Premier Inn owner Whitbread has bought a small portfolio of hotels in Germany and Austria for a total consideration of £28.4 million.
The deal was completed on 1 March 2023, and includes the freehold interest of one hotel in Austria and the leasehold of five hotels within Germany with a total of 900 rooms. The total amount includes a cash consideration of £25.9 million and deferred consideration of £2.5 million.
Whitbread expects to take a £10 million hit to its profit before tax for the current financial year as a result of closing the hotels and refurbishing them.
Whitbread did not disclose the locations or the seller.
Why it matters
Whitbread is a rarity in the world of big hotel brands as it owns and operates its properties. Having already become a dominant player in the UK it has sought to expand in the German market, where it has spotted two opportunities:
- The independent sector is down around 5 per cent versus pre pandemic a small but relevant decline. Like the rest of the industry these hotels are now dealing with inflationary pressures and don’t have the financial clout of Whitbread .
- The branded budget sector in which Premier Inn operates is still pretty small and fragmented in Germany.
Whitbread now has 51 open hotels and 7,000 rooms in the pipeline across Germany with plans to build a scale business. By way of comparison, the Premier Inn brand has 847 hotels across the UK.
What they said
Dominic Paul, CEO of Whitbread, speaking on the company's full-year earnings call, said: “We stay very close to the market in Germany. As you know, we've got a mix of organic hotels that we've opened ourselves generally on greenfield sites, but we've also acquired a number of hotels as well. So, we're very well connected into the German market as opportunities arise. These was one of the opportunities. It was complementary from a location point of view. They're good properties and we think strengthen our position in Germany.”