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The sale will enable Whitbread to exit the luxury-hotel end of the market and focus on its Premier Travel Inn budget hotels, David Lloyd health clubs and restaurant chains. Officials of Whitbread, which has more than 50 four-star hotels operated under the Marriott brand, say 46 hotel assets would be disposed of via the joint venture.
"We expect this transaction to realize at least £1 billion over the next two years from a franchised business that, despite good management and operational performance, does not meet the group's cost of capital requirements," says Whitbread chief executive Alan Parker. Originally, Whitbread had been expected to sell half of the Marriott hotels through a sale and manage-back, which would have allowed the company to continue to run the hotels. The problem with that structure is that Whitbread has to pay franchise fees to Marriott International, the US owner of the brand, and these fees could make such a deal unviable.
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