Existing investors, which include Alchemy Partners, run by Jon Moulton, and Terra Firma, Guy Hands's private equity vehicle, made contact with the prince's advisers amid doubts over a rescue package mounted by Lehman Brothers, the investment bank. Lehman, the largest holder of mezzanine debt in Le Meridien, is trying to orchestrate a Pounds 150 million rescue package.

The hotel group narrowly staved off administration last week when Lehman and others in a consortium of banks made a part rental payment to Royal Bank of Scotland (RBS), the group's biggest UK landlord. RBS accepted Pounds 4 million towards Pounds 20 million in oustanding rent. It has given Lehman and the banks until July 16 to pay the balance. A source close to the shareholders confirmed yesterday that talks had begun with Prince Alwaleed's investment vehicle, Kingdom Holdings. Discussions are seen as a contingency move in case the Lehman talks fail.