Roll call of the winners and losers

JOHN SHEPHERD

The hotel and leisure industries are rapidly splitting into two. One side is making a steady recovery from the recession, while most of the other is destined to be inscribed on an infamous roll call in memory of those who succumbed to greed and the excesses of the free-spending, care- free 1980s.

Granada is convinced it will feature high up on the winners list. It has argued that it can raise hotel prices and simultaneously extract plenty of cost savings out of Forte through redundancies, and from the benefits of stronger buying power - particularly for food.

The take-over victory comes at a time when analysts are forecasting growth of 2.5 per cent in real disposable income for this year, on top of the 2.25 per cent recorded last year. Most of this increased spending power is probably earmarked for the leisure markets.

Granada is in a good position. It will be able take advantage of the expected uplift in spending by repositioning many of Forte's hotels in higher market tiers, mainly by beefing up the customer offering. Installing satellite television and telephones in the 127 Travelodge hotels, for instance, will give it leverage to charge higher prices. The company, however, will not be able to become blase about its approach to the leisure market which is still nursing many recession-inflicted wounds.

There are many companies that are sitting precariously on the fence of survival and will pounce on any mistake by Granada and pitch for the customers who will shun the so-called added value from being able to watch pay-TV.

Forte was late to rise to the challenge, hanging on to the well trusted business methods in the belief that the recession would be short-lived. It was quite happy to promote the notion that it was the single biggest hotel operator in the United Kingdom, but put into context it was nothing other than a small fish in a small pond. Investors had to foot the bill for the management's mistakes. Dividends were cut a couple of years ago and there was little prospect of any restoration of dividend payments being made until Granada launched its assault, leading Forte to promise the earth in exchange for investor loyalty.

Prospects for the hotel and leisure industries may look considerably brighter than for some time but Granada, despite its victory, is not going to be in a position to dictate the play.