The founder of GuestInvest, the buy-to-let hotel operator that promised investors that they would “earn money while others sleep”, is trying to secure funding to buy the company back after its collapse into administration, The Times has learnt.

Johnny Sandelson, the former surveyor who set up the the company in 2004, is understood to be in talks with an equity investor with a view to making a formal offer to the administrators at Deloitte, who were appointed on Thursday night. However, the company is understood to have attracted interest from a number of other parties and Mr Sandelson is likely to face stiff competition.

Nick Edwards, joint administrator, said that the rights of investors who had bought rooms in GuestInvest properties on 999-year leases would be preserved under new ownership.

GuestInvest has five hotels in London that are trading or under development, including part of The Brewery in Chiswell Street, due to reopen in June next year as the 218-room Chiswell Street Hotel.

It also owns Blakes, the celebrity hangout in Kensington, in partnership with Sir Mark and Lady Weinberg. Although the luxury hotel is in a subsidiary company that is unaffected by the insolvency and continues to trade as normal, it will still form part of any sale by the administrators. Guesthouse West, in Notting Hill, the company's first property, is unaffected.

Analysts have long questioned the viability of the GuestInvest model, which involves buying and develop-ing hotels and selling the rooms individually to investors, who are guaranteed a minimum return and can stay in their rooms free for up to 52 nights.

In August, Mr Sandelson had denied rumours of financial problems, insisting that the business model was robust. However, the recent woes of HBOS, its joint venture partner, may have been a factor in the bank's decision to call in administrators. It is understood that HBOS owned 50 per cent of the development company and almost 20 per cent of the management company while also supplying most of the estimated £210 million of debt.

HBOS has been a big investor in the hotel sector in recent years and many of the companies that it has backed are said to be nervous about its proposed takeover by Lloyds TSB.

Observers said that GuestInvest had bought most of its properties at the height of the market, while investing heavily in their redevelopment. The investment in The Brewery is put at £75 million, while The Jones, due to open shortly in Bayswater with 174 rooms, represents a similar investment. The 157-room Nest in Bayswater, which is close to completion, has had a £45 million investment, while Blakes was due to be the subject of a £7 million restoration, reducing it from 52 rooms to 40.

In recent months, GuestInvest had been in discussions about turning part of Somerset House on the Strand into its sixth property, although no deal had been signed.

It is understood that staff were first alerted to problems on Tuesday, when management said that salaries had been delayed. However, they were told that payments would be forthcoming and that Mr Sandelson was trying to put together a rescue buyout. He is said to have been confident that, once The Jones and The Nest were open for business, all creditors would be paid.

Other buy-to-let hotel companies sought to distance themselves from GuestInvest's woes. Skelwith Group, which is developing the Flaxby Country Club in North Yorkshire at a cost of £100 million, said that its model, which guarantees a return of up to 14 per cent, was very different from that of GuestInvest.

Paul Ellis, the managing director of the Skelwith Group, said that more than half of the 303 rooms had been sold, even though the project is not due for completion until early 2011.

“Our business model survives not only from room income — in fact, this is a mere 40 per cent of income. The other 60 per cent of our income comes from our ancillary uses, which we will own outright with zero funding, such as the spa and gym, bars and restaurants, golf course, conference centre and shops,” Mr Ellis said.

“Virtually all our investors are from overseas and have purchased for the return on their money, rather than usage of rooms. The GuestInvest model of selling the rooms and staying there yourself on a regular basis was just not sustainable.”

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