Under the terms of the deal, management of the five-star hotel will be taken over by Canadian firm Fairmont Hotels & Resorts, in which the prince owns a 5% stake. The name will also be changed to The Savoy, a Fairmont Hotel. The new owners also gain control of the Savoy Grill, a favorite among local politicians.

"As a long-term investor in Fairmont, we believe our joint venture's focus on European luxury hotel acquisitions is an excellent strategic choice for growth," says the prince, a nephew of King Fahd and with an estimated euro 17.3 billion ($22.6 billion) personal fortune.

One of the Strand's landmarks, the hotel was built in 1889 by Richard D'Oyly Carte, founder of the Gilbert and Sullivan opera company. Known for hosting society events, it has long been a favorite with guests including Winston Churchill, who took up temporary residence there as prime minister during the Second World War.

Quinlan Private, the consortium that sold the Savoy, bought it in May last year in a euro-1-billion ($1.4 -million) purchase of the Savoy Group from US venture capitalist the Blackstone Group. The hotel will be the Saudi venture's second acquisition in Europe in as many months. In December, it purchased the Monte Carlo Grand in the first transaction of a joint venture that aims to invest in luxury hotels across Europe. Market speculation suggests the prince intends to invest euro 43 million ($ 56.4 million) in the Savoy.