Well, that was quick.
The deal, first announced on Sept. 14, formally closed on Sept. 30. As part of the purchase, Red Lion acquired approximately 1,000 franchise hotel agreements, most of which are for economy hotels, and added 59,000 rooms to its portfolio of 124 hotels. Vantage Hospitality’s 10 brands include Signature Inn, America’s Best Value Inn, Canada’s Best Value Inn, and Value Inn Worldwide, among others.
Red Lion expects the deal to net positive earnings within the year as the company pursues a more “asset-light” franchise model. Within two years, Red Lion may pay up to an additional $7 million in cash and an additional 690,000 shares, contingent upon unnamed “performance metrics.”
“We are excited to have accelerated the closing of Vantage,” Greg Mount, Red Lion president and CEO said in a statement. “Our newly combined teams are diligently working on a smooth integration to capitalize on the strengths of both platforms. With a firm foundation and a deep dedicated team focused on select service, we can now intensify our efforts on accelerating the growth of our midscale and upscale brands, Red Lion and Hotel RL. The pipeline for legacy RLHC brands, including Hotel RL, remains strong, and we look forward to delivering additional value and opportunities to all of our hoteliers and associates, as well as earnings accretion to our shareholders.”
When Skift spoke to Mount on the day the deal was announced, he said the move to buy Vantage was motivated by the pursuit of scale and expertise in the select-service space.
Mount told Skift, “We’re taking 15 or 16 years of expertise and culture that’s been developed around the economy-branded hotels in Vantage and leveraging that and pairing it up with our innovative approach to e-commerce, and digital marketing, as well as our technology. It’s allowing the two companies to work together to build a formidable offering for franchisees.”
Consolidation, Scaling Up Continues
Another hotel company looking to increase its franchise business is Best Western Hotels & Resorts, which last week debuted its new SureStay Hotels Group of brands, also in an effort to seek more scale.
And on Sept. 23, Marriott International finally completed its $13 billion acquisition of Starwood Hotels & Resorts, nearly one year after the deal was first announced. The deal resulted in the world’s biggest hotel company, with 5,700 hotel properties and 1.1 million rooms worldwide, spread out over 30 brands.