Forte profits set to rise by £100m

By Andrew Sangster

Granada is on course to deliver an extra £100m of profit from Forte assets, claimed chief executive Charles Allen last week.

"The cost-savings we outlined during the bid are feasible. They will be delivered," he told Caterer. The target would be achieved by trimming overheads, exploiting a buoyant hotel business, and turning around the previously poorly managed roadside restaurant business, Mr Allen added.

Rack rates at London hotels have been raised by up to 15% since the takeover, and Posthouse rates this week went up in a new banded structure of £69, £79, £89 and £99.

"Forte was previously not getting the reward for its investment. Prices were significantly lower than the rest of the marketplace," claimed Mr Allen.

Gross central costs at Forte were running at more than £70m a year prior to the takeover and Granada is now working on cutting these back. Under review currently are the reservations and IT functions.

A further shake-up of management in the hotels division is also under way. It will result in more redundancies, but Mr Allen refused to disclose figures.

"We are asking a series of questions of each business unit as part of a far-reaching reorganisation," he said. Staffing levels at individual hotels are not likely to change, however.

Alfonso Giannuzzi, who had been running Forte's joint venture in Italy with Agip, has stepped-in as managing director of the international hotels division to replace Randolph Guthrie, who resigned earlier this month.

And Peter Cardnell, who heads the London hotels portfolio, has added all of Forte's properties in the capital - as well as the Criterion and Café Royal restaurants - to his responsibilities.

In February and March of this year, the London hotels saw a five percentage point increase in bedroom occupancy over the same months last year. The UK provinces were also up five percentage points and the international division was ahead by three percentage points.

Granada looks unlikely to make further hotel disposals for some time, although it has conceded it might sell off "trophy" hotels individually.

• Alpha Airports Group, the in-flight catering and retail group, in which Granada has a 25% stake, revealed flat pre-tax profits last week, due to the loss of catering contracts in Paris and New York.

Pre-tax profits dipped from £21.4m to £20.6m in the year ended 31 January 1996, despite a 16% improvement in turnover to £552.9m.

However, the news was overshadowed by Granada's confirmation that it would sell its stake to a "strategic buyer" by September.