The late return to work after the extended Christmas break looks likely to spell doom for AIM-listed Real Hotel Group (RHG), the struggling operator of the budget Purple Hotels chain.

In its second profit warning in only four days, the company said that a 34 per cent slump in revenues in the first seven days of January had precipitated crisis talks with its banks, adding: “Should these discussions not be successful, the group will be forced to consider all options.”

The group, which has issued a series of profit alerts in recent years, said: “Early indications suggest that a slower-than-normal return to work by corporate customers after the Christmas period has impacted results.

"As a result, the group is actively considering its financial position and is in discussions with its bankers, which are expected to be concluded shortly."

The group last week reported a 7 per cent decline in continuing revenues to £63 million in the year to January 1, and said the fall had accelerated to 20 per cent in the last 13 weeks.

RHG, once known as Friendly Hotels, owns, leases or manages about 50 hotels in the UK, France, Germany and Belgium. It also operates the New Connaught Rooms conference and banqueting suite in Covent Garden, central London, which it has been trying to sell.

Last year, it appeared to have resolved its immediate financial worries by selling three London hotels to Whitbread’s Premier Inn chain for £18.5 million. Whitbread is tipped to acquire its 11 remaining Purple hotels in the event of its collapse into administration.

RHG launched the Purple brand in December 2007 after scrapping its UK master franchise agreement with Choice Hotels International, the US owner of the Sleep Inn and Comfort Inn brands.

Shares of RHG, which has net debt of about £13 million, closed up 0.25p at 2.875p before the after-hours statement was issued.

The news of its woes came as Folio Hotels, the privately owned operator, was rescued from administration in a deal that will see 18 of its 36 hotels plus the Folio name taken back by the former management team.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts