Whitbread, the UK-based hospitality group, and Dubai International Capital (DIC) are in talks to merge their hospitality units to create a £3 billion (Dh22bn) hospitality giant, Britain’s Sunday Times reported. The talks are aimed at merging Whitbread’s Premier Inn budget hotel business with DIC’s Travelodge chain.
The two companies are discussing a deal in which Whitbread would take over Travelodge and DIC will acquire a big stake in the London Stock Exchange-listed British group.
The talks are believed to be at an early stage and there is no certainty that they will result in an agreement.
It is not clear who would run the enlarged budget hotel business if Whitbread and DIC do strike a deal.
The combination of Britain’s two largest budget-hotel chains would create a powerful force in the hospitality market. Premier Inn has about 32,500 bedrooms in the UK, making it the country’s biggest chain. Travelodge has 22,000 rooms, the daily said.
Whitbread is known to have long coveted its rival, and tried to buy it two years ago when it was being sold by Permira, the private-equity group.
DIC outbid Whitbread by paying £675 million for the Travelodge chain, beating off competition not only from Whitbread but from a number of private-equity firms.
Premier Inn is the best-performing part of the Whitbread empire.
Whitbread’s shares have fallen from a high of £19.46 last July to close at £11.89 on Friday, giving the company a stock-market value of £2.1bn.
The newspaper said a combination of Travelodge and Premier Inn might spark a competition inquiry, but the two owners are expected to argue that, despite the size of the merged operation, it would still account for only a small part of the overall hotel market.
Whitbread Chief Executive Officer Alan Parker has announced that he would restructure the business by merging Premier Inn with the company’s pub-restaurant division, which operates brands such as Beefeater.
Travelodge is headed by Grant Hearn, who has been in charge of the chain for five years. One of his previous jobs was running Premier Inn for Whitbread, under its former name Travel Inn.
£3bn: The value of the hospitality giant that will be created by the merger of Whitbread’s Premier Inn hotel business with Dubai International Capital’s Travelodge chain. The talks are believed to be at an early stage
DIC in talks for UK hotel chains’ merger?