Duke Street sells budget hotel chain

Duke Street Capital has sold Financiere Galaxie, owner and operator of B&B Hotels and the third largest budget hotel chain in France, to Eurazeo.

Duke Street acquired Galaxie, which also operates hotels in Germany, in July 2003. The group had expanded aggressively since it was founded in 1990 to become the third largest budget hotel chain in France, with 111 hotels in its home market, as well as eight in Germany.

Since leading the buyout, Duke Street has strengthened the management team with the appointment of Georges Sampeur as CEO, who joined from travel company Carlson Wagonlit France.

“We completed a €223m refinancing of the company in July 2004, which replaced numerous lines of mortgage debt with a single mortgage facility to finance the group’s capital expenditure programme from 2005 to 2008,” said Frederic Chauffier, managing partner of Duke Street Capital. “The group has created a solid base from which to continue to pursue strong growth opportunities in France and internationally.”

Financiere Galaxie currently has 8,015 rooms, mostly in the one-star sector, with a pipeline of new site openings in France and Germany. The budget sector of the hotel market has seen significant growth in France since the 1990s, with both occupancy rates and revenues proving resistant to economic pressure.

Eurazeo is France’s largest listed investment vehicle, with a market capitalisation of €3.7bn.