Article Summary: Brand deals dominated hotel industry merger-and-acquisition activity around the world in 2018, but the year also saw several deals involving Asian players, as well as one major REIT deal.
Brand deals dominated hotel industry merger-and-acquisition activity around the world in 2018, but the year also saw several deals involving Asian players, as well as one major REIT deal.
Primary Category: Transactions
GLOBAL REPORT—2018 was a big year for hotel company mergers and acquisitions, the largest in the last five years in terms of number of deals.
Of the 18 major M&A deals announced in 2018, 12 involved brands. AccorHotels—No. 3 on Hotel News Now’s “Biggest Hotel Companies by Market Cap 2018” list—led the way with four major acquisitions in 2018, including deals for 21c Museum Hotels, Mövenpick Hotels & Resorts, Atton Hoteles and a 50% stake in SBE Entertainment.
But AccorHotels isn’t the only big brand name on the list in 2018. This year kicked off with Wyndham Worldwide’s announced acquisition of La Quinta Holdings, a deal which closed in May. A few months later, Wyndham announced its intention to sell the Knights Inn brand to RLH Corporation. These moves came during a year in which Wyndham Hotel Group spun off from the former Wyndham Worldwide and reinforced its intentions of “driving rooms growth (and) continuing to enhance the strength of our brands,” according to company President and CEO Geoff Ballotti on a third-quarter earnings call with analysts.
In other brand news, 2018 saw the continuation of Asian companies as buyers and sellers of major brands. In March, InterContinental Hotels Group picked up the historic Regent Hotels & Resorts brand from Taiwanese company Formosa International Hotels Corporation. Then in August, news broke that Radisson Hotel Group’s Chinese owner since late 2016, HNA Group, was selling the company to Chinese hotel giant Jin Jiang International Holdings.
Among real estate investment trusts, one deal dominated 2018: Pebblebrook Hotel Trust’s acquisition of LaSalle Hotel Properties. In a deal that spanned eight months, the LaSalle portfolio bounced back and forth between top bidders Pebblebrook and Blackstone Real Estate Partners, as LaSalle shareholders weighed and rejected offers, eventually closing the deal with Pebblebrook in November.
The LaSalle deal marks the second acquisition involving major REITs in two years, following the 2017 acquisition of FelCor Lodging Trust by RLJ Lodging Trust, which took a similar back-and-forth pattern between RLJ and competitive bidder Ashford Hospitality Trust.
But does this indicate more REIT M&A in the coming months? Analysts say not necessarily, since above all, REIT deals need to have enough market and strategy overlap to make sense. “It certainly was not smooth sailing,” Mike Bellisario, VP and equity research senior analyst at Baird, told Hotel News Now in November at the close of the deal. “It’s not a sign of more public-to-public deals to come.”
Following is a month-by-month breakdown of the major hotel industry M&A deals around the world in 2018.
Wyndham Worldwide + La Quinta Holdings
In a deal announced in January 2018, Wyndham Worldwide said it would acquire La Quinta Holdings’ hotel franchise and management businesses for $1.95 billion. The acquisition was completed in May 2018.
Pebblebrook Hotel Trust + LaSalle Hotel Properties
In March 2018, Pebblebrook Hotel Trust first publicly announced its proposed merger with LaSalle Hotel Properties, a deal LaSalle executives rejected. Over the following months, Pebblebrook came back with several other proposals and increased its ownership stake in LaSalle. During that time, LaSalle also considered offers from Blackstone Real Estate Partners, but ultimately reached an agreement with Pebblebrook in September 2018 on a $5.2-billion deal. The deal closed in November 2018.
InterContinental Hotels Group + Regent Hotels & Resorts
InterContinental Hotels Group in March 2018 announced its acquisition of 51% of the Regent Hotels & Resorts brand from Formosa International Hotels Corporation for $39 million. The deal, which closed in July 2018, includes rights for IHG to acquire the remaining shares in phases.
RLHC + Knights Inn
RLH Corporation in April 2018 struck a deal to acquire the Knights Inn brand from Wyndham Hotel Group for $27 million. The deal closed in May 2018.
AccorHotels + Mövenpick Hotels & Resorts
AccorHotels in April 2018 signed a deal to acquire Mövenpick Hotels & Resorts from Mövenpick Holding and Kingdom Holding for a cash amount of CHF560 million (€482 million). The deal completed in September 2018.
AccorHotels + Atton Hoteles
AccorHotels announced in May 2018 its plans to acquire Atton Hoteles’ management business from Chilean group Algeciras for $105 million.
Schroders + Algonquin
United Kingdom-based Schroders announced in May 2018 it would acquire Belgian hotel investment firm Algonquin and its 43 European hotels. The deal closed later in 2018, and Algonquin was renamed Schroders Real Estate Hotels.
AccorHotels + SBE
In June 2018, AccorHotels announced an agreement to buy 50% of SBE Entertainment for $125 million from Cain International. The deal was completed in October 2018.
Fattal Hotels + Apollo Hotels
Israel’s Fattal Hotels announced in June 2018 its intention to buy European Hotel Management B.V., based in The Netherlands, for €160 million ($181 million). EHM owns Apollo Hotels. The deal closed in September 2018.
Minor International + NH Hotel Group
In June 2018, Thailand-based Minor International announced its agreement with HNA Group to purchase an equity stake in NH Hotel Group, with plans to acquire the remaining shares. In October 2018, Minor announced it completed its deal to end up with a 94.1% stake in NH. The total investment amount of the deal was €2.33 million ($2.74 million).
AccorHotels + 21c Museum Hotels
In July 2018, AccorHotels announced it agreed to acquire 85% of 21c Museum Hotels and add those properties to its MGallery collection of boutique hotels. The deal closed in September 2018.
LRC Group + Amaris Hospitality
In July 2018, Cyprus-based LRC Group announced its acquisition of Glasgow-based Amaris Hospitality for an undisclosed amount.
Jin Jiang International Holdings + Radisson Holdings
In August 2018, China’s HNA Group announced an agreement to sell Radisson Holdings—including Radisson Hotel Group—to a consortium led by Shanghai’s Jin Jiang International Holdings. The deal includes the purchase of 100% of Radisson Holdings for an undisclosed sum, as well as 51.5% of the outstanding shares of Radisson Hospitality AB for a per-share price of 35 Swedish crowns ($3.83. Additionally, the consortium has agreed to buy an 18.5% stake in Radisson Hospitality. The deal closed in November 2018.
Cobblestone Hotels + Key West Inns, Hotels & Resorts and Centerstone Hotels
In August 2018, Cobblestone Hotels announced its acquisition of Key West Inns, Hotels & Resorts and Centerstone Hotels from Vimana Franchise Systems.
Hogan Hospitality Group + Marin Management
In September 2018, management company Hogan Hospitality Group acquired a majority stake in Marin Management.
Hyatt Hotels Corporation + Two Roads Hospitality
Hyatt Hotels Corporation in October 2018 announced its agreement to buy Two Roads Hospitality for $480 million. The deal closed in November 2018 for a revised acquisition price of $405 million with a potential additional consideration of $96 million.
Alleghany Capital Corporation + Concord Hospitality Enterprises Company
Alleghany Capital Corporation announced in October 2018 it acquired a majority interest in third-party management company Concord Hospitality Enterprises Company for an undisclosed price.
Cobblestone Hotels + Boulders Inn & Suites
In October 2018, Cobblestone Hotels announced its acquisition of the Boulders Inn & Suites brand.
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Headline: 18 in ’18: M&A activity surged this year
Article Date: 12/27/2018
Article Time: 8:28:00 AM