Interim Results

PEEL HOTELS PLC
6 October 1999                                       
                                       
                                PEEL HOTELS PLC


          Interim results for the 28 weeks ended 5th September 1999.

Profits before tax up 157% to £640,935 (1998: £249,456).

Turnover up 190% to £3,221,220 (1998: £1,111,472).

Earnings per share (including tax at 30%) up 97% to 6.9p (1998: 3.5p).

Successful  completion and placing of £3.9 million by  way  of  2,166,666  new
ordinary  shares  at 180p on 6th September to part-fund the  purchase  of  the
Golden  Lion  Hotel,  Leeds, together with an adjacent office  block  and  the
Caledonian  Hotel, Newcastle, effectively doubling the owned  bedrooms  within
the Company.

'The  Board is confident that with it's existing business and the two recently
acquired hotels, it will continue to build on progress achieved thus  far  and
further  improve  shareholder value in the remainder of the year  ending  20th
February 2000.'


Robert Peel
Chairman

6th October 1999


Further information:     0171 266 1100


CHAIRMAN'S STATEMENT


RESULTS

I  am pleased to report an interim pre-tax result of £640,935 (1998 -£249,456)
for the 28 weeks ending 5th September 1999.  After a full provision for tax at
30%,  earnings per share were 6.9p 1998 - 3.5p on 6,500,000 shares in  issue
throughout the period.


Profit  before  interest  and tax was £827,195 (1998  -  £371,898).   On  5th
September  1999 net debt stood at £4,888,089 representing a 10  year  loan  of
£4,712,625  plus an overdraft of £220,693 less £45,229 cash in hand.   Gearing
on shareholders funds was 120% with interest covered 4.4 times.


As  in the previous year, the Board are not declaring an interim dividend  but
expect to recommend a substantially increased dividend when they announce full
year results.

The  first half results include a full contribution from the Midland Hotel  in
Bradford and from the Management Agreement with Grace Hotels Ltd.


CAPITAL EXPENDITURE

In  addition  to a £90,000 deposit paid in respect of Aire House, £596,799  of
capital  was  expended  in the period, which included the  completion  of  the
public  areas at the Bull Hotel in Peterborough and the addition of three  new
meeting rooms at the Midland in Bradford.  This sum includes the beginning  of
a  major  renovation programme at the Midland Hotel which  entails  the  total
refurbishment  of  the entrance lobby and public areas, the creation  of  four
'Wall  Street'  type  conference rooms(completed 20th  September  1999),  the
redecoration and refurbishment of both ballrooms and improvement works to  the
hotel  night  club.   A  total of £1.2 million capital  expenditure  has  been
approved for these projects inclusive of the expenditure accounted for in  the
first  half of the year.  The Midland Hotel project will be completed  by  mid
October  1999.  The result of this significant capital investment will  enable
both  these owned hotels to compete favourably with the major four  star  city
centre conference hotels in the United Kingdom.


SUBSEQUENT EVENTS

On  6th September 1999,(the day after the period end) the Company raised £3.9
million  through a placing and open offer by it's broker, Peel, Hunt & Company
of  2,166,666 new ordinary shares at £1.80 per share, to purchase  the  Golden
Lion, Leeds; Aire House (an office block adjacent to the Golden Lion) and  the
Caledonian,  Newcastle.   The balance of the overall  consideration  of  £9.65
million was financed by a £7 million ten year secured debt from the Royal Bank
of  Scotland  Plc, which includes adequate finance to fund the development  of
Aire House.  This development will constitute a 25 bedroom extension to the 89
bedroom  Golden Lion Hotel, together with a large retail space on  the  ground
floor.


The  Company  now owns four city centre Hotels with a total of 371  rooms  and
intends  to  build  15  additional rooms at the  Bull  Hotel  in  Peterborough
planning  permission has been granted and the 25 rooms at the  Golden  Lion,
thereby  increasing it's room stock by 11%, averaging over  100  bedrooms  per
hotel.   In addition the company manages 1,644 rooms on behalf of Grace Hotels
Limited.


Following these acquisitions the Board decided that it would be prudent to cap
the  exposure of the Company's borrowings to rising interest rates.  This  has
now  been  achieved  in  such a way that £7 million  of  the  borrowings  have
effectively  become, at worst, a ten year fixed rate loan at  approximately 8, 
including margin, while in certain circumstances, such as those currently
prevailing, the rate will be less than this.

SHAREHOLDERS

The  Board are very keen that shareholders should visit both the Company's own
hotels  and  those  it  manages and continue to offer a 20%  discount  on  the
enclosed listed tariff, using a special reservation number 020 7266 1100.

YEAR 2000

Year  2000  issues are not material as far as the Company's  own  systems  are
concerned in that all our computer systems are recently acquired.  Contingency
plans  have  been developed in readiness for any problems with key  suppliers'
systems.

