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BOUTIQUE HOTEL SECTOR EXPANSION

IHG...home to Crowne Plaza, Holiday Inn and InterContinental brands

InterContinental to acquire Kimpton Hotels for $430m

LONDON, December 16, 2014

InterContinental Hotels Group, one of the world's largest hoteliers, has agreed to buy US-focused Kimpton Hotels & Restaurants for $430 million to boost its exposure to the faster-growing boutique hotel sector.

IHG, home to the Crowne Plaza, Holiday Inn and InterContinenal brands, said that the cash acquisition would be earnings enhancing in its first full-year, with Kimpton's core earnings set to double by the end of 2017.

The deal also reduces IHG's tax bill by $160 million.

"The acquisition is another step in IHG's well-established asset-light strategy of investing in high-quality growth, building on a strong track record of developing iconic global brands," IHG chief executive Richard Solomons said in a statement.

Kimpton, started in 1981, manages 62 boutique hotels in the United States and has another 16 in the pipeline. Together with IHG's other boutique hotels, Hotel Indigo and EVEN Hotels, IHG will have over 200 open and planned boutique hotels across 19 countries.

IHG said Kimpton has estimated 2014 earnings before interest, tax, depreciation and amortisation (EBITDA) of about $20 million. It expects that to reach $39 million by 2017, due to opening new hotels and back office and technology savings.

IHG shares were up 0.6 per cent at 0807 GMT. - Reuters




Tags: hotel | acquisition | IHG |

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