Bob Ivell out of Premier Lodge race

Bob Ivell has dropped out of the race to buy Premier Lodge, the budget hotel chain put up for sale for £600m by Spirit Group.

The former Scottish & Newcastle Retail boss was in the running with private equity backer PAI for the 132-strong budget hotel, which was sold to Spirit by S&N as part of its £2.51bn managed division.

Mr Ivell's bid was deemed inappropriate by Spirit as his team wanted to buy more than the nine pubs offered in the sale. They tabled a bid for 84 pub-restaurant businesses that sit alongside the hotel chain, but this was rejected.

A source close to Mr Ivell's camp said: "We think it's a much more difficult deal without the pubs. Separating the two would be very difficult with a whole myriad of issues.

"Many of the hotels and pubs are in the same building, have shared car parks and so on. It goes right down to sprinkler systems - it will be a real headache to sort out. Also you will be effectively cutting a manager's job in half, so they won't be very happy."

It is thought that a successful buyer would perhaps look to establish management contracts with Spirit, as a way round the complex separation issue.

Also out of the running is private equity concern Permira, owner of the Travelodge business, which was seen as the frontrunner for Premier Lodge.

The developments would appear to make Whitbread the favourite to combine it with its existing Travel Inn business, although other bidders through to the final stages in the auction process are also thought to include financial players Apax and Nomura.

Whitbread operates Travel Inns alongside its own pub businesses such as Brewer's Fayre but also with third party companies such as Spirit.

Mr Ivell is said to be weighing up his options.