Exclusive – RedCat to focus on premium inns with exit from managed pub operations: RedCat Hospitality, founded and chaired by Rooney Anand, is to become a focused pub-with-rooms operator and exit its circa 20-strong managed pub division, Propel has learned. Led by the Coaching Inn Group, the company will bring together all of its pubs-with-rooms sites into one division, creating a 43-strong portfolio of premium inns across the UK. The business said the move would allow it to concentrate investment, management time and future acquisitions on continuing to grow a “best-in-class and leading premium inns business” across the UK. Propel understands that the move, which follows the sale of RedCat’s 21-strong leased and tenanted pubs division to Admiral Taverns in November, will see seven of the group’s sites transfer to Coaching Inn Group, which was recently named Which? Large Hotel Chain of the Year. It is thought this will include the 23-bedroom Lion Inn in Boreham, near Chelmsford in Essex. Under the stewardship of RedCat, the Coaching Inn Group has more than doubled in the past three years, having grown from the 18 sites and 513 rooms when acquired in 2021 to 43 premium inns operating nearly 1,500 rooms. Richard Lewis, group chief executive of RedCat, said: “This is the natural next step for us as a business, particularly as our premium inns have become an increasingly important part of what we do. Operating under the Coaching Inn Group brand, we are extremely well positioned to build on the strong growth and momentum we have seen to date. We are already the UK’s fourth-largest pubs-with-rooms operator, and the recent recognition from Which?, combined with the strength of our management team and people across both our support functions and sites, gives us a powerful platform from which to grow. Our ambition is to welcome many more sites into the group.” On the prospect of exiting its managed pubs estate, Lewis said: “This decision in no way reflects the quality of our managed pubs or the brilliant teams that operate them. I would like to thank each and every person involved for making our pubs such warm and inviting places for our guests.” Lewis added that in terms of transitioning these sites to new ownership, the business had commenced a process and was engaging with a number of potential suitors. Propel understands that RedCat is working with Sapient Corporate Finance on the sale process for its managed pubs division.

 

“I wouldn’t describe some of them as back street pubs, more like on the street behind the back street!” Such was one peer’s unflattering description of the then RedCat Pub Company’s first acquisition – the 42-strong package of pubs that were originally placed on the market to address competition concerns surrounding Stonegate Pub Company’s £3bn acquisition of Ei Group. Five years on, it has been quite a journey for the now RedCat Hospitality – one of post-covid opportunity, rapid expansion and strategic refocus. Founded to “save” pubs, the business, which was founded by ex-Greene King chief executive Rooney Anand and backed by Oaktree Capital, grew aggressively to more than 120 sites, and more latterly switched to concentrating on managed pubs and premium accommodation. That rapid expansion unsurprisingly caused some indigestion, but under the group’s third chief executive – Richard Lewis, formerly of SSP UK & Ireland and Greene King – it smoothed out its edges and seems poised to play a key role in sector consolidation.

 

Anand partnered with the Los Angeles-based Oaktree at the start of 2021, reportedly securing £200m in backing to launch the new venture. The business then, unsurprisingly, proceeded to be linked with every pub deal going. At the same time, it hired Chris Hill, the former chief executive of, and driving force behind, the award-winning bar and restaurant business, New World Trading Company, to oversee the business. By March that year, the business made its platform acquisition, the said acquisition of the 42-strong package of pubs from Stonegate Group, a deal that Anand called the “first step in our plan to build a differentiated pub company”. It is thought the business paid circa £20m for the package of pubs, which comprised 30 freehold and 12 leasehold sites and consisted of 32 former Ei Group-owned properties and ten former Stonegate sites. The acquired sites were located predominantly in suburban and neighbourhood locations – 25 in the south east, 11 in northern England, two in the Midlands and four in Wales. 

 

At the same time, it began acquiring smaller companies, parts of smaller companies and individual sites spread far and wide across England and Wales. These included seven pubs from Dominion Hospitality; the five-strong, Leicestershire-based Little Britain Pub Company; four pubs from the award-winning Knead Group; the Five Bells in Colne Engaine; The Lion in Earl’s Colne from Caroline and Darran Lingley, who was the British Institute of Innkeeping’s Licensee of the Year winner in 2011; and two hotels from Shepherd Neame for £5.75m. However, it was in August of that year that the business made its most significant acquisition, swooping in ahead of Greene King to acquire the then 18-strong Coaching Inn Group in a deal valued at more than £60m. The business immediately became the bedrock of the RedCat business and remains so.

