Norwich Union buys nine hotels

HILTON GROUP, owner of theHilton International chain, the Stakis leisure group and the Ladbroke betting shops, has exchanged conditional contracts with Norwich Union, the life assurance company, to sell nine hotels for pounds 68.8m.

The Hilton hotels, located across England and Scotland, will be managed under a pounds 1.4m, 34-year leasing agreement by Jarvis Hotels, the three-star chain headed by former Hilton boss John Jarvis. Norwich Union's purchase of the properties will bring the total number of hotels in its portfolio to 20 but the nine former Hilton hotels, which had a combined turnover of pounds 23.7m last year, will now be branded under the Jarvis name.

A spokesman for Hilton said the company had decided to divest itself of the hotels to reduce its pounds 1.4bn debt. He added: "These are small, provincial hotels that do not fit the Hilton brand standard."

The nine properties were among 13 hotels Hilton put on the market in May. The company has already sold one of them for an undisclosed sum and is still in negotiations to sell the last three. Further rationalisation of the group's interests is expected following its pounds 1.16 acquisition of Stakis in February, which doubled Hilton's room count.

Mr Jarvis described the deal as "elegant" and said he hoped that in a full year, the new hotels would contribute pounds 2m to his company's profits before tax, which last year reached pounds 32m.

Hilton shares rose 6.25p to 245.25p; Jarvis Hotels rose 2p to 147p and Norwich Union rose 2.25p, to 402.5p.