Le Meridien maintains it's business as usual despite takeover talk
There is mounting speculation that Hilton and Marriott are closing in for a takeover of troubled Le Meridien.<br><br>
Le Meridien’s Middle Eastern representatives have dismissed suggestions that the group’s financial problems may affect its ability to operate in the Middle East. According to the UK’s Sunday Times newspaper, international hotel groups Hilton and Marriott have approached banks controlling Le Meridien with proposals to take over the management of their troubled rival.
Le Meridien is struggling under a $1.6 billion debt pile; its business has been hit hard by the worst downturn in the hotel sector for more than a decade.
“The issues raised are about ownership, financing and debt restructuring, not about the day to day operations of our hotels,” Le Meridien told Hotelier Middle East in a statement. “Reports surrounding discussions with other international hotel operators are purely speculative. Le Méridien is an excellent brand with a first class collection of assets, which would understandably make us quite attractive to other companies. However, we have received no offers nor have we solicited offers from other groups.”
In the Middle East, the chain is working on a destination marketing strategy to counteract the downturn in global travel and pursuing an aggressive marketing strategy.
The Sunday Times report stated that creditor banks had taken control of Le Meridien and its equity shareholders had written off the value of their stakes. The banks in turn were said to have asked rival hotel operators to consider running the business on their behalf.
Analysts believe that Hilton and Marriott would be keen to add the chain to their own portfolios, but a deal could prove too complicated to clinch because of the number of banks involved. At the time of going to press, a crisis meeting between the banks and the Le Meridien board was fixed for May 19 to help lenders chalk out their strategy. They have the option of removing the existing management and bringing in a fresh team or putting the company into administration.
Deloitte & Touche, the accountant, has been called in by the management of Le Meridien Hotels to draw up a rescue plan for the beleaguered chain and it is said that its Amsterdam property, the Apollo, is up for sale to create cash. The scale of Le Meridien’s problems emerged when it was revealed that investors in the hotel group, including the Royal Bank of Scotland and Nomura International, had written off more than US $600 million and handed over control to a consortium of lending banks.