IHG Agrees to Acquire Kimpton Hotels & Restaurants for $430 Million

Acquisition makes IHG the clear market leader in the boutique segment, the fastest growing segment in the industry

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. December 17, 2014

LONDON. December 17, 2014. IHG today announced it has agreed to acquire Kimpton Hotels & Restaurants ("Kimpton") for $430 million in cash. Kimpton Hotels is the world's largest independent boutique hotel operator and a sophisticated food and beverage operator. Kimpton is a fully asset-light business that manages 62 hotels in the most attractive cities and resorts in the US with a further 16 hotels in the pipeline. It operates 71 hotel-based destination restaurants and bars.

Richard Solomons, Chief Executive Officer of IHG, commented "Kimpton is a well-established and highly successful business that has built an industry leading position in the US. It has created a portfolio of world-class hotels and destination restaurants, and the distinctive and innovative Kimpton brand will fit perfectly into the IHG brand family. Adding Kimpton to our portfolio of preferred brands creates the world's largest boutique hotel business.

The acquisition is another step in IHG's well-established asset-light strategy of investing in high-quality growth, building on a strong track record of developing iconic global brands. We will use our scale, network of owner relationships, and powerful digital platforms to accelerate Kimpton's growth both within the US and internationally.

The hugely talented Kimpton team will continue to be led by Mike DeFrino, currently Kimpton's COO, and I am delighted to welcome all of Kimpton's associates and owners to the IHG family. The culture and values of both companies are well aligned and Kimpton will bring a wealth of expertise and specialist skills to IHG."

Mike Depatie, Chief Executive Officer of Kimpton Hotels & Restaurants, commented: "Kimpton is a unique business with a strong track record of excellence in everything from design and innovative hotel concepts to financial and operational performance. It also has enormous potential for growth, both in its home market of the US and globally. IHG is the ideal partner for Kimpton and has absolutely the right experience and specialist capabilities to help the business move to the next phase of rapid growth. Kimpton and IHG have many things in common, not least our shared values and approach to building brands. As an owner of a significant number of Kimpton hotels through our real estate investment funds, I am committed to developing additional Kimpton hotels and I look forward to seeing Kimpton go from strength to strength as part of IHG."

Kimpton Overview

Kimpton was established in 1981, and is the largest independent boutique hotel and restaurant business in the US. It manages 62 hotels (11.3k rooms) across 28 cities in the US in attractive urban and resort locations such as Boston, Chicago, Florida, Los Angeles, New York, San Francisco, Seattle and Washington D.C. There are a further 16 hotels in the development pipeline (3.0k rooms), of which 10 are under construction. Kimpton also operates 71 hotel-based destination restaurants, bars and lounges across the US.

Kimpton caters for a broad and varied range of guest needs, including 'Mixing Business with Pleasure', 'Short Break Experience', 'Romantic Getaway' and 'Wellbeing' at an upper upscale price point. It also has a well-established and sophisticated member loyalty programme, Kimpton Karma Rewards, which has approximately 1.6 million members.

Kimpton and its hotels and restaurants have secured a wealth of industry awards and accolades including:

• Fortune Magazine's "100 Best Company to Work For" in five of the last six years.
• Named the number one company for Guest Satisfaction for North American Upper Upscale Hotel Brands in 2013 and 2014 by J.D. Power.
• Recognised by the Market Metrix Hospitality Index as the best performing company in "Overall Customer Satisfaction in Upper Upscale Category" for the World for 2013.
• "Best Hotel Bars" by Food & Wine in 2014 and 2013, TripAdvisor's "Certificate of Excellence" in 2013, and "Best Hotel Bar" USA Today's 10 Best Reader's Choice Award in 2013.

Significant Opportunity to Accelerate Growth

Adding Kimpton to IHG's portfolio of preferred brands, alongside its highly successful Hotel Indigo and EVEN Hotels brands, will create a leading boutique and lifestyle hotel business, with over 200 open and pipeline hotels across 19 countries.

The boutique hotel segment has been the fastest growing in the hospitality industry over the last four years, with demand, supply, and RevPAR growth for boutique hotels in the US each significantly outperforming the overall industry.

IHG will capitalize on its scale, powerful global owner networks, digital platforms, and specialist capabilities of building preferred brands to enhance Kimpton's growth globally. In particular, there is a significant opportunity to expand the brand in Europe and Asia where there is strong demand for boutique brands. IHG will also benefit from Kimpton's strong track record in operational excellence, food & beverage and design, to add value across its current brand portfolio.

The Kimpton Real Estate Investment Funds, which are run by four existing Kimpton executives, expect to make future investments in Kimpton branded hotels. The Funds own approximately 30% of Kimpton's existing and pipeline properties and intend to raise additional funds to acquire, develop and redevelop boutique hotels. As part of this investment platform, the Funds expect to have a meaningful and on-going relationship with the Kimpton brand.