Leisure group Greenalls believes it has hit upon a winning plan with its scheme to build a chain of hotels at London Underground stations.

The £14m joint venture with London Transport will create 200 jobs at an initial seven Premier Lodges to be built on or beside tube stops.

Greenalls said the new lodges, where rooms cost around £50 per night, fitted in well with the Government's aim of boosting public transport.

Finchley Central

The target market is those visiting London on business during the week or families at weekends.

It is also considering including underground fares with the price of the rooms which the company says are equiped to three star hotel standard.

The first four are intended to open early next year at Cockfosters, Northolt, Hillingdon and Hounslow West stations.

A second wave of three Premier Lodges, subject to planning approval, will open at Finchley Central, Arnos Grove and Newbury Park.

John Longden, Greenalls property director, said it had been a complex process to reach agreement on the joint venture.

"It is an important strategic and unique move providing much needed lodge accommodation with direct access to public transport.

"The acquisition of these sites fits clearly into our overall strategy of developing more accommodation in city centres."

Philip Clarke, London Transport principal surveyor, said: "This proposal fits in well with our overall policy to optimise the use of land to provide rental income, maintain commuter car parking and encourage the use of public transport."

The plan was unveiled on a day when chairman Andrew Thomas said there were some positive signs ahead, despite reporting pre-tax profits in the first half of the year down 23% to £50.5m.

That was at the bottom of range of analyst predictions for the group which has been repositioned after disposing of its tenanted pubs and off licences.

Shares in the group, which has been the subject of takeover speculation, fell more than 5% to 321.5p in early trading in London.

Greenalls has shifted its investment towards its De Vere Hotels and health and fitness business, both of which were reported to have been trading well.

Analysts said the group is now looking even more vulnerable to a takeover bid, which could involve the break-up of the pub and hotel divisions.