The Holiday Inn Express City Centre and Holiday Inn Aberdeen West were sold for an undisclosed sum, and 125 jobs were saved in the process.
Why the hotels were up for sale
EDC went into administration following "severe cash flow problems" as a result of the downturn in the oil and gas sector. They also stated that competition was high in the area thanks to the creation of several new build hotels.
It's claimed that the revenue per available room (revpar) in the area during the fourth quarter of last year fell 22%. So it is no surprise that despite high occupancy levels, the owners were facing cash flow problems.
Tom MacLennan and Iain Fraser, who are both partners of the FRP Advisory, were appointed joint administrators of the two hotels. They decided to continue trading while seeking a buyer.
Since the sale, Fraser stated "The administration period provided a vital cushion to allow for a thorough marketing process while the hotels continued to trade as normal".
By entering administration with intention to sell, pressures placed on the business by creditors were lifted and allowed the hotels to create a steady income.
The administrators chose JLL's Hotels & Hospitality Group to sell the two sites on the behalf of the previous owner. They charged with seeking a figure in excess of £7m, and subject to existing franchise agreements with InterContinental Hotels Group (IHG).
Who are the Cairn Group?
The family-run group are based in Newcastle and have a portfolio of over 31 hotels and 30-plus bars across the UK. This includes over 3,000 rooms, 665 of which were bought in 2016 as part of the biggest hotel transaction by a North East company that year.
They bought the hotels with support from Mincoffs Solicitors LLP and HSBC Bank plc. Adding another 241 beds to their portfolio.
The group already owns and operates two hotels within Aberdeen - the Station Hotel and Best Western Summerhill Hotel and Suites. This gives the group confidence that they can turn the fortune of the hotels around as the regional market recovers.
Richard Warren, Cairn Group’s finance director said:
“We are pleased to announce that Holiday Inn Express City Centre and Holiday Inn Aberdeen West have joined our portfolio. Aberdeen is still a busy thoroughfare for the corporate audience and as a result, the convenient locations of the hotels make them popular with visiting trade as well as tourism.
“It’s fantastic we’ve been able to retain all of the staff based at the two sites who are dedicated to providing excellent customer service and comfortable stays for guests.”
If you think administration might be right for your business, get in touch with the experts at Company Rescue today.