THE FUTURE

The  prime objective of the Company is to maximise shareholder value and focus
on  consistent  earnings per share growth, having applied a full  tax  charge.
The  Board is confident that, with it's existing business and the two recently
acquired  hotels, we can continue to build on the progress achieved  thus  far
and further improve shareholder value in the year ending 20th February 2000.

Robert Peel.
EXECUTIVE CHAIRMAN


   PEEL HOTELS PLC                                                      
                                                                        
   PROFIT & LOSS ACCOUNT                                               
                                                                       
   for the interim period ended 5                                       
  September 1999
                                                                        
                                        28          26        Year     
                                    weeks      weeks
                                     ended       ended       ended     
                                05/09/1999    13/09/1998     21/02/1999     
                                               
                                  Unaudited   Unaudited     Audited     
                                               
                              Note        £           £           £     
                              
                                                                       
   Turnover                    3,221,220    1,111,472   3,332,727     
                                      
                                                                        
   Cost of sales              (2,045,621)   (731,090)  (2,034,249)     
                                    
                                                                        
   Gross profit                1,175,599     380,382     1,298,478     
                                                     
                                                                        
   Administrative expenses     (348,404)     (8,484)     (296,735)     
                                     
                                                                        
   Operating profit              827,195     371,898     1,001,743     
                                                              
                                                                        
   Interest payable &           (186,260)     (122,442)     (247,479)     
  similar charges                     
                                                                        
   Profit on ordinary              640,935     249,456     754,264     
  activities before
  taxation
                                                                        
   Taxation                    2  (192,280)     (74,182)    (226,279)     
                                     
                                                                        
   Profit on ordinary              448,655     175,274     527,985     
  activities after taxation
                                                                        
   Dividend                              -           -     (65,000)     
                                                               
                                                                        
   Profit retained                 448,655     175,274     462,985     
                                                                        
                                                                        
   Earnings per share          3                                        
                                                                      
   Basic                               6.9  p     3.5   p    10.0 p   
   Diluted                             6.1  p     3.2   p     8.0 p   
                                                                        
                                                                        
                                                                        
                                                                        
   All transactions derive from continuing                             
   operations.
   There are no recognised gains and losses other                      
   than as stated above.
   Accordingly, no statement of total recognised                       
   gains and losses is given.
                                                                        

                                                                    
     PEEL HOTELS PLC                                                
                                                                    
     BALANCE SHEET as at 5                                          
    September 1999
                                                                    
                                                                    
                                 05/09/1999     13/09/1998    21/02/1999 
                                      
                                    Unaudited     Unaudited    Audited 
                                                    
                                          £            £          £ 
                                                                    
     Fixed assets                                                   
                                                                    
     Tangible assets             9,432,773     4,007,125    8,839,363 
                                      
                                                                    
     Current assets                                                 
                                                                    
     Stocks                          56,418       13,645     70,329 
                                                                    
     Debtors                        639,160      189,392    450,905 
                                                                    
     Cash at bank and in             45,229        2,000    182,463 
    hand
                                                                    
                                    740,807      205,037    703,697 
                                                                    
     Creditors (due within      (1,445,0470     (2,826,435) (1,230,458)
    one year)                        
                                                                    
     Net current                (704,240)    (2,621,398)    (526,761)
    liabilities                       
                                                                    
     Total assets less            8,728,533     1,385,727    8,312,602 
    current liabilities               
                                                                    
     Creditors (due after       (4,468,875)            -    (4,588,125) 
    one year)                      
                                                                    
     Provision for                (187,484)            -    (100,958) 
    liabilities & charges            
                                                                    
     Net assets                   4,072,174     1,385,727    3,623,519 
                                       
                                                                    
                                                                    
                                                                    
     Capital and reserves                                           
                                                                    
     Called up share                650,000      500,000    650,000 
    capital
                                                                    
     Share premium account        2,510,534     710,453    2,510,534 
                                      
                                                                    
     Profit and loss                911,640      175,274    462,985 
    account
                                                                    
     Equity shareholders'         4,072,174     1,385,727    3,623,519 
    funds                     
                                                                    
                                                                    
                                                                     
PEEL HOTELS PLC
                                                                     
CASH FLOW STATEMENT                                                  
                                                                     
for the period ended 5 September 1999                                
                                                                     
                                        28               26              Year
                                     weeks           weeks
                                     ended            ended             ended
                              05/09/1999        13/09/1998          21/02/1999

                                                            
                           Note    Unaudited          Unaudited     Audited   
    
                                                   
                                 £       £       £       £        £        £
                                                                        
Net cash flow from         4        809,426          486,957         1,154,894
operating activities                    
                                                                     
Returns on investments &                                             
servicing of finance
Interest paid             (172,539)           (58,954)            (232,176) 
                               
                                                                     
Net cash outflow from                                                
returns on investments
and servicing of finance      (172,539)          (58,954)           (232,176)
                                      
                                                                     
Capital expenditure                                                  
Purchase of tangible fixed  (680,175)           (4,029,102)        (8,903,553)
assets                                              
                                                                     
