|By Jonathan Prynn, Evening Standard, London|
Knight Ridder/Tribune Business News
Aug. 6, 2003 - The Savoy, London's best-known luxury hotel, has defied the doom and gloom threatening the top end of the industry with a surprise upturn in profits.
The 263-room hotel, which today celebrates its 114th birthday, made a pre-tax profit of UKpound 11.87 million in 2002, up 13 percent on the UKpound 10.5 million the previous year, according to accounts filed recently with Companies House. The profit was made on turnover of UKpound 40.8 million, little changed on the UKpound 40.7 million of 2001.
The hotel, which is now owned by US private equity firm Blackstone, has -- like all its competitors -- suffered over the past two-and-a-half years from the sharp downturn in American visitors, particularly after the 9.11 attacks.
The Savoy's management said it had been able to ride out the worst of the slump through an aggressive programme of cuts in room rates, heavier marketing to the domestic market and a UKpound 60 million upgrade of the hotel.
Jean-Jacques Pergant, senior vice president of the Savoy Group, which also includes Claridge's, the Berkeley, Simpson's in the Strand and the Connaught, said there had been greater focus on the leisure market, particularly "people from the counties further north" enticed to London by West End shopping or eating-out tie-in deals.
The investment in the world-famous art deco icon has included 56 new rooms and a controversial overhaul of the legendary Grill, the power broking restaurant of choice for many politicians, financiers and captains of industry. The gloomy dining room was spruced up earlier this year with a redesign by Barbara Barry. Petrus chef Marcus Wareing was installed to run the kitchen.
The upturn in profits comes as much of the rest of London's luxury hotel market struggles with still grim trading conditions. Last month the Grosvenor House and Waldorf hotels were placed in administrative receivership after the collapse of a deal to rescue their parent hotel chain, Le Meridien. Russell Ketts, managing director of specialist hotel consultancy HVS International, said: "Blackstone do not just sit back and wait for things to happen, they employ people who know the hotel business well and who manage the assets. It is feather in their cap to be able to boost earnings when the London hotel industry is under such pressure."
Blackstone acquired the Savoy and its four sister hotels for UKpound 520 million in 1998.
The Savoy was originally conceived as an upmarket dormitory for Richard D'Oyly Carte's Savoy Theatre when the Gilbert and Sullivan impresario decided audiences needed somewhere to bed down for the night after performances.
It opened on 6 August, 1889, and soon gained its slightly raffish reputation for glamour and luxury. Legendary chef Auguste Escoffier created dishes for the likes of the Prince of Wales and Sarah Bernhardt. A tradition that a bell would be rung whenever a member of royalty entered the hotel had to be abandoned because of the frequency of their visits.
Sir Elton John once caused serious damage to rooms below his when he left his bath running while on the phone.
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UKpound preceding a numeral refers to the United Kingdom's pound sterling.
(c) 2003, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News.