brands report

The beat goes on…

While Sonny’s no longer with us, it’s great to see his one-time partner in song, Cher, remains indomitable as ever, largely due to talent and a savvy sense of reinvention.

The same might be said of what’s continuing in the industry vis-à-vis brands, particularly in the continuing saga of mergers and acquisitions, and who’s got the goods and knows how to use them for the long term.

While the $13-billion Marriott-Starwood mega-deal dominated much of the industry’s M&A discussions until it was a done deal this September, other marriages of convenience and anticipated profitability occurred, albeit with a lot less fanfare and industry concern.

Coming in a close second, though, was Anbang Insurance Group’s $6.5-billion acquisition of Strategic Hotels & Resorts from Blackstone Group, which only a year before had acquired SH&R. The China-based investor, which earlier acquired the iconic Waldorf-Astoria in New York, is likely best remembered in the industry as—in polite terms—the guys who gave Marriott a run for its money in the Starwood deal, then choked.

Depending on what happens in China in terms of foreign investment and getting money out of the country, it’s likely Anbang will surface in the hotel space again at some point.

Similarly, Beijing-based HNA Tourism Group Co., Ltd., at press time, closed on its acquisition of Carlson Hotels, Inc., which owns the Quorvus Collection, Radisson, Radisson Blu, Radisson Red, Park Plaza, Park Inn by Radisson and Country Inns & Suites By Carlson brands. The deal also gives HNA Tourism Group Carlson’s 51.3% stake in Belgium-based Rezidor Hotel Group.

In a reverse on foreign investment, Wyndham Hotel Group acquired South America’s Fën Hotels, which includes signature brands Esplendor Boutique Hotels and Dazzler Hotels. The deal adds 26 management contracts in Argentina, Peru, Costa Rica, Uruguay, Paraguay, Bolivia and the U.S. [Dazzler Brooklyn], including two new Fën-built Wyndham Grand hotels opening in Uruguay and Paraguay.

Closer to home, RLHC is in the process of integrating Vantage Hospitality Group following its swift $27-million acquisition of the membership-model organization. The company acquired approximately 1,000 franchise hotel agreements nationwide and added more than 59,000 rooms, helping RLHC grow while transforming it into an asset-light franchised hotel company.

It’s the second time in as many years RLHC has expanded via a portfolio grab. Last year, it picked up a twofer from Boomerang Hotels, acquiring the intellectual property assets of GuestHouse International, LLC, and economy brands GuestHouse International and Settle Inn & Suites in an $8.5-million deal.

On the boutique side, after an on-again, off-again run at the portfolio, sbe Entertainment Group recently closed on its $82-million acquisition of Morgan’s Hotel Group in a deal with an enterprise value estimated at $805 million. The revised portfolio will now include SLS Hotels, The Raleigh and Townhouse Hotel in Miami Beach, Hyde Hotels, Resorts & Residences, The Redbury and Morgan’s Mondrian, Delano and Hudson properties.

So who’s next? Hard to say, although most observers agree consolidation is a continuing given in the years ahead. One can’t help but bring to mind that image from childhood of a row of fish of escalating size with their mouths open.

While M&A forces an industry interest, there’s a lot more going on in the trenches.

Best Western Hotels & Resorts has carved a subsidiary, SureStay Hotel Group, which prides itself on being PIP-less, an attribute that apparently has caused a surge of applicants.

According to Chick Armstrong, regional director/SureStay Development, reaction to the new brand has been “extremely positive. We have traditional Best Western members who, for one reason or another, have needed to leave the system and this is a great soft-landing area for them. They’re extremely excited to not have to leave Best Western entirely. They’re older properties or properties that need a big PIP and it doesn’t make sense,” said Armstrong.

“The other avenue we’re finding is independents and [owners]in other hotel companies,” he continued. “As their license agreements are coming up, they’re actually calling us. Right now, we’re totally reactive to what the market’s doing. We’re not out trying to push the brand. We’re reacting to a real [surge]of inbound leads that are very, very rapidly wanting to move to a SureStay platform.”

Richard (Rick) Schaeffer, regional director of G6 Hospitality, LLC, said the company is in “exciting times right now” around the pipeline for Motel 6 and Studio 6.

“We’re doing more deals and signing more contracts than we ever have before. We’re in route right now to pushing 200 signings [combined]for the year,” he said.

The executive said the deals are domestic and conversions; however, Schaeffer added there are more than 56 properties under construction.

“We also have development now in Mexico (Hotel 6, Estudio 6) and our development in Canada has picked up,” said Schaeffer, adding G6 also is looking farther afield.

“We’re looking at South America right now and we also have a dedicated person who’s working on India,” he said.

Then there’s independent brand, Virgin Hotels, which, last year, opened its first U.S. property, a 250-room adaptive reuse of the historic Old Dearborn Bank Building in Chicago. With seven projects in the pipeline in North America, Allie Hope, head of development, observed,  “Where the market is today, there are so many brands, and with distribution models the way they’ve changed, a brand is becoming less relevant in many scenarios. I think it’s more important to have a brand that actually stands for something. There’re so many options.”

With entrepreneur Richard Branson as its titular head, Virgin Hotels is willing to put its money where its opportunities are and has equity in a few deals. These include Nashville (partnering with The Buccini/Pollin Group and BPGS Construction) and Chicago. “And we’ll likely be partners in Dallas,” said Hope. Other non-equity-infused pipeline projects include Palm Springs and Silicon Valley.

Even with its own growth, Hope sees still more brand-crunching ahead. “I do think you’ll see some brands go away. Some of the larger brands maybe will roll into other large brands or some deflaggings. I think we’re going to see the landscape be simplified a little bit.”

So the beat goes on. La de da de de, la de da de da.