Premier Inn owner anticipates UK holiday boom

Premier Inn owner Whitbread plc has reported a £1bn annual loss but said it expects strong demand for holidays in the UK this summer.

In its financial results for the year to 25 February 2021, Whitbread reported a 71% drop in revenues compared with the prior year, reflecting the impact of Covid-19 restrictions. Lockdown rules designed to help stop the spread of coronavirus forced the company’s hotels and restaurants to close for substantial periods of the year.

Chief executive Alison Brittain said that last year was “one of the most challenging in our 279 year history”.

Whitbread – which also owns the Beefeater and Brewers Fayre restaurant chains – benefited from around £270m worth of government support during the year, including the furlough scheme and business rates relief.

This year the company plans to invest over £350m, which will go toward room refurbishments as well as new advertising featuring comedian and actor Sir Lenny Henry.

However, it also intends to cut an additional £100m in costs.

Under plans to further ease the pandemic restrictions in England, hotels are due to reopen for leisure stays from 17 May, alongside the full reopening of restaurants.

“The vaccination programme in the UK means we can look forward to the planned relaxation of government restrictions as we move into summer, with the first major milestone being the return of leisure guests to our hotels and the full reopening of restaurants from 17 May,” Brittain said.

“We expect a significant bounce in leisure demand in our tourist locations during the summer, followed by a gradual recovery in business and event-driven leisure demand.”

Marriott International and Starwood Hotels & Resorts Worldwide to merge in transaction valued at $12bn


The boards of directors of hotel companies Marriott International Inc (NASDAQ: MAR) and Starwood Hotels & Resorts Worldwide Inc (NYSE: HOT) have unanimously approved a definitive merger agreement, the companies announced on Monday.

This merger agreement will see the creation of the world’s largest hotel company, which will offer 1.1 million rooms in more than 5,500 hotels around the world. The transaction is expected to close in mid-2016, subject shareholder approvals, the completion of Starwood’s planned disposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions.

Under the terms of the agreement, Starwood shareholders will receive 0.92 shares of Marriott International Class A common stock and $2.00 in cash for each share of Starwood common stock, at closing. Following completion of the merger, Starwood shareholders would own approximately 37% of the combined company’s common stock, on a pro forma basis, using fully diluted share counts as of 30 September 2015.

Marriott will pay a total consideration of $12.2bn for Starwood, which will consist of $11.9bn of Marriott International stock, based on the 20-day VWAP (volume weighted average price) of Marriott stock ending on 13 November 2015, and $340m in cash, based on approximately 170 million fully diluted Starwood shares outstanding at 30 September 2015. Based on Marriott’s 20-day VWAP ending 13 November 2015, the merger transaction has a current value of $72.08 per Starwood share, which includes the $2 cash per share consideration.

Separately, Starwood shareholders will receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with Interval Leisure Group, which has an estimated value of approximately $1.3bn to Starwood shareholders, or around $7.80 per Starwood share. This is also based on the 20-day VWAP of Interval Leisure Group stock ending 13 November 2015. The timeshare transaction is expected to close before the closing of the Marriott-Starwood merger.

On completion of the transaction, Starwood’s lifestyle brands and international footprint will combine with Marriott’s strong presence in the luxury and select-service tiers, as well as the convention and resort segment. The merged hotel company is expected to offer broader choice for guests and greater opportunities for associates. The companies also anticipate that additional value for Marriott and Starwood shareholders will be unlocked as a result of the merger. 

At least $200m in annual cost savings are expected by Marriott in the second full year after closing, which it said will be achieved by leveraging operating and G&A efficiencies. Marriott also expects the transaction to be earnings accretive by the second year after the merger, not including the impact of transaction and transition costs.

President and chief executive officer of Marriott International, Arne Sorenson, commented: “The driving force behind this transaction is growth. This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace. This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders. Today is the start of an incredible journey for our two companies. We expect to benefit from the best talent from both companies as we position ourselves for the future. I know we’ll do great things together as The World’s Favorite Travel Company.”

Following the merger, Sorenson will remain as president and chief executive officer of Marriott International and the company’s board of directors will increase from 11 to 14 members with the expected addition of three members of the Starwood Board of Directors.

Lazard and Citigroup are serving as financial advisors to Starwood Hotels & Resorts Worldwide and its legal counsel is Cravath, Swaine & Moore. 

Deutsche Bank Securities is the financial advisor to Marriott International and Gibson, Dunn & Crutcher is its legal counsel.

France’s Accor to exit Australian fund, sell two Beijing hotels

French hotel operator Accor SA (EPA:AC) said today it will sell its interest in an Australian fund plus two hotels in Beijing to a newly-created hotel investment trust, called A-Htrust, for a combined EUR110m (USD135.1m).

Accor will divest its 21.9% stake in Ascendas Australia Hospitality Fund, previously known as Mirvac Wholesale Fund, for the sum of EUR56m. This fund holds seven properties of which six are operated by Accor in Australia and New Zealand.

In addition, the company will dispose of the 305-room Novotel and 401-room Ibis hotels in Beijing under a sale and management back contract for EUR54m. The seller noted that the Ibis divestment is subject to administrative authorisations applying in China.

Meanwhile, Accor will acquire a 6.9% interest in A-Htrust for EUR32m, while Ascendas will take up to 35% in the newly-formed and publicly-listed hotel investment trust. The French party will also have the right of first offer to manage future purchases, when the hotels are not managed under a pre-existing contract. A-Htrust will, in turn, have the right of first offer to buy hotels in the Asia-Pacific region, excluding Australia and India, that are put on sale by Accor.

The new partnership will help Accor accelerate its expansion as well as its asset-management policy in the Asia-Pacific region, it said.