Ladbroke raises pounds 100m in sale of Langham Hilton

Ladbroke, the hotels and leisure company, yesterday kicked off its long-awaited hotels disposal programme, raising pounds 100m from the sale of the Langham Hilton in central London to Hong Kong-based Great Eagle, writes Mathew Horsman.

The sale will leave Ladbroke with a management contract to operate the hotel, and a spokesman insisted yesterday that clients will "not even notice the difference".

The disposal follows a shift in strategy at Ladbroke. The company is seeking to reduce the amount of capital it has invested in hotel properties, while retaining its strong Hilton brand through management contracts.

The group operates 161 hotels around the world, 58 of which are run on management contracts.

In the UK, its 41 hotels are nearly all owned outright, with the exception of the Langham, located in Langham Place, central London, and two airport hotels at Stansted and Heathrow.

"We have stated clearly that we aim to manage our hotels, and liquidate hotel assets as and when the offers arrive," the spokesman said.

The Langham sale attracted considerable attention, and the price achieved was far in excess of market forecasts.

Under the deal, Ladbroke receives a deposit of pounds 10m, with the balance to be paid by August.

The hotel had operating profits of pounds 7.5m last year, and yielded about pounds 100 a room - at the upper end of market performance.

Ladbroke intends to continue to invest in the hotels market, but is not interested in buying hotel properties outright.

It has ruled out bidding for the 17 Exclusive Forte hotels put up for sale last week by Granada as part of its disposal programme following the pounds 3.9bn takeover of Forte earlier this year.

Great Eagle said yesterday it viewed the Langham purchase as a "long- term investment," and would fund the deal from a mixture of own resources and bank financing.

Great Eagle owns two luxury hotels and three apartment buildings in Hong Kong.

The company has said that it is investigating other acquisition targets in New York, Hong Kong, mainland China and on the West Coast of the United States.