Satellite TV for all to boost profits

JOHN SHEPHERD

Satellite television and telephones in every room and newspapers delivered every morning will give the 127 Travelodge hotels the impetus to move slightly up market and charge higher prices.

The hotel and leisure industries are rapidly dividing into two halves. One side is making a steady recovery from the recession - where Granada clearly reckons it will feature - while most companies on the other side are destined to be remembered as victims of the greed of free-spending 1980s.

Granada has argued that it can raise hotel prices and still extract cost savings out of Forte through redundancies, and stronger buying power.

The takeover victory comes as analysts are forecasting growth of 2.5 per cent in real disposable income for this year - with most of the increase earmarked for leisure spending. Granada is in a good position to take advantage by moving many of Forte's hotels to higher market tiers.

Forte was late to rise to the challenge, hanging on to the well trusted business methods in the belief - and it was not alone - that the recession would be short-lived. Forte was quite happy to promote the notion that it was the single biggest hotel operator in the UK, but 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 until Granada launched its assault.

Prospects for the hotel and leisure industries, which are increasingly interlocked, 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.