When Conran Restaurants sold its 50 per cent stake in the Great Eastern Hotel, in the City of London, in February 2006, it vowed to return to the hotel business as soon as possible. Today, the company, now called D&D London, will unveil its plans for a £50 million hotel in nearby Moorgate as the first step in developing a small chain of boutique hotels.

The group, in which Sir Terence Conran retains a 51 per cent stake, is working with Frogmore, the property developer, on a project to create a luxury 80-room hotel at South Place, five minutes’ walk from the Great Eastern. The interior of the 72,000 sq ft building will be designed by Conran & Partners, working alongside architects from Allies and Morrison.

Des Gunewardena, chairman and chief executive of D&D — which takes its name from him and David Loewi, the company’s managing director — said that he was looking at “another couple of hotel sites, one of which is in legals”. He refused to say where the next would be located, although industry rumours suggest that it could be in Birmingham, where D&D is already set to open three restaurants and bars on the rooftop of The Cube development.

Mr Gunewardena admitted that the search for a way back into the hotel sector had taken longer than expected. “The reason we haven’t done any hotels since the Great Eastern is that the numbers didn’t work. On this project they do.”

He refused to be drawn on the cost of the Moorgate project — tipped by experts to cost about £50 million, including property acquisition costs — but confirmed that D&D, which will run the as-yet-unnamed hotel on a 35-year lease, would invest “several million pounds” in fitting it out.

Mr Gunewardena said that, subject to final planning consent, work on demolishing the existing building would start next year, with a view to opening in 2012. It would be different in style to the Great Eastern, now run under Hyatt’s Andaz brand, which, with 267 rooms, is more than three times as big. The hotel will have a bar and grill on the ground floor, plus a rooftop restaurant and bar with an outside terrace on the seventh floor, as well as private dining and meeting facilities. D&D will run the whole operation, unlike the Great Eastern, where it ran only the food and drink outlets.

Despite the impact of the credit crunch on the City, Mr Gunewardena said that he was keen to add further restaurants in the Square Mile. He was looking at a development “within a mile of the hotel” that could include three or four D&D-run bars and restaurants. The recession had thrown up a number of interesting developments, he said, adding: “We are still expanding, but in a slightly different way. For example, in different times we might have invested more of our money in the hotel.”

The group, which has 30 restaurants in London, Paris, Copenhagen, New York and Tokyo, was trading “a lot better than this time last year and the beginning of this year”, although the recovery in spending by individual diners has yet to be matched by businesses, especially on events.

On the outlook for Christmas bookings, Mr Gunewardena said: “It is still too early to tell, but it’s not looking too dreadful. We have seen a recovery from the worst, though we’re not back to pre-credit crunch levels by any means. Footfall has remained good but spend per head is down. The jury’s still out on next year.”

D&D, in which management has a 49 per cent stake, will open a restaurant in Kuala Lumpur next summer, the first of several planned openings in Asia, and is monitoring joint venture opportunities in the Middle East.

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