DUBAI International Capital (DIC), the international investment arm of Dubai Holding, has announced that it has agreed to acquire UK-based Travelodge Hotels, Britain’s fastest growing hotel company, for £675 million ($1.3 billion) from Permira Funds.
The acquisition is expected to complete in late September. Travelodge’s senior management team will remain in place under DIC.
“We are delighted to have successfully acquired Travelodge,” said Sameer Al Ansari, CEO of Dubai International Capital. “It is a strong brand with good growth potential, and an excellent fit for DIC. The budget hotel sector is growing and, in our view, has immense potential in the UK market. Travelodge's outstanding management team has an aggressive expansion plan which we are confident will give us an excellent return on this investment.”
Travelodge, the UK’s second largest budget hotel company, operates 291 hotels, with 279 in the UK, nine in Ireland and three in Spain. The company’s aggressive UK growth strategy is on track to deliver a total of 32,000 UK rooms in the next five years. Travelodge aims to be the biggest budget operator in London by the 2012 Olympics, with over 7,000 rooms in the British capital.
Travelodge may open as many as 200 outlets in the next decade as price cuts encourage more people to book rooms, CEO Grant Hearn said on July 11.
The acquisition of Travelodge is in line with DIC’s strategy to diversify the assets of its parent company, Dubai Holding. Commenting on the deal, Hearn said: “We are pleased that DIC has shown such confidence in our business and our people. Our new owners share our ambitions for Travelodge to lead the budget hotels sector here in the UK and grow the business internationally.”
UK-based private equity firms Cinven and BC Partners and UK leisure group Whitbread, were also in the bidding for Travelodge according to media reports.