Choice Hotels to Acquire Radisson Hotel Group Americas for $675M

Choice Hotels International has entered into a definitive agreement to acquire the franchise business, operations and intellectual property of Radisson Hotel Group Americas for approximately $675 million, adding nine brands to its portfolio. 

The deal will add 624 hotels with more than 68,000 guestrooms, expanding Choice Hotels' presence in the upscale and upper-midscale hospitality segments, particularly in the West Coast and Midwest of the United States. It also aims to provide new growth opportunities to expand Choice Hotels' presence to additional locations in Canada, Latin America and the Caribbean. The Radisson brands typically have larger room counts and are located in higher market with higher revenue per available room, driving higher royalty revenue per hotel.

"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. "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."

Choice expects the transaction to provide "significant potential value" for the Radisson brands in the Americas as many Radisson franchisees already have franchise agreements with Choice Hotels.    

"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," Pacious continued. "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."

"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," said Federico J. González, CEO of Radisson Hotel Group. "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."

Transaction Details

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, 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 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.

This story originally appeared on www.hotelmanagement.net.

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