Furniture retailer Ikea plans to build a budget hotel chain across Europe, following a trend for cheap-but-cool accommodation driven by low air fares and increasingly price-conscious business travellers.
The 100 hotels, which will not feature Ikea's eponymous flat-pack furniture nor its brand name, represent the company's biggest real estate development to date.
Demand for stylish yet affordable rooms from austerity-hit business guests and leisure travellers is high and growing, according to Harald Muller, senior executive at the property unit of Inter Ikea, the company that owns the Ikea brand and concept.
"'Budget designer hotels' is today the fastest developing hotel segment." he said.
Ikea, which has outlets in Dublin and Belfast, will most likely open its first hotel in Germany in 2014 and the chain will be run by an international hotel operator, Mr Muller said.
"There is no IKEA furniture in it," Mr Muller said. "It is not an Ikea hotel. It's a continuation of our normal investment activities in real estate."
Inter Ikea already owns a few hotels and has more in the works, but the new project would be its first chain and will top its 26-acre home, office and hotel scheme around the Olympic park in London.
Inter IKEA is identifying and buying sites for future hotels in the chain which will be launched in Belgium, Austria, the Netherlands, Scandinavia, Britain and Eastern European countries like Poland.
Inter Ikea's property assets total around €750 million but it has the financial muscle to be a larger developer.
In its fiscal 2010/11 year, Ikea Group, which operates most Ikea stores under franchise from Inter IKEA, raised net profit by 10 per cent to a record €2.97 billion on revenues of €25.17 billion, another all-time high.
Accounts just filed by Ikea Ireland Ltd show that revenues at the Ballymun store dipped by 7 per cent from €110.7 million to €102.8 million in the 12 months to the end of August 2011. The company currently employs 449 staff in Dublin.
Reuters