Skift Take

Choice wants to make its mark in the upscale segment. This is certainly one way.

Choice Hotels International is acquiring the franchise business, operations and intellectual property of Radisson Hotel Group Americas for $675 million.

The U.S. division split from Radisson last year, to operate as two separate companies with separate loyalty programs, technology infrastructure like reservations and property management systems, and websites.

Radisson Hotel Group Americas covers North, Central, and South America while Brussels-headquartered Radisson Hotel Group operates in the rest of the world.

The added 624 hotels with 68,000 rooms will help Choice Hotels grow its upscale and core upper-midscale hospitality segments, particularly in the West Coast and Midwest of the U.S.

Choice’s portfolio is dominated by brands like Comfort and Econo Lodge, which suit the drive-to leisure and road warrior business travel markets — think healthcare workers and infrastructure teams — but it has never shied away from its upscale ambitions.

“We have a mergers and acquisition group that’s out looking … If you look at our portfolio, it’d be nice to have an upper-upscale, full-service brand, potentially,” Mark Shalala, senior vice president of development for upscale brands at Choice Hotels, told Skift during the Americas Lodging Investment Summit in April.

Choice’s acquisition, which was unanimously approved by its board of directors and is expected to close in the second half of 2022, will be funded with cash on hand and revolver borrowings, the company said on Monday.

Upscale Potential

Radisson Hotel Group Americas comprises the franchise agreements, operations and intellectual property of Radisson Hotels in the U.S., Canada, Latin America and the Caribbean.

The group includes 10 Radisson Blu hotels, 130 Radisson hotels, nine Radisson Individuals, one Park Plaza hotel, four Radisson RED hotels, 453 Country Inn & Suites by Radisson and 17 Park Inn by Radisson hotels, as well as the Radisson Inn & Suites and Radisson Collection brands. Choice Hotels said it would independently own and control the brands in the Americas and “work with the Radisson Hotel Group to drive the growth, continuity and success of the brands.”

Mergers have been gaining in popularity since 2019’s merger of Aimbridge, North America’s largest independent hotel management firm, and Interstate Hotels & Resorts, a hotel operator.

Some of the largest third-party managers in North America today include Aimbridge, Alberigo, American Liberty, Arbor Lodging, Atrium Hospitality, Banyan Tree Management, and Benchmark Pyramid.

Last month, hotel management and investment company HMM said it was acquiring Urgo Hotels & Resorts in a transaction that would boost its portfolio size by almost 30 percent — to about 235 full-service and select-service hotels.

“Choice has a well-established history of smart acquisitions in new segments where our world-class franchising engine can spur future growth,” said Patrick Pacious, president and CEO of Choice Hotels, in a statement. “This transaction brings together two highly complementary businesses, enhancing our guest offerings in the core upper-midscale hospitality segments, while extending our reach into the upper upscale and upscale full-service segments and in higher revenue geographic markets.”

Last month, the non-U.S.-based Radisson Hotel Group extended its strategic partnership with hospitality real estate and management company PPHE Hotel Group, to pursue its own move into the lifestyle hotel segment, to grow further in Europe, the Middle East and Africa.

In particular the hotel group wants to open more high-end art’otels. Several are earmarked to open in the coming years, including two in London, in the redeveloped Battersea Power Station and another $300 million building in the capital’s trendy Hoxton district.

Radisson Hotel Group CEO Federico Gonzalez told Skift he also wants to expand its two-star lifestyle brand prizeotel as well, targeting 45 new signings in the next five years.

This story is breaking. More to follow…

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Tags: choice hotels, future of lodging, mergers and acquisitions, radisson

Photo credit: Choice Hotels International is acquiring the franchise business, operations and intellectual property of Radisson Hotel Group Americas. Hanna Sörensson / Radisson