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Share Name | Share Symbol | Market | Type |
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Hilton Worldwide Holdings Inc. | NYSE:HLT.WI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0 | - |
By Craig Karmin and Dana Mattioli
InterContinental Hotels Group PLC agreed to acquire Kimpton Hotels & Restaurants Group LLC. the largest independent boutique-hotel operator, in a bid to overtake its global rivals in this hot corner of the hospitality market.
The U.K-based hotel operator is paying $430 million for Kimpton, which operates 62 hotels across the U.S., InterContinental said Monday.
The deal would vault InterContinental to the top ranks in the boutique, or lifestyle, sector, which is characterized by stylish design and a thriving bar scene to attract travelers tired of cookie-cutter designs. It also sets the stage for the new owner to expand the U.S. brand overseas.
"For us, it's bang on strategy," InterContinental Chief Executive Richard Solomons said in an interview. "It fills gaps we have in North America, and in Europe and Asia, we see a lot of opportunity for the Kimpton brand."
While the boutique sector is highly competitive and fast changing, making it hard to predict which brands will stay on top, some hotel analysts thought the acquisition made sense.
"This is a well-conceived, strategic use of InterContinental's cash to quickly gain entry to an important lodging sector with a well-established lifestyle brand," said Sean Hennessey, chief executive officer of Lodging Advisors, a hotel-consulting firm.
Starwood Hotels & Resorts Worldwide Inc. was the first major chain to create a lifestyle brand with W Hotels in the late 1990s. In recent years, virtually all the major hotel brands have created their own lifestyle brands to compete in a market sector that has been especially popular with coveted young travelers whose spending habits are poised to eclipse older generations.
Hilton Worldwide Holdings Inc. and Best Western International Inc. both announced plans for their own boutique brands earlier this year, while this month Marriott International Inc. opened a boutique Miami hotel under its Edition brand, a new venture with hotelier Ian Schrager.
InterContinental has its own boutique brand, Hotel Indigo, which has 60 hotels, InterContinental said. That brand and Kimpton combined would have more than 200 hotels open or in the pipeline, InterContinental said.
Kimpton was founded in 1981 and now has hotels in New York, Los Angeles and Miami Beach and about two dozen other U.S. cities. While Kimpton manages many of its properties as independents, the company also runs the Hotel Palomar and Hotel Monaco brands.
The San Francisco-based company was among the first boutique brands and often has attracted attention from the major brands. Marriott reached an agreement to buy the company in 2000, but the deal never was completed.
Kimpton CEO Mike Depatie will step down to focus on management of the Kimpton real-estate funds, which buy or develop properties for Kimpton hotels. Mike DeFrino, currently chief operating officer, will become the new CEO, InterContinental said.
The deal comes at the end of a robust year for deal making, where M&A volumes reached levels not seen since 2007.
There have been a number of high-profile deals in the hospitality sector this year. In October, Anbang Insurance Group Co. of China bought the Waldorf Astoria in Manhattan for $1.95 billion from Hilton Worldwide. Also in October, Highgate Hotels LP sold a minority stake to private-equity firm Trilantic Capital Partners LP.
Deal makers in the sector say boutique properties and asset-lite plays, like management companies that don't own properties, are particularly hot among buyers.
Write to Craig Karmin at craig.karmin@wsj.com and Dana Mattioli at dana.mattioli@wsj.com
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