 

By the summer of 2022, the company had grown to more than 100 pubs and hotels, with more than 1,200 rooms. Of course, going at that speed, there were some teething problems. With a patchwork quilt of businesses strewn across the country, the business, in places, found itself trading against the same local entrepreneurs it had just acquired sites off. Hill, who had come from a more focus, brand and concept-led business, left the business at the end of that summer, subsequently joining Urban Pubs & Bars. In his place came former Whitbread managing director Phil Birbeck, who had left the Beefeater and Brewers Fayre operator two years previously. Brought in to further stabilise the business and bring some sense of a coherence across the group, Birbeck’s appointment now looks like a stop gap, while Anand waited for his former Greene King colleague Lewis to become available.

By the end of 2022, RedCat received new funding from Oaktree and was trading from circa 120 sites and had, according to the business, a total enterprise value of circa £250m. At the end of the summer of 2023, Birbeck moved on and Lewis was hired, with Anand stating that after two years, RedCat was a “fully functioning pubco and Richard’s experience of driving performance, as well as his proven capabilities as a leader, will really help RedCat push on even more”. Firstly, like its peers, the company had to deal with the increasing headwinds the sector was facing, and Lewis needed to consolidate the sites the business already had. The following February, Kevin Charity, the founder and chief executive of the Coaching Inn Group, stepped down from his role, having helped RedCat almost double the size of the business he founded in 1996, from 18 to 35 sites.

A month later, Propel revealed that RedCat was looking at potentially exiting more than a fifth of its 114-strong estate after a strategic review of the business. As part of the review, RedCat Leased Pubs, a self-contained subsidiary comprising ten leasehold pubs, was placed into administration. The company said that it was an isolated action, with no further impact on the wider RedCat and Coaching Inn Group estate. RedCat said it had undertaken the strategic review of its estate in the context of “significant challenges in the operating environment of the hospitality industry”.

 

In April 2024, RedCat posted losses of £31m but reiterated it believed the current headwinds facing the sector would create further opportunities for the business to grow. It came as the group reported turnover increased to £120,488,826 for the year ending 3 April 2023 compared with £62,790,800 for the previous 64-week period, from when the company was incorporated in January 2021. At the same time, it confirmed that it had received £25m of additional funding from its majority shareholder, Oaktree, £10m of which has been used to repay part of its external borrowings.

That summer, RedCat completed a £61m refinancing, which it said gave the business “the stability required to invest for growth”, The refinancing of its debt facilities included debt funding from Barclays Bank and further equity from the group’s existing investors, including funds managed by Oaktree. RedCat said the deal demonstrated “a vote of confidence in the strategy, team and future success of the business”. That September, the company began rolling out an £8m capital investment programme across its RedCat Pubs and Coaching Inn Group portfolio. The group planned to invest in 18 RedCat pubs and six Coaching Inn Group sites across the UK.

 

By March last year, Lewis, now group chief executive of RedCat Hospitality, the rebranded operator of Coaching Inn Group and RedCat Independent Pubs, told Propel that after a period of stabilisation, the circa 100-strong business was ready to return to the acquisition trail, with further additions to its room stock a particular focus. The rebrand would also include its biggest single investment to date of £3m in the development and reopening of The Castle of Brecon Hotel – the oldest hotel in Wales – under the 35-strong Coaching Inn Group. The 43-room site reopened with a 100-plus cover restaurant and 100-cover lounge area. Lewis said the business was in “early conversations on a couple of further sites we would look to add to Coaching Inn Group”. RedCat also at that point ran 38 managed sites operating under the RedCat Independent Pubs umbrella, plus 22 leased and tenanted sites. A month later, the group said its adjusted Ebitda was expected to more than double to circa £6m for the 12 months to 31 March 2025, on the back of a transitional 12 months, which has left it in a “more stable and strong position”. The operator of 95 sites said the work undertaken in the year to 31 March 2024 had “laid the foundations for subsequent transformation of the business, and return to growth and investment”.

