Herm, the tiny island off Guernsey that spent much of the Second World War under German occupation, looks set to be acquired by the hotel company that owns Cliveden, the Berkshire stately home at the centre of the Profumo affair.

The Times understands that Von Essen Hotels, which runs some of Britain's most exclusive hotels, has submitted an offer of £15 million for Herm and that contracts are set to be exchanged with the family that has owned the island since 1949.

The revelation comes in the wake of speculation that Lakshmi Mittal, the Indian steel magnate, is in talks over the possibility of taking a 40 per cent stake in Von Essen. Andrew Davis, the Von Essen owner, is understood to be hoping to use the backing of the Mittal family to make a bid for the European portfolio of Orient-Express Hotels, which includes Le Manoir aux Quat'Saisons in Oxfordshire and the Cipriani in Venice. He is also expected to continue to snap up individual hotels, with targets thought to include Hintlesham Hall, near Ipswich, Inverlochy Castle, near Ben Nevis, and the Port Palace Hotel in Monaco.

Mr Davis, who is said to have fallen in love with Herm after visiting by helicopter, is buying a 40-year lease from Adrian and Pennie Heyworth, who put it up for sale in May after running it for 28 years. Mrs Heyworth's father, Major Peter Wood, bought the lease from Guernsey in 1949 with a £15,000 overdraft.

Previous occupants of Herm, which is half a mile wide and a mile and half long, have included Prince Blucher von Wahlstatt, the great-grandson of the man who helped the Duke of Wellington defeat Napoleon at Waterloo, and Compton Makenzie, the author of Whisky Galore!

Although Herm already has a hotel, the White House Hotel is a far cry from the other 27 Von Essen properties, which include the Royal Crescent in Bath and Amberley Castle in West Sussex. The 40-room hotel has no telephones, televisions or even clocks.

Mr Davis is believed to be planning to upgrade the White House, add a luxury spa and then run it as part of Von Essen's Luxury Family Hotels brand.

In addition to the hotel, Mr Davis is acquiring a manor house with swimming pool - handy for those weekend visits from London Heliport (also owned by Von Essen) in the company helicopter - a 13th-century chapel, a pub, beachside cafés, an organic farm and a school that, at the last count, had eight pupils. The 50 or so residents of Herm are easily outnumbered by species of birds (92) and the 60,000 visitors who come every summer.

The deal is subject to agreement with the States of Guernsey, which owns the freehold. This may sound straightforward, given Von Essen's investment plans for the island, but there is one condition that, while crucial to ensuring Von Essen's super-rich customers can get to Herm, may upset some of the locals. It is demanding the right to unrestricted helicopter landings.

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