 hotels. It has a three-year programme to spend pounds 80m refurbishing its existing chain under the Corus brand name. It bought the White Hart chain from Forte in 1996 and Country Clubs the following year.

Also in 1997 it sold 20 per cent of its equity to Regent Corporation for pounds 40m, and used part of the cash to fund the purchase of a 49 per cent stake in the Plaza Hotel near London's Hyde Park, where it has the management contract. The rest was spent on refurbishment. It also sold 14 hotels last year.

Regal said yesterday that any acquisition would be made through a joint venture company and would not require the raising of additional funds.

Regal says the three-star sector accounts for two-thirds of the market but suffers from a lack of branding. Regal shares closed unchanged at 32p.