Choice Hotels today announced that it had reached an agreement to acquire Radisson Hotels Americas for $675 million.
The transaction consists of Radisson’s operations in the United States, Canada, Latin America, and the Caribbean total of 624 hotels.
You can access Choice Hotels here and Radisson Hotels here.
Radisson has been in turmoil since it was acquired by Chinese HNA, which ran into financial trouble. It was then purchased by a Jin-Jiang-led, another Chinese state-owned tourism and hospitality company.
This ownership forced the company to split its operations into two Radisson Hotels (everywhere except the Americas) and Radisson Hotels Americas (Americas + the Caribbean). Also, the loyalty programs had to be kept separate.
Choice is now buying the Radisson Hotels Americas, which allows it to continue using its nine brands (Radisson, Radisson RED, Radisson Blu, Radisson Collection, Radisson Individuals, Park Plaza, Park Inn, Country Inn & Suites, and prizeotel).
Radisson’s Ownership Woes:
Radisson Hotels Americas:
10 Radisson Blu hotels
130 Radisson hotels
9 Radisson Individuals
1 Park Plaza hotel
4 Radisson RED hotels
453 Country Inn & Suites by Radisson
17 Park Inn by Radisson
Here’s the announcement from Choice:
Choice Hotels International to Acquire Radisson Hotel Group Americas
Unites highly complementary businesses, adding nine brands, 624 hotels and over 68,000 rooms
Marks the latest step in Choice’s strategy of growing its asset-light portfolio of hotel brands in higher revenue travel segments and locations
Extends Choice’s customer reach with some of the industry’s most recognized brands
Radisson Hotel Group to continue growing and managing Radisson business in EMEA and APAC, with aim of doubling portfolio by 2025
ROCKVILLE, Md. and BRUSSELS, June 13, 2022 /PRNewswire/ — Choice Hotels International, Inc. (NYSE: CHH) and Radisson Hotel Group today announced that Choice Hotels has entered into a definitive agreement to acquire the franchise business, operations and intellectual property of Radisson Hotel Group Americas for approximately $675 million. The addition of Radisson’s nine hotel brands in the Americas is the latest chapter in Choice’s successful strategy to expand its growth opportunities by bringing the company’s best-in-class franchising platform to adjacent hotel segments and to a new set of hotel owners. The added 624 hotels with over 68,000 rooms expand Choice Hotels’ presence in the upscale and core upper-midscale hospitality segments, particularly in the West Coast and Midwest of the United States.
The acquisition of some of the industry’s most recognized brands extends Choice Hotels’ customer reach in the upscale segments, as well as to more business travelers and a broader demographic within Choice’s core leisure segment. The combination strengthens Choice’s ability to provide a more holistic product offering across segments and continue to capitalize on consumer trends expected to fuel future demand for travel such as remote work, increasing retirements and road trips.
The transaction brings Choice’s industry-leading RevPAR (revenue per available room) growth performance to a new set of franchisees and hotel investors and provides new growth opportunities to expand Choice Hotels’ presence to additional locations in Canada, Latin America and the Caribbean. Consistent with Choice Hotels’ long-term strategy of growing in higher revenue segments, the Radisson brands typically have larger room counts and are located in higher RevPAR markets, driving higher royalty revenue per hotel.
Patrick Pacious, President and Chief Executive Officer of Choice Hotels, said, “Choice has a well-established history of smart acquisitions in new segments where our world-class franchising engine can spur future growth. 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. We are confident that guests and franchisees will significantly benefit by combining these two exceptional sets of brands.”
The transaction unlocks significant potential value for the Radisson brands in the Americas. Choice Hotels has a deep familiarity with the Americas franchisee community and will bring a strong commitment to driving the success of Radisson franchisees, many of whom already have franchise agreements with Choice Hotels.
Pacious continued, “Our long track record of establishing mutually beneficial relationships with our franchisees has resulted in a best-in-class voluntary retention rate, and those franchisees are the source of a majority of our new hotel development. Our existing and new hotel owners will benefit from the improved business delivery capabilities of the combined companies, including our award-winning loyalty program, proprietary tools and emerging technologies that will enable them to capture more business, lower their hotel operating costs, reach new customers and respond to evolving industry trends.”
Federico J. González, CEO of Radisson Hotel Group, said, “Since the introduction of our strategic transformation plan in 2017, Radisson Hotel Group has been committed to the global success of the Radisson brands and expanding the overall footprint of our global operations. We have achieved strong results, doubling the number of rooms signed per year in EMEA and APAC, confirming Radisson Blu as the largest upper-upscale brand for over 10 years and establishing Radisson as the upscale brand with the largest growth in EMEA. We are confident that Choice Hotels is the owner with the right long-term strategy, resources and management team to successfully accelerate the growth of the Radisson business in the Americas. Radisson Hotel Group will continue to leverage the strength of operational excellence to set our business in EMEA and APAC on a significant growth path with the aim of doubling the portfolio in those markets by 2025. Together with Choice, we will work to ensure that customers continue to experience the highest levels of service and a superior brand experience.”
Tom Buoy, interim CEO of Radisson Hotel Group Americas, said, “Our associates have been working hard to solidify the power of our brands, build a better commercial engine and offer best-in-class solutions to franchisees and customers. We are very pleased that the Radisson family of brands in the Americas will join Choice Hotels. We believe that this acquisition will drive growth in a highly competitive market and enable stronger performance for our franchisees.”
Choice Hotels will acquire the franchise business, operations and intellectual property of Radisson Hotels in the United States, Canada, Latin America and the Caribbean, for approximately $675 million, inclusive of the real estate value of three owned assets. The acquisition will be funded with cash on hand and revolver borrowings. Radisson Hotel Group Americas comprises the franchise agreements, operations and intellectual property of Radisson Hotels in the United States, Canada, Latin America and the Caribbean, and includes 10 Radisson Blu hotels, 130 Radisson hotels, 9 Radisson Individuals, 1 Park Plaza hotel, 4 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 will independently own and control the brands in the Americas and will work with the Radisson Hotel Group to drive the growth, continuity and success of the brands. The transaction is not anticipated to change Choice Hotels’ current capital allocation strategy related to dividend payment policy and planned share repurchases.
The transaction has been unanimously approved by Choice Hotels’ Board of Directors and is expected to close in the second half of 2022, pending regulatory approvals and customary closing requirements.
Credit Suisse Securities (USA) LLC is serving as financial advisor to Choice Hotels on the transaction, and Willkie Farr & Gallagher is serving as legal advisor. Baker McKenzie is serving as legal advisor to Radisson Hotel Group.
Radisson Hotels, for a while, was essentially two separate companies: Carlson for the Americas and Rezidor for everywhere else (SAS first owned it).
Then HNA purchased the Carlson and eventually took control over Rezidor, and then collapsed only to be rescued by a Chinese state-owned company.
Now, Choice is essentially taking over the old Carlson while the Chinese continue owning the business previously run by Rezidor.
It will soon confuse many that the loyalty program for Radisson branded hotels in the Americas will be Choice Privileges, while it is Radisson Rewards everywhere else.
There are some excellent Radisson Blu hotels in the Americas, but most other properties are not quite at the same level as outside of the area.