Marriott franchisee to sell hotels
Byline: Lauren Mills in London
British leisure group Whitbread plc, the main franchisee for Marriott International Inc. in the U.K., on Thursday, Oct. 28, hoisted a “for sale” sign on hotel and restaurant assets worth [pounds sterling]800 million ($1.5 billion).
The company, whose brands include Pizza Hut restaurants in Britain and the Costa Coffee chain, has pledged to return at least half of the cash to shareholders and use the rest to reduce its [pounds sterling]376 million pension fund deficit and pay down debt. The sales are driven in part by Whitbread’s desire to lessen its dependence on the hotel industry’s struggling full service sector.
“Our acquisition in July of Premier Lodge has shifted the balance of the business more strongly into branded budget hotels,” said Alan Parker, Whitbread’s new CEO, adding in a statement that the full service sector is starting to recover.
In its most advanced portion of the plan, Whitbread said it is close to selling 11 Courtyard by Marriott hotels to Kew Green Hotels, a private U.K. hotel group, for about [pounds sterling]80 million. It also plans to sell 24 hotels in the U.K. that are operated under the Marriott brand in the next three years. It hopes to sell the underlying assets while retaining the contract to manage the hotels. Whitbread is also selling its historic Chiswell Street site in the City of London, after abandoning plans to redevelop it for long-stay executive apartments under the Marriott brand. CB Richard Ellis, the international property broker, will handle that sale.
In Germany, Whitbread is seeking to dispose of its Maredo steakhouse brand, which has one hotel near Hamburg and 61 restaurants. In the U.K., a collection of 50 pub restaurants — a mix of Beefeater, Brewer’s Fayre and Brewsters — is also set to come under the hammer.
Greg Feehely, a leisure analyst at Altium Securities in London, expects the hotels to attract financial, rather than trade buyers for the assets. “They are most likely to attract a financial buyer who is happy to own the asset and let someone else run it,” he said.
Whitbread’s banking adviser is Brian Magnus at Morgan Stanley in London, while Slaughter and May of London is providing legal services.
Whitbread announced a 9.4% rise in pre-tax interim profits to [pounds sterling]147.4 million. Sales climbed 4.6% to [pounds sterling]1.03 billion. The company, which sold its breweries in 2001 to focus on hotels, restaurants and fitness clubs, said an IPO of its drinks business, Britvic, in which it holds a 23.75%, is being considered. A final decision is not expected until at least 2005.
COMPANY: Whitbread plc
COMPANY: Kew Green Hotels
COMPANY: CB Richard Ellis
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