THE town house hotel sector, currently enjoying particular success in London, is showing signs of proving as popular with provincial hoteliers.

Town house hotels, as the name denotes, are small, personally run town centre hotels which concentrate on privacy, high quality room service and luxuriously furnished bedrooms and suites.

This due to the quality and simplicity of the concept and the concentration on a rooms revenue-driven business creating a highly profitable hotel product, Dominic Murray, Associate of Knight Frank Hotels London office, said: "The three Hotel du Vin properties in Winchester, Bristol and Tunbridge Wells are all proof of the success of the town house concept in the provinces. says Murray.

"A fourth Hotel du Vin is scheduled to open in 2001 at Birmingham. Judging by the growing number of Knight Frank clients seeking opportunities to develop hotels in this market sector, the town house concept could well hold the key to future prosperity for provincial hoteliers."

In 1998 nearly 60 per cent of the properties in this growing sector were located in London., according to a survey conducted by TRI Hospitality Consulting. The popularity of these hotels in the capital led by companies such as Firmdale Hotels and Eton Town House Group - was illustrated by a recorded average room occupancy in 1998 of around 83 per cent, an achieved average room rate of £181.01., and average gross operating profits totalling 48 per cent of revenue. There were then only 21 town house properties in the provinces. They enjoyed similar success to those in London, although on a different scale - recording an average room rate of around £99.30, and a gross profit conversion of 42 per cent. In the last ten years the supply of town house hotels in London has grown by some 230 per cent, whereas outside the capital it has risen by about 80 per cent - a rate which could well accelerate over the coming years.

Mr Murray adds: "Though provincial town house hotels are not as profitable as in London, Knight Frank agrees with TRI Hospitality Consulting that they compare favourably with mainstream provincial upper-market hotels and are an attractive alternative to traditional hotels, not least due to their simplicity."

"They are often of historical architectural interest and do not have public rooms or formal dining arrangements traditionally associated with hotels, but are usually in areas well served by restaurants.

"The provinces are filled with hotel properties which can be readily adapted to the town house concept, which aims to provide exclusive accommodation to a niche market - attracting a wide customer base, enabling high operating profits to be successfully achieved."

He believes that town house hotels can provide an ambience and individual experience to executives, which they may not readily find in a traditional provincial hotel.

In London the tourism market is of equal significance as the corporate market for town house properties - a factor which is less true in the provinces, where a surprisingly high proportion of guests pay full published room rates.

The likely predominance, therefore, of the corporate market using provincial town house hotels provides an added bonus for the hotelier. "Corporate leisure business," says Murray, "protects town house hotels against the seasonal slumps associated with the leisure market and to a lesser extent, the cyclical slumps in commercial demand."

To an extent, he adds, the majority of town house transactions on average achieve a more substantial price per bedroom than in comparison to the traditional hotel. This is, therefore, reflected by premium values being achieved for town house hotels. Knight Frank estimates that the real 1998 and 1999 average transaction prices per room for UK town house properties was in the region of £150,000, compared with the average of £120,000 per bedroom for UK quality hotels over the same period.

Murray concludes that three broad characteristics may be discerned in Town House Hotel customers: * being prepared and having the ability to pay premium hotel rates * having a desire for an intimate and homely atmosphere * having a greater preparedness to mix business with pleasure

"There is no shortage of such customers outside London. The growth in town house hotels is indicative of the attractiveness to this sector by investors and operators." he says. "In general, the town house hotel supply is increasing, and this growth could well become as rapid in the provinces as it is in London. Who knows - the town house concept could well be the future, for example, for some of our UK holiday resort hotels?"