There’s some consolidation coming to the hotel industry. While hotel consolidation generally isn’t good for consumers, given Radisson’s ownership structure, maybe this isn’t so bad?
Choice acquiring Radisson Americas for $675 million
A definitive agreement has been reached for Choice Hotels to acquire Radisson Hotel Group Americas for approximately $675 million. The transaction is expected to close in the second half of 2022, pending regulatory approval.
This purchase includes acquiring the Radisson Americas franchise business, operations, and intellectual property. This will add nine new brands, 624 hotels, and over 68,000 rooms to Choice’s portfolio, across the United States, Canada, the Caribbean, and Latin America.
As it’s described, this will greatly expand Choice’s presence in the upscale and upper-midscale hospitality segment, especially in the West Coast and Midwest of the United States. Choice believes this will allow the brand to provide a more holistic product offering across segments.
Here’s how Choice Hotels CEO Patrick Pacious describs this acquisition:
“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.”
“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.”
The interesting implications of this deal
Radisson is currently owned by Jin Jiang, which is a Chinese state-owned tourism and hospitality company based in Shanghai. The company’s ownership structure has posed some issues for global operations. In the summer of 2021 we saw the Radisson Rewards loyalty program split into two, with the launch of Radisson Rewards Americas.
The reason for this is interesting. Radisson is essentially owned by the Chinese government, and the United States government is requiring that companies limit the amount of information and data shared with the Chinese government.
Therefore Radisson’s loyalty program in the Americas was split off from the rest of the program, which certainly made it less seamless of a program.
The implications here sure are unusual, though, since Choice is only purchasing the Radisson brand in the Americas. I’m curious to see if Radisson properties will be fully integrated into Choice Privileges, or if we see the Radisson Rewards Americas program continue.
If acquired Radisson brands are fully integrated into Choice Privileges, that means Radisson properties in the Americas would participate in Choice Privileges, while others would participate in Radisson Rewards.
Choice Hotels is acquiring Radisson Hotel Group Americas for around $675 million. This will allow Choice to greatly expand its business in the Americas (especially in the upscale market), all while Radisson properties will be able to operate a bit more freely, given the China connection.
I’m curious about the logistics of this deal when it comes to loyalty programs. Otherwise the brands seem to have largely complementary portfolios.
What do you make of Choice acquiring Radisson Americas?