THE company behind Southampton’s Highfield House hotel has gone into administration because of cash-flow problems.

Folio Hotels, which runs 36 hotels in the UK and has an annual turnover of approximately £70m, said high rents and expensive refurbishments had led to the collapse.

It follows Southampton’s Dolphin Hotel into the hands of administrators, after it emerged the historic high street business was in serious difficulties last week.

According to administrators MCR, the group is likely to be sold as a going concern. The parent company has folded 18 months after applying the finishing touches to a £1.5m makeover of the former lodging house into a business hotel.

All 71 bedrooms at the hotel were converted from selfcatering lodging rooms to a £69 a night business friendly venue by May 2007.

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.

Paul Clark from MCR remained upbeat about the group’s prospects: “All the hotels in the group will continue to trade while a buyer is sought as a going concern.

“We are confident that there will be a significant amount of interest.”