Carlson Exploring Selling Its Hotel Business According To WSJ

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The Wall Street Journal ran a story last Thursday about privately held Carlson’s exploration in selling its’ hotel business.

Carlson

Carlson calls their hotel business Carlson Rezidor. The Rezidor Hotel Group is a publicly listed company in Europe that has franchise agreements to operate and develop various Carlson brands in Europe, Middle East & Africa. Carlson owns 51% of Rezidor.

You can access the WSJ article here of which below is an excerpt:

Carlson, the owner of Radisson and other hotel brands that are part of Carlson Rezidor Hotel Group, is exploring strategic alternatives for the hotel company that could include a partnership, merger or sale of the company, according to people familiar with the matter.

Part of the hotel company, known as Rezidor Hotel Group, has shares that trade in Stockholm. That is a reflection of its Swedish roots when it was part of the SAS Group, owner of Scandinavian Airlines.

Carlson Rezidor has more than 1,100 hotels and nearly 174,000 rooms world-wide, according to data tracker STR Inc., making it one of the world’s largest hotel companies. Its brands include the flagship Radisson business hotels, and its offshoots, Radisson Blu and Radisson Red, which are more design-oriented hotels. Carlson Rezidor also owns Country Inns and Suites.

Conclusion

Now, Carlson wants to get out of the hotel business and its stake in Rezidor Hotel Group. The Carlson Rezidor Hotel Group (whatever that is) currently has 1,100+ hotels open and 270+ under development.

Marriott recently purchased South Africa based Protea Hotels and Delta Hotels of Canada. The company is in the process to complete the purchase of Starwood Hotels. It is difficult to see how Marriott could take over yet another hotel company when they are dealing with the Starwood takeover for the next few years.

Hyatt was one of the bidders for Starwood and made several offers according to the industry analysts but eventually it lost to Marriott. It appears that they are trying to quickly expand the number of properties and Carlson could be one option.

InterContinental Hotels Group recently purchased the San Francisco-based boutique hotel chain Kimpton Hotels. InterContinental Hotels Group (IHG) also made an offer to purchase Starwood, but it fell through because the UK disclosure requirements would have required the company to make the offer public. So, they are looking for possible acquisition targets.

Accor made a deal to purchase FRHI from its Qatari and Saudi owners. FRHI consists of Fairmont, Swissotel and Raffles brands. I am not sure if Accor could digest another 1,100+ hotels.

Hilton hasn’t made any deals as of late.

It is certainly interesting to see what will happen with Carlson and its share of the Rezidor Hotel Group based in Europe. One of the hotel groups mentioned above could be a potential acquirer or there are companies such as Wyndham, Choice and a few Chinese (Wanda) that perhaps could see potential for expanding their portfolio.

For me, the Club Carlson loyalty program has not been strong enough incentive to stay at their properties of which many are of variable quality. The benefits at the Silver and Gold level are limited and I have not seen incentive to stay enough to make it to Concierge considering what competitors are offering.

Usually the merger activity is highest at the top of the market and you have to remember that hotel business is highly cyclical. I am not sure if Carlson lost the opportunity to sell at the top considering the recent market slide.

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