Fitzpatrick Hotels to invest £18m

Fitzpatrick Hotels is set to transform the scale of its operations in New York with a $27 million (£18 million) investment in a new hotel near Grand Central Station. The hotel, the Fitzpatrick Grand Central, is scheduled to open next May and will be the group's second hotel in New York.

Fitzpatrick is also on the lookout for another city centre Dublin hotel with at least 130 bedrooms following Bord Pleanala's refusal of planning permission to convert the Ansbacher building in Leeson Street to a 140bedroom hotel. Fitzpatrick bought the Ansbacher building and two adjoining buildings on Leeson Street for around £4 million.

Fitzpatrick chairman Mr Paddy Fitzpatrick has also told The Irish Times that the group is likely to float on the stock market in the medium term - within three to five years.

"We have expansion plans, and I would like to see a Fitzpatrick hotel in every Irish city. I don't think we could do that independently," he said.

In January 1996, the venture capital group ACT injected about £6 million into Fitzpatrick for a reported 35 per cent stake, the first time that the family-controlled group brought in an outside investor and shareholder. That deal also involved the rescheduling of loan stock and banking facilities of around £20 million.

In New York, Fitzpatrick has linked up with a venture capital group, Blackacre Capital, to buy a large property beside Grand Central Station which will be converted into a 156-bedroom hotel. The partners are putting up around 40 per cent of the $27 million purchase and development costs in equity, with the balance coming from bank borrowings. Fitzpatrick will also, however, have the fee-earning management contract.

Fitzpatrick and Blackacre will have equal stakes in the joint venture, but Fitzpatrick has the right to buy out its American partner "in the medium term," according to Fitzpatrick chairman Mr Paddy Fitzpatrick. This buyout option is likely to be exercised within five years.

The group already has a 92-room hotel in Manhattan, "but we were turning more people away than we were sleeping", said Mr Fitzpatrick. The room rate at the new hotel will be similar to that at the Fitzpatrick Manhattan - $245 for a room and $295 for a suite.

The group has been on the lookout for another hotel in New York for some time, but in this case the approach came from Blackacre, a venture capital group with interests in a number of hotels in the US. The 75,000 square foot hotel at Grand Central has 10 floors which will be converted into 156 bedrooms, suites and a penthouse. "The property was formerly a hotel and will now be restored to its former glory," said Mr Fitzpatrick.

As with the Fitzpatrick Manhattan Hotel, the new hotel will be targeted largely at the Irish corporate market. "We still see major opportunities in Ireland and I would like to see a Fitzpatrick hotel in every Irish city. I would also love to find an alternative downtown hotel to the one in Leeson Street that fell foul of the planners," he said.

He added that the group has yet to decide whether to submit a new hotel design for the Ansbacher site or simply sell the property. If a decision is taken to find an alternative city centre site, then Fitzpatrick would either buy or build a hotel.