Whitbread buys out Emaar MGF's stake in JV
Whitbread, UK's budget lodging chain, has bought out its Indian joint venture partner Emaar MGF, after nearly three years went by without any progress in building its popular Premier Inn Hotels, Economic Times reported yesterday.
The company has trimmed down its investment plans for India as it now hopes to build fewer hotels in far lesser towns than it planned in 2007, said an official at Premier Inn India.
"Whitbread confirms that Premier Inn has completed the acquisition of the 50.1 per cent stake it did not own in the JV with real estate developer Emaar-MGF," the company said in a statement to the Indian daily. It would get to own the lone Bangalore hotel.
Emaar MGF and other real estate firms such as DLF got into series businesses including ventures with hotel companies aiming to benefit from the roaring tourism sector and the rising business travel. These companies bought up a lot of land at high prices, but the subsequent credit crisis led to most of their business plans unviable. Now, most of the real estate firms are trimming down their business and debt to focus on limited number of residential and office projects.
"This is part of our business strategy. The update will be given in the red herring prospectus that we will file for the IPO," a spokeswoman at Emaar MGF said. This company has filed an offer document with the regulator to raise funds through a share sale, after a similar plan was scrapped in 2008 due to adverse market conditions.
The two companies while announcing a venture in 2007 said they would invest $600 million (Dh2.2 billion) to build 80 Premier Inn Hotels over a decade.
Now, the revised plans are a lot more realistic keeping with the overall economic activity post crisis.
The company on its own will invest Rs4.95bn (Dh399.88m) to develop nine hotels by 2013, said Aly Shariff, Managing Director at Premier Inn in India.
These nine hotels will have 1,295 rooms. Its existing hotel in Bangalore which opened in November 2009 has 105 rooms.
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