Luxury £1.9bn hotel chain Le Meridien could face collapse this week following inconclusive financial talks over the weekend, aimed at avoiding UK bankruptcy procedures.

It is predicted that the privately-owned Meridien group – whose hotel portfolio includes Grosvenor House in London’s Park Lane – could be put into administration by tomorrow, 22 July, following a missed £20m rent payment two weeks ago to the Royal Bank of Scotland (RBS).

RBS owns the freehold to 11 Meridien properties, is currently owed £16m in interest and could begin legal action as early as 22 July for the Meridien’s rent non-payment.

An offer was made last week by Saudi billionaire Prince al-Waleed and private equity fund Terra Firma for an estimated £150m to recapitalise the luxury group, subject to interest payments being reduced. The banks rejected this offer late on 18 July.

It now seems to insiders that the break-up of the Meridien business is “inevitable”, although negotiations are currently continuing between the RBS and Meridien’s lending banks, which are led by American investment bank Lehman Brothers, which is owed £200m.