Ikea, the Sweden-based flat pack furniture chain, has announced its intention to move into the hotel business.

In a major departure from its core interests, the company is looking to diversify by opening 100 low-cost hotels across Europe. A key area for growth in the hotel industry is budget-designed, boutique-style hotels that can provide rooms at affordable prices, and it is this segment that Ikea is keen to exploit.

The Swedish firm is one of a number of organisations that are looking to corner this part of the market, although it remains to be seen if its hotels will be assembled with a screwdriver and a page of written instructions. Even if that were the case, the hotels will not be carrying the Ikea brand name, but will be run on its behalf by a third party operator.

Ikea has already been active in the European property markets, including housing and commercial developments in the UK, Holland and Poland, and it is cities in these countries that are most likely to be the first recipients of the new hotel programme, along with Germany.

Speaking to German newspaper Frankfurter Allgemeine Zeitung, Harald Muller, a senior manager at Inter, IKEA’s property division, said, ‘We will announce within a few weeks the first location for our budget hotel in Germany and we are in talks with hotel operators to rapidly implement our concept.’

Founded in Sweden in 1943 by 17-year old, Ingvar Kamprad, Ikea has grown to iconic status, employing well over 120,000 staff worldwide, and turning over billions of Euros each year.