Whitbread has inked a deal to acquire 21 hotels (1245 rooms), currently operating as Express by Holiday Inn, from Mitchells & Butlers in exchange for 44 Whitbread pub restaurants.
The exchange has been made on the basis of equivalent EBITDA of around £9m from the hotels and pub restaurants and an estimated value of £78 million for the assets to be exchanged. This transaction is expected to be earnings neutral in 2009/10 and thereafter earnings enhancing.The exchange will take the total number of UK Premier Inn rooms to over 38,000 in 550 hotels. Planning consent has been granted to extend five of the 21 acquired hotels, adding around 200 new rooms.
Whitbread has identified additional opportunities to extend the acquired estate to over 1500 rooms, subject to planning approvals. This represents a significant contribution towards the 2008/09 target of 4,000 new Premier Inn rooms.
The hotels are modern, in prime locations throughout the UK and will be fully integrated into the Premier Inn estate on completion. The 400 existing employees at the hotels will transfer to Whitbread and approximately 1300 pub restaurant employees will transfer to MAB on completion, due on 19 September 2008.
The 44 Whitbread pub restaurants to be exchanged are on sites where development with a Premier Inn has not been possible due to planning constraints. Whitbread will continue with plans to develop a Premier Inn on its remaining 51 pub restaurant sites where there is currently not yet a hotel alongside.
Alan Parker, Chief Executive Officer commented: “There is a clear and compelling logic to this transaction. Acquiring this well located, modern hotel estate will enable us to re-brand quickly, drive occupancy, increase profits and extend the number of rooms at these hotels by at least 20%.
“We are exchanging these pub restaurant sites because we have been unable to develop a Premier Inn alongside, which was the reason for retaining them”.