The company behind the UK's first buy-to-let hotel has gone into administration.
GuestInvest, founded in 2003 by businessman Johnny Sandelson, invited investors to buy a room in a luxury hotel, with the option of staying there for up to 52 nights a year at no extra charge, and take the rent from guests who stayed there in the owner's absence.
Deloitte was appointed as administrator to the business yesterday. It said it would assess the position of the group before determining the best outcome for creditors.
The scheme, advertised under the slogan "Earn money while others sleep", is said to have brought returns of more than 8% to investors.
GuestInvest owned five luxury hotels in central London, including celebrity haunt Blakes in South Kensington. Regarded as the jewel in the company's crown, the hotel is unaffected by the administration and is operating as normal.
The company's first venture, GuesthouseWest - based in Westbourne Grove - is not part of the group and also continues to trade normally.
The group paid £34 million for Blakes, reported to be the London haunt of Robert De Niro, Uma Thurman and Diana Ross.
The hotel, which can command nearly £1,000 a night for its best rooms, was purchased by the group from actress and designer Anouska Hempel last year.
The group is said to have attempted to sell the hotel's 39 rooms for £1 million each, but failed to attract investors.
The announcement is yet more bad news for the struggling hotel industry.
Yesterday, Malmaison hotel owner MWB announced it had seen a softening in room rates due to a reduction in corporate demand.