EU: Hospitality group IHG has acquired the urban lifestyle Ruby Hotels brand for an initial sum of around €110.5 million.
The deal consists of an upfront payment of €109.9 million, paid on completion of the transaction, as well as a fixed deferred payment of €600,000 when approximately half of Ruby’s hotels join IHG’s system.
The brand will continue to be operated independently with all open, pipeline and future Ruby hotels to enter into individual franchise agreements with IHG. Franchise fees by 2030 are anticipated to be in excess of €14.3 million.
Ruby currently operates 20 hotels (3,483 rooms) across Europe and has another 10 hotels (2,235 rooms) in the pipeline. Over the next three years, the pipeline will see Ruby expand to Edinburgh, Marseille, Rome and Stockholm.
The integration of all 20 currently open Ruby hotels into IHG’s system is expected to start later this year and be completed by 31 March 2026.
IHG expects to have the Ruby brand ready for development in the US by the end of 2025. Globally, IHG is targeting more than 120 hotels over the next 10 years and more than 250 hotels over two decades.
To incentivise growth, potential additional payments ranging up to €181 million could be paid to Ruby’s operating company in 2030 and 2035. Payments are contingent on the number of Ruby-branded rooms operated at the end of the preceding year.
IHG also said a payment of €9 million would be paid if Ruby grew to operate in excess of 10,000 Ruby-branded rooms, which would scale up to the maximum potential total if the brand grows in excess of 20,000 rooms. IHG’s planned growth of the brand with other hotel owners is excluded from the calculation of any potential additional payments.
Michael Struck, founder and CEO of The Ruby Group, said: “We have carefully selected IHG as the right partner to take the Ruby brand and our international expansion to the next level. IHG’s distribution powerhouse, the fact that Ruby perfectly complements IHG’s portfolio, and its proven track record of successfully preserving identity and culture when integrating brands gives us great confidence as we embark on this next chapter together.
“Combining the global reach and resources of IHG with the efficiency advantages of our operational and construction model will drive superior returns for our investors and real-estate partners, alike. Also, the timing could not be better. Our unique solutions for efficient adaptive reuse of office space are in high demand, positioning us for strong growth,” he added.
Elie Maalouf, CEO of IHG Hotels & Resorts, said: “We are delighted with the acquisition of Ruby, which further enriches our portfolio with an exciting, distinct and high-quality offer for both guests and owners in popular city destinations. This acquisition demonstrates our focus on building our presence in large, attractive industry segments and using our experience of integrating and growing brands and hotel portfolios.
“The urban micro space is a franchise-friendly model with attractive owner economics, and we see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions,” Maalouf said.