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Business

British Company Moves to Buy Operator of Local Hotels

Canary Hotel in Santa Barbara and Goodland Hotel in Goleta affected by sale

A British company has agreed to buy San Francisco-based Kimpton Hotels & Restaurants, which owns the Canary Hotel in downtown Santa Barbara and manages The Goodland Hotel in Goleta.

InterContinental Hotels Group will pay $430 million in cash to acquire Kimpton, founded in 1981 and billed as the world’s largest independent boutique hotel operator.

The tentative deal was announced late Monday and was expected to close during the first quarter of 2015, depending on regulatory approval and Kimpton shareholder consent.

Early Tuesday, Kimpton CEO Mike Depatie said all its hotels and resorts would continue operating independently and under its own brand within IHG.

Kimpton manages 62 hotels and resorts — with 11,300 rooms — in 29 U.S. cities, with 16 more hotels in the pipeline, according to the announcement. The business also operates 71 hotel-based destination restaurants and bars.

Kimpton bought the 97-room luxury Canary Hotel at 31 West Carrillo St. in 2012, and earlier this year the company signed on to manage The Goodland Hotel at 5650 Calle Real in Goleta — formerly a Holiday Inn — for Newport Beach-based owner Makar Properties.

Great Britain’s IHG franchises, leases, manages or owns more than 4,700 hotels and 697,000 guest rooms in nearly 100 countries, with some 1,200 hotels in the development pipeline, according to the company.

IHG encompasses nine hotel and resort brands, including Holiday Inn and another one locals might recognize: Hotel Indigo (121 State St. in Santa Barbara).

With the acquisition, IHG would become the market leader in the ever-growing boutique segment of the hotel industry.

“Kimpton is a well-established and highly successful business that has built an industry leading position in the U.S.,” IHG CEO Richard Solomons said in a statement. “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.”

He said IHG would accelerate Kimpton’s growth in the U.S. and abroad, and Kimpton COO Mike DeFrino will continue leading the company’s team. Kimpton’s associates and owners would also be part of the IHG family, Solomons said.

Growth is also a goal for Kimpton, a sentiment its CEO shared with the announcement.

“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,” Depatie said. “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.”

According to IHG, the transaction would realize returns above the company’s cost of capital by year three.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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