Dubai chief executive Sameer Al Ansari says Travelodge was a strong brand with growth potential. "The budget hotel sector is growing and, in our view, is underdeveloped in the UK market," he states. Travelodge aims to be the biggest budget operator in London by the 2012 Olympics, with more than 7,000 rooms in the British capital."

Permira bought Travelodge in 2003 for euro 1.1 billion ($1.4 billion) and less than two years later recouped euro 590 million ($754 million) of that from a sale-leaseback of 139 hotels. It put the chain on the market earlier this year. Dubai International beat competition from other financial and trade bidders. The acquisition is Dubai International's third UK purchase in the past year, the others being in the car and engineering sectors. But its biggest splash came last year when the company paid euro 1.2 billion ($1.5 billion) for Tussauds Group, the British theme parks company best known for the Madame Tussauds waxwork museums.

But Dubai International's senior vice-president Sylvain Denis says in a published report that his company expects to exit in three to five years. Hotel analysts in London believe the company will look for a relatively quick turnaround.