Fuller, Smith and Turner Buys 7 Cotswold Inns Hotels for £40m

Main Photo: The Swan at Bibury, one of the seven hotel acquired by Fullers

Date: November 2019

Location: UK

Name: Cotswolds Inns & Hotels

No. of Keys: 201

Seller: Cotswold Inns & Hotels, which was founded in 1997 and, in the year to 30 September 2018, the properties being acquired generated revenue of £17.5m and EBITDA of £3.4m with a gross asset value of £31.5m.

At the group’s full-year results to 30 March, the company said that it had added 93 bedrooms to its estate including 15 at The Counting House on Cornhill, London as it moved towards its target of 1,000 rooms. During the year it acquired six Bel & The Dragon country inns across the Home Counties.

Buyer: Fuller, Smith and Turner has announced plans to buy Cotswold Inns & Hotels for £40m, adding seven hotels to its estate. Earlier this year saw the pub group announce that it would focus on its hotels division after selling its beer business to Asahi for £250m.

At the time of the Asahi deal said that it was committed to “running a stylish, high quality estate” and would expand through organic growth and acquisitions.

Fuller’s CEO Simon Emeny said: “The inns and hotels being acquired are all iconic, character properties in sought-after locations in the Cotswolds. They will further enhance our existing portfolio of premium hotel accommodation, adding 201 stylish bedrooms.

“A number of the sites have further development potential and Cotswold Inns & Hotels benefits from an established function business, spanning both leisure and corporate custom as well as weddings. We expect to realise further benefits from bringing the properties into Fuller’s and for the acquisition to be earnings accretive in the first year.

“Quintessentially English and renowned for a focus on fresh food, premium accommodation and an exceptional level of customer service, this collection of seven iconic country hotels is highly complementary with our existing strategy.”

News of the deal with Cotswold came as Wetherspoon Hotels shared first place with Premier Inn for the best hotel chain in the UK, according to a survey undertaken by Which. The consumer group said that customers had “raved about the chain’s ‘outstanding value for money’ and its central locations in ‘sympathetically converted’ period buildings”.

The group has 55 hotels and for the year to 28 July reported a 3.9% increase in hotel room sales and said that it would continue to grow its hotel portfolio.

Fuller’s and JD Wetherspoon were not alone. At its most-recent results, Marston’s said that it expected to develop four new lodges this year, adding to its 1,500 room accommodation portfolio. At the beginning of October rumours suggested that the company was planning to sell 150 hotels to help cut its GBP1.4bn in debt, although these were not expected to include pubs with rooms.

Comment from Andrew Sangster of Hotel Analyst: “The early pioneers of the budget hotel market in the UK – Forte (with Travelodge) and Whitbread (with Prmier Inn) benefited hugely from the landbank they had next to their existing restaurant or pub properties.

With almost free land cost it was now wonder that both the then Travel Inn and Travelodge estates mushroomed, becoming the dominant forces they are today. This latest pub hotel boom is quite different. Rather than bolting on a hotel, often built on a volumetric / modular basis off site, which has 40 plus rooms, maybe even 60 or 80, these properties have fewer rooms.

Price: £40m

Price per Key: £199,005

THPT Comment: Pubs adding rooms to their licensed premises is a no-brainer…very little extra capital and operational, brings in that extra revenue that drops largely on the bottom line.

First Seen: Hotel Analyst

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