Sunday 21 April 2019

Applegreen may sell hotel stake as it eyes more US expansion

Applegreen's Joe Barrett
Applegreen's Joe Barrett
John Mulligan

John Mulligan

Forecourt retailer Applegreen is reviewing its newly-acquired hotel operation in the UK with all options on the table for the business.

It's also involved in initial discussions in the United States that could see it further expand its footprint there.

Applegreen acquired 29 hotel premises in the UK when it bought just over a 55pc stake in UK motorway service operator Welcome Break last year in a €440m deal.

Applegreen has an option to lift its stake to 70pc within six years. But the hotels, operated under the Ramada and Days Inn brands, are outside Applegreen's core competencies.

"It's not a sector we know a whole lot about," said CEO Bob Etchingham.

"We are learning, and we do anticipate coming to some conclusions on that before the year is out."

Mr Etchingham told the Irish Independent that it's "a little bit early" to speculate as to the likely outcome of the review.

"The first phase of this work is for the management team to get to know the sector and it isn't a business that we've been involved in at all," he said.

"The second stage will be starting to look at the options. We're at the very beginning of the process. I don't want to pre-judge anything. You can imagine the full range of potential outcomes here, and I genuinely don't know where it's going to end up."

Applegreen chief operating officer Joe Barrett also confirmed that the group is in initial talks with US-based CrossAmerica on foot of a deal the American firm did late last year to acquire 192 forecourts from Circle-K owner Alimentation Couche-Tard in an asset swap.

CrossAmerica indicated last year that it was already in talks with unnamed operators in relation to the 192 forecourts it will acquire over the next two years from Couche-Tard.

Applegreen has done previous deals in the US with CrossAmerica. Most recently, it signed a deal with CrossAmerica to lease 43 filling stations in Florida, expanding the Irish group's US presence. Applegreen has 121 outlets along the eastern seaboard in the United States, in South Carolina, Massachusetts and New York's Long Island.

"We're in discussions, but these things, they take time," Mr Barrett said.

Mr Etchingham added: "There's nothing that I can say to you now with any real confidence about something that might happen in the second half of the year.

"It could happen, but then again it may not happen."

Applegreen is also constructing a $3m (€2.6m) trunk road service area in Massachusetts - its first in the US.

The group yesterday said that, excluding the Welcome Break acquisition completed last October, its adjusted earnings before interest, tax, depreciation and amortisation (ebitda) rose 20pc last year to €47.8m. Revenue was 32pc higher at €1.9bn.

Including Welcome Break, the figures were €58.1m and €2bn respectively.

Irish Independent

Also in Business