Choice Hotels International will be a serious contender in the upscale and upper-upscale segments with the addition of Radisson Hotel Group Americas.
Although Radisson has faced some uncertainty in recent years, most analysts agree that it is still an attractive addition to the Choice family of brands.
Choice Hotels plans to acquire the Radisson Hotel Group Americas for $675 million. It is expected to close in the second half of the year.
Robert Cole, a senior research analyst for lodging and leisure travel at PhoCusWright, said that Choice Hotels' portfolio is more heavily weighted towards the economy, midscale and upper-midscale segments. Choice has brands in these categories.
The upscale and upper-upscale Radisson, Radissonblu, Radisson Individuals, Park Plaza, Radisson Red, Radisson Inn & Suites and Radisson Collection are all part of the Radisson Hotel Group.
Cole said that they overlap very well. It makes sense.
The Radisson business is a historically challenged group compared with larger players due to legacy issues around both development and brand positioning.
The Carlson Cos.' Radisson division was taken over by China's HNA Group in 2016 and sold to a group led by Jin Jiang International. Radisson Hotel Group still manages Radissons in Europe, the Middle East, Africa and the Asia- Pacific region.
Cole thinks that the big shifts thrown things off. It's been difficult for them, and they haven't been able to compete with Marriott and the other big guys.
Cole said that the Radisson Americas business lacked a permanent CEO. The most recent CEO of Radisson Hotel Group Americas is no longer with the company. The company's chief commercial officer has been serving as interim CEO.
Cole said that the absence of a permanent CEO raised some questions.
In a note, the analyst said that his firm maintains a "bullish sentiment on the deal."
The addition of higher chain-scale and greater RevPAR rooms should strengthen Choice's value proposition and serve as a tailwind for both operating performance and new signings.
Radisson's presence in Canada, the Caribbean and Latin America could be a platform for Choice's expansion into other markets.
The acquisition of Radisson Americas by Choice is positive.
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