Net cash outflow from            (680,1675)       (4,029,102)     (8,903,553)
capital expenditure                                
                                                                     
Equity dividend paid             (65,000)               -                 -
                                       
                                                                     
Net cash outflow before         (108,288)        (3,601,099)       (7,980,835)
financing                          
                                                                     
Financing                                                            
Issue of ordinary share          -         1,210,453           3,160,534
capital                                        
New long term loans              -                -            4,631,250 
                                                               
New short term loans             -                -            243,750 
                                                                 
Loan repayments          (121,875)                  -                - 
                               
                                                                     
Net cash (outflow)/inflow         (121,875)    1,210,453           8,035,534
from financing                               
                                                                     
(Decrease) / Increase in   5  (230,163)         (2,390,646)        54,699
cash                                 
                                                                     
                                                                     
                                                                     
Reconciliation of net debt                                          
                                                                        
(Decrease) / Increase in         (230,163)        (2,390,646)           54,699
cash in the period                     
Cash outflow/(inflow) from        121,875                -         (4,831,875)
decrease/(increase) in                                              
debt
                                                                     
Change in net debt              (108,288)      (2,390,646)        (4,777,176)
resulting from cashflows                         
                                                                             
Amortisation of finance           (2,625)               -                 -
costs                               
                                                                     
Net debt at beginning of       (4,777,176)                -                 -
period                            
                                                                     
Net debt at end of period  5     (4,888,089)      (2,390,646)      (4,777,176)
                                    
                                                                     
                            
PEEL HOTELS PLC                                                       
                                                                      
                                                                      
NOTES TO THE INTERIM                                                          
ACCOUNTS
                                                                      
                                                                             
1. Basis of preparation                                                      
The interim financial information has been prepared on the basis of the 
accounting policies set out in the Annual Report. The company's profit and loss
account for the year ended 21 February 1999 and balance sheet as at that date
are an abridged version of the statutory accounts for that period which,
together with an unqualified audit report, have been filed with the Registrar of
Companies.
                                                                     
2. Taxation                                                                 
The tax charge for the 28 weeks ended 5 September 1999 is at a higher rate than
the prevailing effective rate of 25.66% largely because deferred tax has been
provided at the rate of 30%. This is the rate at which the timing differences
are expected to reverse.
                                                                            
3. Earnings per share                                                
Earnings per share are based on the profit after taxation, and on the average 
number of shares in issue during the period.

                               05/09/1999   13/09/1998             21/02/1999
                                  
Average No. Shares-Basic                                                    
                               6,500,000    5,000,000               5,262,428
                                     
                                                                            
-Diluted                       7,378,221    5,485,975               6,562,138
                                     
                                                                            
4. Reconciliation of operating profit to net cash flow from operating activities
                                                                            
                           05/09/1999       13/09/1998             21/02/1999
                                    
                                                                            
Operating profit                 827,195     371,898                1,001,743
                                                                        
Depreciation                      86,765      21,977                  64,190
Decrease / (increase) in          13,911    (13,645)                (70,329)
stocks
Increase in debtors             (189,599)   (189,392)              (444,482)
                                             
Increase in creditors             71,154     296,119                 603,772
                                                                            
Net cash inflow from            809,426      486,957                1,154,894
operating activities                                                   
                                                                            
                                                         other              
                                                          non-
5. Analysis of net debt           21/02/      cash      cash      05/09/1999
                                   1999       flow      changes        
                                               £                            
Cash at bank and in hand         182,463    (137,234)                  45,229
                                            
Bank overdrafts                (127,764)    (92,929)                (220,693)
                                                                     
                                                                            
                                  54,699    (230,163)                (175,464)
                                                                          
                                                                            
Debt due within one year        (243,750)           -                (243,750)
                                                                  
Debt due after one year        (4,588,125)     121,875     (2,625) (4,468,875)
                                                                 
                                                                            
Total                        (4,777,176)    (108,288)     (2,625)  (4,888,089)
                                                                 
                                                                            
6.Other non-cash changes                                                    
Other non-cash changes consists of £2625 of finance costs which have been
amortised in accordance with FRS4

                                                                            
INDEPENDENT REVIEW REPORT TO PEEL HOTELS PLC
                                                                            
Introduction                                                                
We have been instructed by the company to review the financial information set
out on pages 3 to 6 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
                                                                            
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors.  It is required
of the directors that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where any changes, and the reasons for them,
are disclosed.
                                                                     
Review work performed                                              
We conducted our review in accordance with guidance contained in bulletin
1999/4 issued by the Auditing Practices Board.   A review consists principally
of making enquiries of management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed.   A review excludes audit procedures such as tests
of controls and verification of assets, liabilities and transactions.  It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
                                                                      
Review conclusion                                                     
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 28 weeks
ended 5 September 1999.
                                                                      
Deloitte & Touche                                                     
Chartered accountants                                                 
Leda House                                                            
Station Road                                                          
Cambridge                                                             
CB1 2RN