Premier Inn owner Whitbread is acquiring 19 hotels in Germany for an undisclosed sum.
The deal with Foremost Hospitality Group will give the budget chain a “substantial presence” in Germany, increasing the total committed network pipeline to 31 hotels with more than 5,700 rooms across 15 cities that are all expected to be open by the end of 2020.
The hotels are all in “proven prime locations,” are of high quality and can be readily rebranded to Premier Inn.
The acquisition was described as an “important step in accelerating Whitbread’s existing international strategy and in replicating Premier Inn UK’s success and network scale in this key strategic market”.
Whitbread said it will continue to explore options to further accelerate growth in Germany, through a mix of freehold property developments, leasehold sites and acquisitions of small existing hotel portfolios.
Premier Inn currently has one hotel open in Frankfurt and a further 11 in a pipeline across key cities in Germany, having recently secured a development in Munich for 216 rooms.
The German hotel market is 35% larger than the UK and similar to the UK ten years ago and is experiencing a structural shift from independent hotels to branded hotels, according to Whitbread.
The branded budget hotel sector is the fastest beneficiary of this shift, but still only represents a 6% market share, compared to 24% in the UK.
“With only moderate growth expected from other brands, Premier Inn’s strong quality and value credentials provide a long-term opportunity to establish a major hotel brand and develop a successful business of scale in this attractive market,” the company said.
Whitbread chief executive Alison Brittain said: “One of our three key strategic priorities is to focus on building strong and sustainable growth in key international markets.
“Today’s announcement marks the next stage in our ambitious growth plan for the Premier Inn brand in Germany.
“We believe Germany has many of the structural growth drivers that have underpinned the success of Premier Inn in the UK and that Germany is a market that will deliver strong returns in the future.”
She added: “This acquisition mirrors the strategic opportunity that we identified with Costa in China, where we recently bought out Costa’s South China joint venture partner.
“Whitbread’s strong businesses still have considerable growth opportunities in the UK, however, these two transactions and our continued investment in these new markets, gives us confidence in our ability to build international businesses of scale in both Germany and China, that will underpin our growth for decades to come.”
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