InterContinental Hotels Group, owner of the Holiday Inn and Crowne Plaza brands, agreed to buy Kimpton Hotels & Restaurants for $430 million, gaining a boutique chain with high-end properties in cities across the US.
Kimpton, established in 1981, is the largest independent boutique hotel operator and restaurant company in the US, with 62 properties in 28 cities, InterContinental said today in a statement. The San Francisco-based chain also has 16 hotels under development and operates 71 restaurants, bars and lounges.
InterContinental is looking to take advantage of the fast-growing boutique segment and expand its business at the higher end, said Richard Solomons, chief executive officer of the Denham, England-based company. Kimpton’s properties include the trendy Ink48 and Muse hotels in New York, the Palomar in Los Angeles and Hotel Monaco in San Francisco.
“We have a very big US business but are more skewed toward the mid-market in the region,” Solomons said in a telephone interview. “We have wanted to grow faster in the higher end and this deal will help us accomplish that.”
Mike DeFrino, currently Kimpton’s chief operating officer, will assume the role of CEO of the chain, replacing Mike Depatie, Solomons said. Depatie will focus on running the real estate investment funds, which hold stakes in some of the properties that are operated under the Kimpton name, he said.
The transaction won’t include the purchase of any real estate, Solomons said.
Fast-Growing
Boutique hotels have been among the fastest-growing segments in the lodging sector, buoyed by demand from millennial customers, or those born after 1980, said Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Virginia. In October, Hilton Worldwide Holdings said it was starting a new boutique brand called Canopy.
“When you look at all the major hotel companies, IHG is one of the only brands that didn’t have any exposure to the higher-end lifestyle segment,” Bhalla said in a telephone interview. “It can take quite some time to create a presence in key markets. By buying an established brand name like Kimpton, with many properties under management, IHG can cut its expansion by years.”
Kimpton, which runs properties with features such as floor-to-ceiling bookcases and lush velvet drapes in guest suites, was in talks with several possible buyers, according to Solomons. Depatie declined to comment on who else the company was talking to during the sale’s process.
InterContinental, which owns the budget Hotel Indigo boutique brand, with 60 properties currently open, is looking to expand Kimpton overseas in such regions as Europe and Asia, Solomons said.
Bloomberg News, edited by Hospitality Ireland
