Rumours about the sale of Whitbread's four- and five-star Marriott-branded properties were confirmed this morning, when the company announced it hoped to realise £1b from the transaction and return about £400m to shareholders.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
The group, which intends to focus on its core products of budget hotels, restaurants and leisure clubs, will form a joint 50:50 venture with US company Marriott Hotels until the hotels are sold.
Under this agreement Whitbread will receive £710m on 5 May, of which £400m will be returned to shareholders, £100m will go towards reducing the company's pension deficit and the rest will be used to reduce its overall debt.
Whitbread chief executive Alan Parker defended the decision to sell the properties outright, rather than the original sale-and-manage-back plan.
"We expect this transaction to realise at least £1b over the next two years from a franchised business that, despite good management and operational performance, does not meet the group's cost of capital requirements."
Once sold, Marriott will operate the hotels under long-term management contracts and Whitbread employees will be transferred to Marriott.
by Emily Manson
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