Choice Hotels Considers Further Acquisitions to Sustain Growth
25.08.2023 - 13:03
/ skift.com
/ Sean Oneill
/ Patrick Pacious
Choice Hotels considers its recent acquistion of Radisson Americas to be a success and is open to pursuing additional mergers and acquisitions to keep expanding its hotel empire, according to executives speaking Tuesday during a second-quarter earnings call.
“We’ve certainly developed a pretty strong capability within the company to rapidly integrate brands,” said president and CEO Patrick Pacious.
In less than a year after saying it would acquire Radisson Americas for $675 million, Choice onboarded the nearly 600 Radisson Americas hotels into its reservations software platform and integrated the 2 award-winning loyalty programs.
The Rockville, Maryland-based hotel operator — whose 7,472 hotels span 22 brands, such as its flagship upper midscale brand Comfort and roadside midscale brands like Quality Inn — touted early merger gains.
“This acquisition has created a step function change in the size of our business,” Pacious said.
Choice Hotels expects further benefits.
Executives responded to questions from investment analysts about possible future mergers and acquisitions. They didn’t address recent rumors of a possible merger between Choice and Wyndham, the nearest comparable publicly held hotel company, and they said none of their forecasts for growth counted on any acquisitions outside of the Radisson integration.
Yet they did provide commentary on their thinking generally.
“We’re always looking for M&A [mergers and acquistions] that fits the 2 litmus tests that we talked about, improving the ROI [return on investment] for the owners and growing the brands for the shareholders,” Pacious said.
Executives look for acquisitions that will bulk up their brand portfolio into new segments or geographies to speed up growth. They said their $231 million WoodSpring acquisition helped them expand in extended stay, while buying Radisson Americas brought more upscale brands, boosted the membership in its loyalty program, and broadened its presence in North America.
While they see “whitespace” in the U.S., they also see “a lot of potential opportunities on the international front.”
“So when you look at a lot of potential acquisitions outside of the U.S., the product type may be different,” Pacious said. “It may not be something that you see here in the U.S. that doesn’t play well in the Americas region. There’s shorter stay, there’s rooms where they convert from a business traveler to leisure travelers. So there’s some different models out there on the international front that really work for certain international markets. But there’s also different product types that are lodging alternatives in the international side as well.”
The hotel operator’s second-quarter earnings results were better than analysts