CONCERNS over the future of Southampton’s Highfield House Hotel have been allayed by a deal which sees the site form part of a management buy-out.

There were question marks over its future after its parent, the 36-strong Folio Hotels group, went into administration blaming high rents and expensive refurbishments for the collapse.

Now the Highfield, along with 17 other Folio hotels, will be run by a new company, Mulbourn Limited, which will continue to trade under the Folio Hotels banner.

Using funding provided by the hotel’s landlords, the management team and private equity in a deal led by BTG McInnes Corporate Finance, the new company, is expected to save 1,200 jobs around the country.

Standing on the corner of Highfield Lane and Shaftesbury Avenue, the building is one of the area’s best known buildings. It was bought by a property developer in 2002 and was widely assumed to be destined to be broken up into flats.

Instead it was converted into profitable serviced apartments before being sold to the newly formed Folio Hotels group in 2005. All 71 bedrooms were converted from self-catering lodging rooms to a £69 a night business friendly venue by May 2007.

Led by managing director Matthew Welbourn and finance director Alan Murray, who held similar roles in the previous company, about a dozen former senior managers will also take a stake in the new company. They are forecasting a turnover of £48m in its first year of trading.

Matthew Welbourn said: “This is the start of a positive new chapter for Folio Hotels. We have reached an agreement over the cream of the properties in the portfolio. They are in great locations and have recently been refurbished at a cost of £35m.”

“There is no doubt that trading conditions will be tough over the next few months, however we believe we are well poised with an excellent product to combat the current downturn in the economy.”