Whitbread offloads Marriott hotels

HOTELS and leisure group Whitbread expects to earn £1bn over the next two years from the sale of its franchised Marriott hotels operation to US-based Marriott International. The company is selling the chain to a joint-venture company it is setting up with Marriott.

Whitbread said today it will take an initial payment from the joint venture of £710m, to be paid in May this year. It will return £400m of this to shareholders through a special dividend of 135p a share. A further £100m will be used to reduce its pension fund deficit and the balance to pay down debt.

The company said on Friday that it was considering a complete sale of all 52 Marriott hotels in the UK, which would leave it to concentrate on the rest of its portfolio of interests. Whitbread's other hotel and leisure businesses include the Premier Travel Inn budget hotel chain, the David Lloyd health clubs and Pizza Hut restaurants, which it operates under franchise.

Whitbread acquired the Premier Lodge chain for £505m last year and adding it to the Travel Inn chain made it the biggest operator in this sector. Earlier this month Whitbread published a positive update on the previous year's trading although membership numbers at its David Lloyd fitness clubs fell after a dip in renewals at some older clubs. The 65-strong chain of clubs is facing increased competition, though the company refused to give specific details on the membership decline.