Red Lion Parent Is Going Asset Light to Buy Up More Hotel Companies You Haven't Heard Of

As the hospitality industry gets more consolidated than ever, RLH Corp. is pursuing a crucial strategy to enable it to get bigger. The board of directors of the Denver-based chain, which is the parent company of several hotel brands, including Red Lion, said October 5 it approved the sale of 11 of the company's remaining 18 owned-hotel properties. The decision to sell those properties marks yet one more step in the company's pursuit of an asset-light strategy, which RLH began about four years ago, said chief financial officer Doug Ludwig. It's a strategy the company is pursuing not only because it makes good business sense, but because it can help the company get event bigger by helping RLH "acquire franchise businesses similar to Vantage [Hospitality]," which Red Lion bought last year. So, who would might RLH buy? Ludwig wouldn't name names, but he did give some hints. "I think the difference, for our next few acquisitions, would be to go after upscale and midscale properties," he said. "Whereas Vantage was more dominated by economy properties, the benefit of going upscale is that the fee income is more significant — the royalty and marketing fees are based as a percentage of rooms revenue. And the contracts are typically longer-term contracts, too. Instead of a five- to 10-year contract, those are usually 20 to 30 years." He said that potential acquisition targets would most likely be private companies that aren't "big enough to attract the attention of the Marriotts, H