Four upmarket Scottish hotels are to be rebranded as part of a deal approaching £1bn which will see 14 UK properties sold to a French real estate group.

Fonciere Des Regions has made its first steps into the UK market with the acquisition of the leading Principal and De Vere brands from Starwood Capital for £858m.

Under the terms of the deal, the day-to-day running of 13 of the hotels will be transferred to the Intercontinental Hotel Group (IHG), leading to a major rebranding exercise within two years.

The Principal Edinburgh Charlotte Square, the Principal Edinburgh George Street, the Principal Blythswood Square (Glasgow), and the Principal Grand Central (Glasgow) are among those to be operated by IHG.

IHG said the properties will be incorporated into its existing ‘luxury brand’ – Kimpton – and a yet-to-be created new ‘upscale’ brand, which is due to be launched later this year.

The brand, principally focused on conversion opportunities, will, according to the company, ‘capitalise on the significant opportunity IHG has identified to offer consumers an informal but differentiated experience in the upscale segment, whilst offering owners a strong return on investment.’

Keith Barr, Chief Executive Officer, IHG, said: “We are focused on continuing to expand our leadership in luxury and upscale, which are both high-value segments with significant growth potential. Bringing Kimpton to such an important market as the UK is a key part of our plans, as is the introduction of our new upscale brand, which will provide an exciting, differentiated offering to both guests and owners. Together with the recent addition of Regent Hotels & Resorts to our portfolio, we are building real momentum behind our plans to deliver industry-leading net rooms growth.”

The deal marks a quick end for the Principal brand, which launched in November 2016 and led to a £25m investment into the former Roxburghe Hotel (now Principal Edinburgh Charlotte Square), in particular.

It will establish IHG as the leading luxury hotel operator in the UK, taking it to more than 2k rooms in a fast-growing segment which has seen increased tourism levels after the post-Brexit devaluation of sterling.

Following FdR’s acquisition of the hotel properties and operations, IHG will operate the hotels under long-term “managed leases” as part of its luxury and upscale portfolio.

Foncière des Régions will now have a presence in the United Kingdom, the top hotel real estate investment market and fourth most popular travel destination in Europe (38 million tourists in 2017, up by 4%).

The portfolio is entirely made up of high-end hotel real estate (four and five-star hotels) and comprises a total of 2,638 rooms in prime locations at the heart of major British cities: nine are located in England (Birmingham, Leeds, Liverpool, London, Manchester, Oxford, Wotton and York), four are in Scotland (Edinburgh, Glasgow), and one is in Wales (Cardiff).

“Foncière des Régions is continuing its strategy to move upmarket in the hotel real estate industry. This acquisition is an opportunity to duplicate the development strategy already rolled out in France, Germany and Spain, where Foncière des Régions is the preferred partner of active operators on these markets. This transaction will help Foncière des Régions cement its leading position on the hotel real estate investment market in Europe”, said Dominique OZANNE, Deputy CEO of Foncière des Régions.

The hotels currently operate under the Principal Hotels and De Vere Hotels brands:

The Principal London
The Principal Edinburgh Charlotte Square
The Principal Edinburgh George Street
The Principal Met Hotel (Leeds)
The Principal York
De Vere Oxford Thames
The Grand Birmingham (pipeline)
The Principal Manchester
The Principal Blythswood Square (Glasgow)
The Principal Grand Central (Glasgow)
The Principal St David’s (Cardiff)
The Principal Oxford Spires
De Vere Wotton House