Candlewood Suites Brand for $15 million in Cash
|ATLANTA, Oct. 28, 2003 - InterContinental Hotels Group (IHG) today
announces an agreement to acquire the Candlewood Suites brand and increase
the company's management portfolio by more than 30% in the Americas.
The deal, subject to CNDL shareholder approval in December, will increase
IHG's brand portfolio to six brands, as well as add 108 hotels and nearly
12,500 rooms in the Americas.
Candlewood Suites is an established midscale brand whose hotels are all purpose built and are on average less than 5 years old. The addition of this new brand to the IHG portfolio means that the group now has representation in both the midscale extended stay segment, as well as the upscale extended stay segment with their Staybridge Suites offering.
This two-part transaction involves three parties: IHG, Candlewood Hotel Corp (CNDL) and Hospitality Properties Trust (HPT). IHG will acquire for $15 million in cash the Candlewood Suites brand from CNDL and be licensor on all current and future franchise agreements. IHG will enter into an agreement with HPT, which owns 64 Candlewood Suites hotels and will purchase an additional 12, to manage these 76 properties. The management agreements will be for 25 years with options to extend. The transaction is expected to be earnings enhancing within the first year.
This deal follows two earlier announcements involving HPT. The first was HPT's purchase of 16 Staybridge Suites and the second the conversion of 14 Summerfield Suites to Staybridge Suites hotels. Once this transaction closes, HPT will own 136 IHG properties -- all to be managed by IHG.
"This acquisition is consistent with our long term strategy to prove and deliver winning brand concepts, while reducing our capital exposure in real estate assets and growing our revenue stream from management and franchise fees. Our growing relationship with HPT gives us the best of both worlds," says Steve Porter, president for the Americas, InterContinental Hotels Group.
Porter continues, "The Candlewood Suites acquisition expands our industry supply share in a segment where we have experience and dominance -- the mid-price market -- with good quality assets, that significantly grow our room and hotel supply share virtually overnight. The brand is a perfect fit within our current portfolio of brands and will benefit tremendously from our global enterprise values such as Priority Club Rewards, global sales and our worldwide reservation system."
Porter adds, "We are pleased to work with Jack DeBoer and his team who have done a tremendous job in developing and launching this brand. We look forward to growing distribution of the brand."
InterContinental Hotels Group PLC of the United Kingdom (LON: IHG), (NYSE: IHG) (ADRs), owns, manages, leases or franchises, through various subsidiaries, more than 3,300 hotels and 515,000 guest rooms in nearly 100 countries and territories around the world ( http://www.ichotelsgroup.com ). The Group owns a portfolio of well recognized and respected hotel brands including InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn, Express by Holiday Inn and Staybridge Suites, and also has a controlling interest in Britvic, the second largest soft drinks manufacturer in the UK.
Hospitality Properties Trust is a real estate investment trust headquartered in Newton, Massachusetts, USA, which owns 274 hotels located throughout the United States.
Candlewood Hotel Company, headquartered in Wichita, Kansas, owns, operates and franchises Candlewood Suites and Cambridge Suites -- hotel properties that offer high-quality accommodations for all guests, while catering to mid-market and upscale business and personal travelers seeking multiple night stays. Jack DeBoer, Chairman and CEO and founder of Residence Inn, started Candlewood Hotel Company in late 1995.
Web Site: http://www.ichotelsgroup.com
|Also See||InterContinental Hotels Group PLC Sells 16 Staybridge Suites' Hotels to Hospitality Properties Trust for $185 million Cash / July 2003|
|Candlewood Hotel Company Competes $65 Million Sale-Leaseback Transaction with Hospitality Properties Trust / July 2003|