GHL Gresham Hotel

RNS Number:4322X
Gresham Hotel Group Plc
19 June 2002


CHAIRMAN'S ADDRESS TO THE ANNUAL

GENERAL MEETING - 19 JUNE 2002



When we spoke last year we were still assessing the impact of the Foot & Mouth
Disease epidemic on the short term and medium term prospects for the company.

We were counting on the effects being of a relatively short term nature and were
optimistic about a trading improvement in the second half of the year, in
particular.

Following the tragic events of September 11th in the United States all optimism
was put aside as it became clear that the impact of that day on national and
international trading was not just deep but was also likely to be longer term,
as businesses around the world adopted a defensive attitude to all expansion
plans and developments.

The impact on tourism was drastic and the intervening period has seen the demise
of airlines and a radical re-appraisal of the prospects for the hotel industry
round the world. This impacted on all aspects of your group's business including
tourism, leisure and corporate business. The results for the year bear witness
to this new situation and the trend continues in the early part of this year.

In common with many other businesses we remain hopeful that the second half of
2002 may see a turnaround in business confidence and some re-establishment of
the levels of business which we had prior to September 11th. Even this, however,
must be tempered by the effects of the succession of warnings being issued by
the United States and other governments regarding further anticipated acts of
terrorism.

Strategy

Your Board reviewed its strategy plan in the light of the changed world economic
circumstances and decided that the fundamental strategy stated to you, the
shareholders, over the last year or so would remain intact with the exception of
a decision that, in the short term, the emphasis would switch from acquisition
of new properties to a policy of completely upgrading existing properties so as
to ensure that in a continuing difficult market your group would have a product
which would be highly desirable and would become a preferred option in a new
market environment where supply might exceed demand.

Branding

The decision to re-brand the company has proven to be a correct one. As we
discussed last year branding is much more than a change of logo or signage. It
involves a commitment to establish a level of product and service which will
lift the image and position of your group to a completely new level.


In respect of the properties most of you will have seen the radical changes
effected in the lobby of this hotel which is now of the highest standard.
Comparable work has been done in other parts of this property. We now believe
that it is a hotel of exceptional quality.

The Gresham Memphis ground floor has been completely redeveloped and work is
continuing on a large number of the bedrooms at the Gresham Belson in Brussels.

As of today we are just 2 weeks away from completing work on the Gresham
Metropole which will see the refurbishment of all the bedrooms at that hotel.

For many of you the properties in the group will continue to be associated with
the Ryan Leisure Brand and, far from being neglected as has been insinuated by
some reports, the Killarney Ryan and Galway Ryan have almost completed an
upgrading of the entire bedroom stock and those of you visiting these hotels
will, I have no doubt, be pleased at the quality of the premises.

The product is only part of what a hotel needs to be. More fundamentally, the
Group has committed additional resources to the development of staff. A very
senior fulltime executive has been appointed to the Human Resources function and
considerable training and development is ongoing at all levels of staff in the
group. This programme has been enthusiastically embraced by the staff and the
level of commitment and expertise that has been a hall mark of your group's
staff will be enhanced further in this process.

Property

As part of the strategy we undertook to release land values at our various
properties. As you are aware, during the year we completed the successful Sale &
Lease Back of the Gresham Royal Marine in Dun Laoghaire. This transaction was
completed at full book value thus underpinning the basis of valuation which the
company's valuers use in assessing the worth of the properties.

All of the properties were revalued in September 2001 and this resulted in an
upgrade in all properties, excluding the Gresham Carat, totalling €20 million.
Given the continuing depressed state of the German market and the general
down-turn in business confidence, the valuers recommended that we revalue the
Gresham Carat downward by €6 million and this has been incorporated in the
Profit & Loss account of the company.

The net effect is an increase in the existing properties of €14 million and
results in an increase in property values over the last 5 years of €60 million.

Trading

As I have already said trading conditions continue to be challenging and the
uncertain climate that exists for business makes predictions difficult. However,
we continue to be optimistic about the second half of the year and would
anticipate achieving results broadly inline with brokers expectations.



Shareholders

You will be aware of considerable media activity in respect of the stated
ambition of one particular shareholder owning 28.25% of the shares to seek to
acquire a position where this shareholder and its nominees would gain effective
control over the composition of the Board and, therefore, many of the decision
making processes in your group.

We entered into discussions with this shareholder with a view to establishing
the strategy they wished to implement in the group on the basis that we would be
receptive to any well thought out and costed plan which they may articulate. We
also offered board representation. It soon became obvious that this shareholder
was not willing to reveal the details of their strategy and even when we offered
to work with them on a strategy development process, this was rejected on the
basis that they would not divulge their strategy until the Board has been
restructured as they wished.

The matters involved were not about Board representation but were in defence of
the interests of shareholders, large and small. Your Board believes that it is
incumbent on anybody seeking control of your Group to make a fair offer to all
the shareholders and allow them to evaluate such an offer. It would then be for
the shareholders to determine the outcome, as is their right.



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