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LONDON-Marriott International has emerged as front-runner to take over the leases on Grosvenor House and Waldorf hotels in London’s West End.

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

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

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

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