£3bn hotel merger talks ends
Prospects of a £3 billion merger between budget hotel chains Travelodge and Premier Inn have faded after talks over a deal ended.typical travelodge hotel room-No comments necessary
Premier Inn owner Whitbread said it had been holding “preliminary conversations” with its rival about a combination, but the discussions were now over.
A merger would have created a group with more than 800 hotels. Premier Inn has 500 hotels across the UK, while Travelodge has more than 300.
Whitbread said: “Whilst there were preliminary conversations between the parties, these discussions have now ended.”
Travelodge is owned by Middle East investment company Dubai International Capital (DIC). It is thought Whitbread found the investment group’s price expectations too high.
This week Travelodge posted revenues up 20% to £243.8 million, with underlying earnings up 30% to £55.8 million.
The firm also said it was preparing to open 44 UK sites during 2008, compared to 23 last year, and was hoping to become London’s biggest hotel operator by the 2012 Olympics with 7,000 rooms in the capital.
Leisure and hospitality group Whitbread has eyed a tie-up with Travelodge for some time and reportedly attempted to buy it when previous owner, private equity group Permira, put the chain up for sale two years ago. DIC beat the company to the deal.
Whitbread is also the owner of the Costa Coffee and Beefeater restaurant chain, but Premier Inn is the best performing part of the business.
A recent trading update showed Premier’s like-for-like sales increasing at almost double the rate of the overall business in the year to February, with plans to expand the chain running ahead of schedule.
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