Two of Britain’s leading entrepreneurs are preparing to announce plans to float a hotel property group worth an estimated £2.5 billion on the London Stock Exchange, The Times has learnt.

Richard Balfour-Lynn, the head of Marylebone Warwick Balfour, and Sir David Michels, former chief executive of Hilton Group, have teamed up with Bank of Scotland and Royal Bank of Scotland to pool between 60 and 80 hotels under the De Vere, Hilton and Marriott brands in a real estate investment trust (Reit).

The flotation, which is expected to be announced in the next two weeks, will be the first of its kind in Europe to use the Reit vehicle for hotel assets.

The group, likely to be called Vector, is being advised by Deutsche Bank, supported by UBS and Goldman Sachs. JPMorgan Cazenove and Citigroup have also been hired to help promote what promises to be the biggest new issue this year, while DTZ is providing property valuations.

Mr Balfour-Lynn will be the principal executive director of the Reit, while Sir David will also sit on the board. The former Hilton boss will in addition become chairman of Vision, an asset management firm that will act as a conduit between the Reit and the companies that manage the hotels.

The Reit is also expected to appoint four big-hitting non-executive directors, with Simon Duffy, the former head of NTL, becoming chairman.

The hotels to be acquired by the Reit include the majority of the De Vere and Village hotels bought last year by Mr Balfour-Lynn's Alternative Hotel Group for more than £1 billion in a venture with Bank of Scotland, as well as the former Insignia Style conference centres bought in 2005 for £325 million and now rebranded as De Vere Venues.

A small number of De Vere hotels under refurbishment will be excluded from the quoted company, including The Grand in Brighton, although these may be acquired later.

Royal Bank will be pooling about 15 Hilton hotels as well as the Marriott Manchester Victoria and Albert Hotel. Plans to include the rest of the £1 billion Marriott UK chain have been put on hold. The Malmaison and Hotel du Vin chains owned by MWB could be included.

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