IHG acquires Kimpton Hotels
IHG has agreed to acquire Kimpton Hotels & Restaurants for $430 million in cash to create the world’s largest boutique hotel business.
Expected to close during the first quarter of 2015, the acquisition makes IHG the clear market leader in the boutique segment, the fastest growing segment in the industry.
Richard Solomons, Chief Executive Officer of IHG, comments: “Kimpton is a well-established and highly successful business that has built an industry leading position in the US. It has created a portfolio of world-class hotels and destination restaurants, and the distinctive and innovative Kimpton brand will fit perfectly into the IHG brand family. Adding Kimpton to our portfolio of preferred brands creates the world’s largest boutique hotel business.
“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. We will use our scale, network of owner relationships, and powerful digital platforms to accelerate Kimpton’s growth both within the US and internationally.”
He continues: “The hugely talented Kimpton team will continue to be led by Mike DeFrino, currently Kimpton’s COO, and I am delighted to welcome all of Kimpton’s associates and owners to the IHG family. The culture and values of both companies are well aligned and Kimpton will bring a wealth of expertise and specialist skills to IHG.”
Mike Depatie, Chief Executive Officer of Kimpton Hotels & Restaurants, adds: “Kimpton is a unique business with a strong track record of excellence in everything from design and innovative hotel concepts to financial and operational performance. It also has enormous potential for growth, both in its home market of the US and globally. IHG is the ideal partner for Kimpton and has absolutely the right experience and specialist capabilities to help the business move to the next phase of rapid growth.”
Kimpton was established in 1981, and is the largest independent boutique hotel and restaurant business in the US. It manages 62 hotels (11.3k rooms) across 28 cities in the US in urban and resort locations such as Boston, Chicago, Florida, Los Angeles, New York, San Francisco, Seattle and Washington D.C. There are a further 16 hotels in the development pipeline (3.0k rooms), of which 10 are under construction.
Adding Kimpton to IHG’s portfolio of preferred brands, alongside its highly successful Hotel Indigo and EVEN Hotels brands, will create a leading boutique and lifestyle hotel business, with over 200 open and pipeline hotels across 19 countries.
IHG will capitalise on its scale, powerful global owner networks, digital platforms, and specialist capabilities of building preferred brands to enhance Kimpton’s growth globally. In particular, there is a significant opportunity to expand the brand in Europe and Asia where there is strong demand for boutique brands.
Kimpton has a strong track record of operational and financial performance, achieving 4.0% per annum growth in system size and 7.7% average growth in comparable same store RevPAR in the last five years. Kimpton’s EBITDA is expected to be approximately $20 million for the year ended 31 December 2014, and IHG expects to be able to deliver future growth in Kimpton EBITDA to approximately $39 million by 2017 from the opening of hotels in the pipeline and the achievement of certain back office and technology savings.
The transaction will be financed through existing cash resources and new debt facilities, and is expected to close during the first quarter of 2015 upon satisfaction of certain customary conditions, including Hart-Scott-Rodino anti-trust clearance and Kimpton shareholder consent.
