The two five-star hotels, among the most prestigious in London,were put into administrative receivership at the end of last monthbecause Le Meridien could not pay the rent due on 11 hotels ownedby Royal Bank of Scotland (RBS). The £1.25 billion ($2 billion)sale-and-leaseback agreement between Le Meridien and RBS in 2001left the hotel group with a residual interest in the ownership ofthe hotels. A lease technicality meant the only way RBS could takeback control of the two London hotels was through the appointmentof new operators.

Recession, war in Iraq and the Sars outbreak have led to a slumpin the number of tourists, hitting earnings across the hotelsector. This meant Le Meridien was unable to generate enough incometo meet the quarterly rental payments owed to RBS and city analystsquestion whether Marriott will find the market any easier.

Marriott is also one of several groups to express an interest inthe remaining RBS-owned hotels but it will have fend to off bidsfrom Hilton Group, Accor of France and Fairmont Hotels, the USgroup in which Prince Alwaleed has a stake. A separate £100 million($159.3 million) rescue deal involving the other 126 Meridienhotels is close to being signed by Lehman Brothers and Hyatt, theUS hotelier.

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