On 12th July 2004 Paramount Group of Hotels, a collection of 13 four and five-star UK hotels, was purchased by London based Dawnay Shore Hotels PLC. The sale comes one week before Paramount’s 10th birthday.

The entire share stock - comprising an 87 per cent holding by private equity firm Alchemy Partners Nominees Ltd and a 13 per cent management holding - was bought for £215 million. Jones Lang LaSalle Hotels, the world’s leading hotel investment services group, handled the sale.

Close to 2000 staff are employed by Leeds based Paramount Group of Hotels, in 13 properties across the UK, from the five star Imperial Hotel in Torquay to The Stirling Highland Hotel in Stirling and the flagship Carlton Hotel in Edinburgh. Hotel employees are unaffected by the sale. Paramount’s head office operation and senior management team based in Morley, Leeds will continue to manage the group and the hotels will remain branded as Paramount.

The relationship between Paramount’s management team and Alchemy Partners, which began in 1994 with the purchase of four hotels, will continue through Alchemy’s investment in Quintessential Hotel Group; a company established in 2003, comprising 3 properties (The Queens in Leeds, which is in the final stages of a £4 million refurbishment, Chesford Grange Hotel in Kenilworth, Warwickshire and the most recent acquisition The Midland in Manchester). Quintessential hotels will continue to be managed by the Paramount team, branded under the Paramount name and remain unaffected by the deal. Alchemy’s decision to exit the Paramount investment was the conclusion to their original investment plan.

The timing of the sale comes and as both PKF and TRI Hospitality Consulting report a sustained growth in occupancy and average room rates in the UK hospitality industry, following a three year struggle against the affects of foot and mouth, SARS and the war in Iraq. Paramount’s 2001 to 2004 results demonstrated the group’s ability to outperform the industry average for both occupancy and rate – testament, Paramount’s managing director Michael Purtill says, to the strength of the teams across the group.

Michael Purtill says, ‘We are pleased that at the planned exit of Alchemy Partners, our work with Paramount over the last ten years has brought good results for our investors. We are looking forward to working with Alchemy in managing their Quintessential hotels. Naturally I am delighted to be working with Dawnay Shore Hotels in continuing to develop the Paramount group and move the portfolio from strength to strength.’

In 2004 Dawnay Shore Hotels have ambitious plans to develop the portfolio further, and see this group acquisition as an important step in the realisation of their plans.

Current and future business placed in a Paramount hotel is unaffected by the sale.

Dawnay Shore Hotels Plc is an investment vehicle set up by, Dawnay Day Structured Finance Ltd and Shore Capital Group Plc. Anglo Irish Bank funded the £215 million deal.

Paramount Group of Hotels was founded in 1994 by managing director Michael Purtill, the former managing director of Principal Hotels. The group specializes in acquiring under-funded hotels and growing revenue and profitability through finance for refurbishments from investors and profits, and by development of the right teams. The group comprises 13 UK hotels, with over 1800 bedrooms in total. The company operates leisure brand Bodysense in most properties. The head office is based in Morley in Leeds. The group has invested over £70 million in refurbishments and system upgrades across the portfolio since 2000. This year Paramount celebrates its 10th anniversary and is one of the strongest performing small hotel groups in the UK. Group occupancy level is currently high at 79.1% against a UK industry average of 73.3%. Group RevPAR (revenue per available room) has shown year on year to May a growth of 13.5%. ARR (average room rate) is currently outperforming the industry average of £63.97 at £66.16 (PKF Monthly Regional Trends Survey May 2004).

Liz Howe
Group Marketing Manager
(0113 393 6007)
Paramount Group of Hotels (UK)