Paramount Hotels is bought for £215m by Dawnay Shore Hotels

Today also saw the first day of trading on the Alternative Investment Market of the Hotel Corporation, which has been set up to allow investors to gain an interest in Dawnay Shore Hotels.

The Hotel Corporation has raised £22m through the placing of 22 million shares at £1 apiece.

Dawnay Shore Hotels was created by investment firms Shore Capital and Dawnay, Day to buy Paramount, which comprises 13 four-and five-star hotels. It has bought the 87% stake held in Paramount by private equity firm Alchemy Partners and the remaining 13% held by Paramount management.

Paramount's senior management team - including founder and managing director Michael Purtill, sales and marketing director David Taylor, and finance director Ian Goulding - will remain with the group.

The deal does not include Quintessential Hotels which was set up in 2003 as a separate company by Paramount's management team in concert with Alchemy Partners.

Quintessential currently owns three hotels (the Queens in Leeds, Chesford Grange hotel in Kenilworth, Warwickshire, and the Midland in Manchester) which are managed, and will continue to be managed, by the Paramount team.

Purtill said Dawnay Shore Hotels wanted to expand to 50 hotels, and he expected it to announce the purchase of a "complementary" four-star hotel group within the next two to three weeks.

Dawnay Shore Hotels and the Hotel Corporation are expected to have a five-year life before maximizing the value for shareholders through a trade sale, a flotation or a transfer of the hotels into a property investment fund.

David Pantin, former managing director of Rocco Forte Hotels, is chairman of Dawnay Shore Hotels. Colin Campbell, who was an executive with Stakis and Hilton hotels, is to lead the new hotel management division.

by Angela Frewin

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