PERMIRA, the private equity firm that has just sold Travelodge for £675 million, has wasted no time in re-entering the hotel sector by acquiring Principal Hotels for an estimated £300 million.
Principal, which is being sold by Royal Bank of Scotland, has six four-star hotels in the UK, including The Russell in London and The George in Edinburgh. Permira said the group would provide a “platform for consolidation” in the sector.
Analysts cited rivals such as Paramount Hotels, Macdonald Hotels and Q Hotels as potential acquisition targets as all would be looking for exits for their investors in the next couple of years. It is also expected to look at continental hotels.
The company will continue to be run by Tony Troy, the former head of the UK and Ireland division of Le Méridien Hotels. He led a management buy-in of Principal in 1994 and remained with the business when it was acquired by Nomura International in 2001 and merged with Méridien.
Mr Troy quit two years later, but Méridien’s subsequent financial woes presented him with the opportunity to regain control of the Principal Hotels name as well as five of his former hotels. These include The Metropole in Leeds and The Palace in Manchester.
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Permira had planned to acquire Principal in tandem with a purchase of De Vere Group. However, its plan was scuppered in July when Richard Balfour-Lynn’s Alternative Hotel Group tied up a deal with De Vere worth about £1.1 billion.