The head of one of Birmingham’s highest profile property companies has explained why its regional hotel arm has been merged into its London operation.

Knight Frank, based at One Colmore Row, said the decision to consolidate its Midlands hotel business from Birmingham to London was the result of a “service line review”.

The agency, which has a significant presence across all sectors including residential, commercial and industrial, said in a statement that the company would continue to provide hotel advice across the UK and Europe through its 25-strong hotel service line and through hotel specific representation in London, Southampton, Exeter, Leeds and Glasgow.

Mark Swallow, head of the Birmingham office, said: “It is with sincere regret that we have taken the decision to close the Birmingham hotels division, although we understand that the national hotels service line is better served from London.

"This has absolutely no effect on the everyday operation of the Knight Frank commercial and residential property services that are provided by the Birmingham office, and the office will continue to look to bring national operators into the Midlands.”

The decision to consolidate its hotels division comes at particularly challenging time for Knight Frank which, along with the majority of estate agents, has been hit by the downturn in the housing market where it enjoys a significant market share in both the upmarket residental sector as well as in city centre apartments.

Last week it was revealed that the company was scaling back its Spanish operations with around a quarter of its staff losing their jobs.

Chris Bell, Knight Frank’s managing director for Europe, reportedly said the high staff levels were a result of the Spanish construction boom which had now stalled as sales fell by around 10 per cent.

Knight Frank’s Spanish business enjoyed a profit of just under €5m (£3.9m) last year.