• Whitbread commits to conversion to grow budget hotels

Whitbread's purchase of seven former Holiday Inn hotels marks a step-change in its determination to grow its Premier Travel Inn brand.
   Opportunities such as this £34.5m deal to buy 1,021 rooms were described by chief executive Alan Parker as "a rich seam to exploit for future growth".
   The Premier Travel Inn estate will now number more than 31,000 rooms, putting it comfortably ahead of the 17,000-strong Travelodge, its nearest rival.
   But Travelodge had been growing faster over the last few years. Earlier this month it said it expected to reach 30,000 rooms in the next three years, almost doubling from its current size of 17,000 rooms. It also promised to pitch its prices below those of PTI.
   Whitbread has reacted by promising to reach 45,000 rooms in the UK by 2010 and pointing to its higher occupancy rates.
The need to enter city centres, given that most of the viable roadside opportunities outside of towns have been exhausted, has driven the switch by PTI into conversions.
Travelodge has been able to make headway with site acquisition thanks to its preparedness to sign-up for fixed leases, making it popular with institutional landlords. Whitbread, in contrast, has grown almost entirely by taking direct ownership.
   The latest acquisition was from LRG (Lehman Brothers, Realstar and GIC) who almost a year ago paid £1bn to buy 73 hotels from InterContinental. LRG said it expects to sell the remaining four hotels on the market through agent Christie & Co individually 'in the near future'.
   These sales will bring to an end the major ownership reshuffling of InterContinental's UK brands. The Whitbread deal is expected to complete within two months.

Share →