Choice Hotels International and Radisson Hotel Group have announced that Choice Hotels has entered into a definitive agreement to take over the franchise business, operations and intellectual property of Radisson Hotel Group Americas for approximately $675 million.
The acquisition of Radisson Group's nine hotel brands in the Americas marks the latest chapter in Choice Hotels' strategic plan to expand its growth opportunities by bringing the company's best-in-class franchising platform to adjacent hotel segments and a new group of owners.
The addition of 624 hotels with over 68,000 rooms expands Choice Hotels' footprint in the upscale and core upper-midscale hospitality segments, especially in the West Coast and Midwest of the United States.
The acquisition of some of the industry's most well-known brands will extend Choice Hotels' customer reach in the upmarket segments and to more business travellers and a broader demographic within Choice's core leisure segment. The combination fortifies Choice Hotels' ability to deliver a more holistic product offering across segments and continue to capitalise on consumer trends expected to drive future demand for travel, such as remote work, retirements and road trips.
Choice's industry-leading RevPAR (revenue per available room) growth performance will be introduced to a new set of franchisees and hotel investors, providing new growth opportunities to expand Choice Hotels' presence across Canada, Latin America and the Caribbean. Aligned with Choice Hotels' long-term strategy of growing in higher revenue segments, the Radisson brands commonly have larger room counts and are positioned in higher RevPAR markets, pushing 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 Chief Executive Officer 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 higher revenue geographic markets. We are confident that guests and franchisees will significantly benefit by combining these two exceptional sets of brands."
The agreement between the two groups also unlocks significant potential value for the Radisson brands in the Americas. Choice Hotels has a profound connection with the Americas franchisee community and will supply a solid commitment to fuelling the success of Radisson franchisees, many of whom 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 most of our new hotel development," continued Pacious. "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."
For approximately $675 million, Choice Hotels will acquire the franchise business, operations and intellectual property of Radisson Hotels across the United States, Canada, Latin America and the Caribbean, including the real estate value of three owned assets. The transaction will be funded with cash on hand and revolver borrowings and is expected to close in the second half of 2022.