Dubai: In a major foray into the UK's hospitality business, government investment firm Dubai International Capital (DIC) is set to acquire budget hotel chain Travelodge for 675 million (Dh4.66 billion).
It would be DIC's second major acquisition in the UK this year after it bought Doncasters for $1.3 billion in May.
The Dubai firm is buying Travelodge from private equity firm Permira, which has owned the hotel chain for more than three years. Permira had bought the Travelodge for 712 million in 2003 from contract catering company Compass.
DIC beat rival approaches from several private equity houses such as BC Partners, Starwood Capital and Cinven.
An announcement of the deal is expected shortly.
Travelodge, which operates hotels in the UK, Spain and Ireland, was also targeted by British-based Whitbread group, operator of rival budget hotel chain Premier Travel Inn (PTI).
Travelodge and Whitbread are tough competitors in the UK budget hotel market and their rivalry could unfold in the Middle East.
Under DIC ownership, the hotel chain is likely to increase its international focus. Travelodge's plans to open 40 new hotels this year are certain to be boosted by the Dubai deal.
The hotel chain currently has 279 sites across the UK, according to the company website. It added 2,500 rooms to its inventory in 2005, and has plans to add 2,750 rooms in 2006 and 3,000 in 2007, bringing the total number of Travelodge rooms to over 20,000.
Whitbread plans to increase the number of rooms at its PTI hotels to 45,000 by 2011 from some 30,000 at present.
In a 50:50 deal with Emirates Group, it will build three budget hotels in Dubai. The two companies plan to spend Dh260 million on the three Premier Travel Inn brand hotels.
Acquisitions: Charting recent investments
Paid $1.3 billion for engineering company Doncasters this year.
Acquired Tussauds Group for $1.48 billion.
Invested $1 billion in DaimlerChrysler.
Made a $272 million investment in JD Capital in Jordan.
Invested $150 million in Ishraq, a company formed to develop and own up to 22 Express by Holiday Inn hotels in the Middle East.
By Shakir Husain
Gulf News 2006
