The London landmark will be managed by Canada's Fairmont Hotels & Resorts, in which Prince Alwaleed has a 5 per cent stake. 'London is an extremely challenging market - in New York you might see six or seven major hotels come up for sale every year, whereas the last prestige hotel to come on the market here that I know of was the Berkeley in the mid-1970s,' says Ramsey Mankarious, chief executive officer of London-based Cedar Capital Partners, which advised on the transaction. 'So we now have a huge competitive advantage.'

Cedar is also acting as manager and investment adviser to a joint venture between KHI, HBOS and Fairmont, provisionally called FHR European Ventures, which plans to target the luxury hotel market in Europe. Set up in late December, the venture has already acquired the Monte Carlo Grand Hotel in Monaco. Negotiations for the Savoy were already at an advanced stage when FHR was formed, although it may later be absorbed into a common portfolio (MEED 7:1:04).

HBOS is preparing to arrange initial debt financing for the venture, which has a target fund of $1,500 million. FHR will initially be supported by equity payments of about $390 million, 50 per cent from Bank of Scotland and the remainder equally from KHI and Fairmont.

The joint venture is also bidding for the Intercontinental Paris hotel, which was put up for sale in 2004 for an estimated $350 million as part of a wider asset sell-off by the US-based Intercontinental Hotels Group. Among the bidders is former Savoy Group owners the Blackstone Group.

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