Budget hotel chain Travelodge has joined Whitbread in the race to acquire rival operator Premier Lodge.
If successful, the deal would give Travelodge the largest budget hotel estate in the UK, with 372 hotels.
The 136-strong Premier Lodge chain was auctioned off by Scottish & Newcastle alongside its pubs division and on Monday a consortium led by pub operator Spirit emerged as the new owners with a bid worth £2.51b. Both Permira-owned Travelodge and Whitbread-owned Travel Inn are interested in acquiring Premier Lodge in a secondary sale.
Travelodge chief executive Grant Hearn confirmed the firm had held "lengthy talks" with the Spirit-led consortium about acquiring Premier Lodge and had received an "encouraging" response.
Leisure group Whitbread, which owns the 300-strong Travel Inn chain, is believed to have held talks with the consortium last month and a Whitbread spokesman confirmed it was interested in acquiring Premier Lodge "at the right price".
Dominic Murray, associate director at hospitality real estate consultants CB Richard Ellis hotels, said Travel Inn and Travelodge were "on equal terms" in their bid to acquire the chain and the emergence of other contenders was unlikely.
"Whitbread may end up being a joint-venture partner - I wouldn't rule that out," Murray added. "But it wouldn't surprise me if the consortium retained Premier Lodge."
A spokeswoman for Spirit said it was too early to comment on the company's plans for the chain.