Principal announces expansion plans after £255m Nomura deal

Principal Hotels said this week that its £255m sale to Japanese investment bank Nomura International would allow it to add hundreds of bedrooms to its UK hotels and press ahead with plans to buy new hotels in Europe.

The Harrogate-based company of 17 mostly four-star properties was owned by a consortium owned mainly by venture capital firms Bridgepoint Capital and PPM Ventures.

Last Friday it was sold to Nomura's Principal Finance Group, headed by financier Guy Hands.

Principal has 13 hotels in the UK, one in Dublin, one in Amsterdam and two in Copenhagen. They have about 2,750 bedrooms, the flagship hotels being the Russell in London, Selsdon Park near Croydon in Surrey and the Palace in Manchester.

Juergen Bartels, former chief executive of US-based Starwood Hotels, joined Nomura in December and now replaces John Lewis as chairman of Principal. Lewis, who had an equity stake in the company, has left.

Last year Principal admitted it was holding talks with a view to a possible merger or takeover, but never revealed with whom it was negotiating. De Vere was one name mentioned (Caterer, 20 April 2000, page 7).

Last week Principal denied rumours it had been bought by an American company (Caterer, 25 January, page 5).

Tony Troy, managing director, said Principal had been talking with Nomura since November. "The group is looking to spend £50m in the existing portfolio and we have opportunities to add at least 300 bedrooms," he said.

Troy, who last year said Principal would like to buy its next hotel in Germany or Switzerland (Caterer, 24 August 2000, page 12), said it would continue to look at Europe.

"Our ambition is to be a European hotel group and Nomura would like that."

Bartels is also believed to be heading Nomura's bid for Granada Compass's Forte hotels.

Viewpoint by Guy Hands in Caterer next week.

by Louise Bozec and David Shrimpton