InterContinental Hotels Group has reached an agreement to acquire Kimpton Hotels & Restaurants for $430 million in cash, adding 62 boutique-style hotels in 28 U.S. cities and resort areas to its already established portfolio of boutique and lifestyle hotels.
In a statement announcing the deal, IHG officials made it clear they felt the Kimpton brand, which includes 71 restaurants and bars, is a perfect fit with its Hotel Indigo and EVEN Hotels brands.
“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,” said IHG Chief Executive Officer Richard Solomons. “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 U.S. and internationally.”
The acquisition doesn’t just give IHG key assets, but it gives the company cache in the industry’s hottest growing sector. Kimpton has been in the boutique business before it even became defined as a “thing” since founding the company in San Francisco in 1981 and is the world’s largest independent boutique hotel operator.
In its statement. IHG officials said the move will double the company’s EBITDA (earnings before interest, taxes and amortization) from $20 million to $39 million by the end of 2017.
IHG is known more for chains in the U.S., with midscale brands like Holiday Inn and Holiday Inn Express and Candlewood Suites, and luxury-leaning brands InterContinental Hotels and Resorts and Crowne Plaza under its umbrella.
The company added EVEN Hotels to its Hotel Indigo brand last year as it tried to make waves in the boutique sector, a hotel style known more for smaller properties and local culture than cookie-cutter design.
With hotels already in the pipeline for 2015, the combined brands will operate more than 200 boutique and lifestyle hotels in 19 countries. Kimpton hotels currently run 11,300 rooms and will add another 3,000 rooms with the hotels in development and under construction.
The move, pending stockholder and regulatory approvals is expected to be completed by March 2015.
Kimpton COO Mike DeFrino will continue to lead the Kimpton team, according to Solomons.
“Kimpton and IHG have many things in common, not least our shared values and approach to building brands,” said Kimpton CEO Mike Depatie in a joint statement. “As an owner of a significant number of Kimpton hotels through our real estate investment funds, I am committed to developing additional Kimpton hotels and I look forward to seeing Kimpton go from strength to strength as part of IHG.”
Depatie sent a note to the 1.6 million members of the Kimpton Karma Rewards program Monday evening, saying it will be status quo for now, as both the Karma and IHG Rewards Club programs will run separately with no immediate changes to the Kimpton program.
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