A newly formed Irish budget hotel group has purchased its first site in Manchester and is looking at locations in six other cities including Dublin.

Pillo Hotels, formed by the private equity firm Ion Equity, paid €4.8 million for the site at Whitworth Street in Manchester which will accommodate a 280-bedroom hotel with dedicated meeting rooms, bar and restaurant. The project will involve an overall investment of €32 million and the hotel is due to open in 2010.

Pillo’s strategy is to establish a network of premium budget hotels in city centre locations around the UK and Ireland.

The group is studying the merits of sites in Dublin, Belfast, London, Edinburgh, Glasgow and Brighton.

Ion Equity, which was formed in 2000 and has offices in Dublin and London, has recruited three former executives of the former Jurys Doyle group – Dermot Crowley, Shane Casserley and Conal O’Neill – to roll out the Pillo business.

The Jurys Inns business was bought by Quinlan Private for almost €1.2 billion, including debt. It has 23 outlets in Ireland and the UK and is aiming to open a further 10 hotels over the next two years.

Mark Reynolds of estate agent Savills, who advised Ion on the purchase of the Manchester site from a local firm Ask Developments, said that recent economic events had resulted in a large number of sites being offered to Pillo on attractive leasing and sales terms. This would allow the company to avail of central locations in a number of UK cities.

Ion’s first major acquisition was the USIT travel company in 2002 with the UK-based Lion Capital backing the deal. It later backed the Topaz consortium which paid €160 million in 2005 for the Shell chain of petrol stations in Ireland. Last year Topaz paid a further €240 million for Statoil’s retail chain.