A private equity firm will create a new billon-pound hospitality group to compete with the likes of InterContinental Hotels in the UK and become one of the largest hotel owners in the region.
Lone Star, a Dallas-based private equity firm, has signalled to bring its current 89 UK hotels together to create a £1 billion hospitably company, Amaris, and expects to float it on the stock market in the medium term.
The company has been stocking up buying ‘distressed’ hotels in recent years, and the new group will be a culmination of those properties including 29 recently acquired Jurys Inn hotels, which it bought for £680 million in January, and Puma Hotels, which it bought for £323 million in 2014, and has since been rebranded as the Hotel Collection.
It will also take on Lone Star’s 21 Mercure properties, 3 Hiltons and 19 Thistle Hotels when the deal is sealed on July 30, various reports stated.
After the signing, it will immediately become one of the largest hotel owners in the UK with 8000 employees and 15,000 rooms with a combined sales of more than £450m, it said.
“The strategy is to create a branded hotels business. Many of these hotels have great locations but have not had much put into them. We have £100m to invest and renovate these hotels,” current head of Jurys Inn who will become ceo of Amaris, John Brennan, told the Financial Times.
Lone Star said it decided to streamline its hotels portfolio to create a more attractive business and will be looking at which brands to be repositioned or brought into the group, with a number of Hotel Collection properties yet to be integrated.
“We want to make it simple and easy to understand,” Brennan told the paper.
“This year is about strategy. In 2016 we will do the renovation and investment; 2017 is when we should see the fruits of our labours.”
Grant Hearn, former chief executive of Travelodge, will become a non-executive chairman of the newly formed company.
“The aim is to create value by deploying capital and showing what the business is capable of. The plan is to build a business we can [float]”, Hearn said to the paper, but added they were not contemplating a quick flip.
“There is a market gap. In the UK you have InterContinental Hotels and there’s nobody else, so I think it is going to be a very interesting proposition.”
“The new Group will allow us to leverage the considerable scale and size of this unique portfolio of hotels and brands to accelerate its future growth and development and, we believe, create the UK’s best performing, most exciting hospitality investment group.”
“Through the successful implementation of our strategy in the coming years we expect the business to have a value of over £2 billion,” Hearn said.