 

The business had stabilised so much that last May, RedCat Hospitality entered talks to buy 39 sites from Greene King in a deal valued at £90m. It was a statement of intent and a further signal of the direction of travel that RedCat was focused on going down. However, a few weeks later, Propel revealed those discussions had come to an end over what is understood was a gap in the valuation of the portfolio between the two parties. RedCat would have also had to invest a significant amount – some have suggested more than £40m –in said portfolio post-acquisition. Later that same month, it did return to the acquisition trail, acquiring the 40-room Warwick Arms Hotel in Warwick – its first acquisition since August 2022, which again saw RedCat deliver against its strategy of expanding the Coaching Inn Group.

 

In September, RedCat heralded the 12 months to the end of March 2025 as a “transformational year”, with the company emerging from it a “stronger, leaner and more coherent business”. The business said adjusted Ebitda for the period was up 290% to £8.8m (2024: £2.2m), with site Ebitda up 42% to £18.7m (2024: £13.2m), and like-for-like sales up 2%. Total revenue for the group was down slightly, 4.3% to £124.3m (2023: £129.8m), but the business said it expected to be back in revenue growth in 2025. At the end of the same month, Lewis told Propel that the business has an opportunity to consolidate a fragmented coaching inn market. However, he said “the expectations of people selling their businesses versus their performance and the investment required to fix them was still a little bit out of line”, although he expected that probably to change in the next 12 months, as costs start to bite further.

 

The move to a purely room-led business took a step further when the company reached an agreement with community pub group Admiral Taverns over the sale of its leased and tenanted pubs division, which saw 21 sites (the majority from that original Stonegate deal) disposed of, for a price, I understand, was around £10m. As Lewis said: “This is the right move for our business. RedCat’s greatest opportunity lies in further expanding and investing behind our managed business and pubs-with-rooms model, where we see strong and sustained customer demand.” And the deal for those Stonegate sites in 2021 was the right deal for the business then, allowing it to establish a platform, and while subscale for RedCat, the estate is thought to have performed well and generated stable cash flow.

 

It looked like a good deal for both parties. In a strongly performing, wet-led community market, the opportunity arose for RedCat to realise its investment in the leased and tenanted estate, allowing capital to be reallocated to higher growth managed pubs, particularly sites with rooms, while Admiral, continuing to be led expertly by Chris Jowsey, will do what it does well – deliver growth from wet-led community pubs alongside accretive capex. It further ups the group’s batting average (average weekly sales) across its estate and strengthens its position in the south east, alongside the acquisition of 37 pubs from Fuller’s in 2024 for £18.3m. Admiral will also be able to integrate the RedCat pubs into its portfolio without much by way of incremental overhead. The deal also underscored RedCat’s current and future direction – current equals premium rooms and coaching inns, alongside managed pubs with food-led offers like carveries, while future should be less about sheer scale; more about quality, guest experience, and profitable formats.

 

I have written a couple of times that to take the next step in its development, RedCat would need to make a bold statement. The aborted deal for the 39-strong Greene King package would have been one. It would have been a significant cheque to write in the current climate. But the fact there was willing to do so, or get close, highlights Oaktree’s confidence in Anand and Lewis; in Adam Charity and his team leading Coaching Inn Group; and that the pubs with rooms market has plenty more runway. When I heard a rumour that RedCat was involved in a deal at the end of October, I thought it may have gone in for parts of that Greene King package – a portfolio that Greene King currently has to find a solution and investment for. Or it was set to take a bite out of the Whitbread portfolio that is still doing the rounds.

The market knows it has firepower, but Lewis has shown he won’t be rushed, and in the Coaching Inn Group, recently named Large Hotel Chain of the Year by consumer champion Which?, it has one of the jewels in the sector’s highly competitive pubs with rooms market. As I wrote last month, I could even see RedCat getting leaner and fitter before it presses the button on further acquisitions. By placing its remaining managed sites on the market, it can now focus its energy and investment on the part of the business it believes provides the best return on investment and long-term growth potential – a strategic trend other operators are also set to follow.

With the funds generated from the managed division sale to come, RedCat can play an interesting and potentially decisive role in the future make-up of the inns market, alongside the likes of the Heartwood Collection, Inn Collection and newcomer to the accommodation party, Brunning & Price. After two years of getting under the bonnet, Lewis and his team have put RedCat in a prime position to play a key role in any consolidation play.