Private equity firm Lone Star has announced the launch of a new hotel investment and management group, Amaris Hospitality. The new hotel group will help the US-based private equity firm to bring together its existing portfolio of 89 properties.
The private equity firm announced its Amaris Hospitality would bring together its recently acquired hotels, which are currently spread around four separate portfolios.
The hotel group will include 29 Jurys Inn hotels, 21 Mercury hotels, 17 Hotel Collection hotels and three Hilton Hotels. The private equity firm has acquired the units over the last two years.
Furthermore, the group will add 19 provincial hotels at the end of July. These are currently operating as Thistle venues. The private equity firm currently has combined sales of over £450 million with its hotel chains.
The new hotel investment and management group will be led by John Brennan. Mr Brennan is the former Jurys Inn boss. Furthermore, Grant Hearn, the former chief executive of Travelodge, has been appointed as the non-executive chairman of the new company.
Mr Brennan was quoted in the Financial Times saying, “The strategy is to create a branded hotels business. Many of these hotels have great locations but have not had much put into them. We have £100m to invest and renovate these hotels.”
Furthermore, Mr Brennan said in the official statement, “Through the successful implementation of our strategy in the coming years we expect the business to have a value of over £2 billion”.
Lone Star has more hotels in its portfolio, but these will not feature in the new group. According to the BigHospitality website, the hotels will continue to operate under the Hotel Collection portfolio run by Peter Manby.
Hotel Industry Becoming Increasingly Attractive
According to the Financial Times article, the hotel sector’s attractiveness is returning to the pre-financial crash levels. The industry has seen a flurry of deals involving private equity firms.
While Lone Star has been one of the firms to invest heavily in the industry, other firms have been making great exits in recent years. The US-based private equity firm, Blackstone, recently sold around 90 million of its shares in the Hilton hotel chain, cutting its stake in the chain to less than 50%.
The plan for the private equity firm is to create enough value to allow the business to list in a couple of years. According to Mr Hearn, “The aim is to create value by deploying capital and showing what the business is capable of”. The group isn’t expected to list anytime soon.
The UK’s hotel industry has been especially booming, as it has seen investment increase in the sector by 47%. Martin Rogers, hotels director at the property expert Savills, recently commented on the increased investment by saying, “Last year saw UK hotel transaction volumes reach an eight-year high at £6.1 billion, and investor confidence has remained strong throughout the first quarter of 2015.” Furthermore, Mr Rogers expect the buoyant mood in the sector will continue for the duration of the year.