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Merged and Acquired: A Review of US Hotel Industry Consolidation in 2023

Growth, Talent Retention and Scale Drove Deal-Making
The 285-key Mystic Marriott Hotel & Spa in Groton, Connecticut, was one of 25 hotels joining KSL Capital Partner's portfolio following its $1.4 billion acquisition of Hersha Hospitality Trust. (CoStar)
The 285-key Mystic Marriott Hotel & Spa in Groton, Connecticut, was one of 25 hotels joining KSL Capital Partner's portfolio following its $1.4 billion acquisition of Hersha Hospitality Trust. (CoStar)
Hotel News Now
December 26, 2023 | 1:29 P.M.

As the U.S. hotel industry moves closer to full recovery, consolidation was still the name of the game as hotel brand, ownership and management companies sought to better position themselves for success.

In January, hospitality investment firm Sortis Holdings announced plans to acquire the Ace Group International and its Ace Hotels brand for $85 million. Though it was supposed to close the following March, the deal officially fell apart later in the year, the Portland Business Journal reports.

Hotel development, management and investment company Raines bought HP Hotels, a full-service, third-party management company, in March for an undisclosed price. The deal added 27 hotels to the Mt. Pleasant, South Carolina-based Raines’ management portfolio, bringing it to a total of 49.

“In addition to acquiring third-party management contracts, Raines is adding experienced principals, trusted partnerships, and operations, sales and marketing and human resources teams to its arsenal of experienced hospitality professionals,” said Grey Raines, managing partner of Raines.

Days later, Aimbridge Hospitality, the world’s largest third-party hotel operator, announced it acquired the management portfolio of Houston-based Terrapin Hospitality. The deal added 8,100 rooms in 71 hotels in the upper-midscale and upscale segments to Aimbridge’s portfolio.

“The strategic relationship with Aimbridge will allow Terrapin’s properties to benefit from the scale and experience of the top management company in the industry,” said Tony Sherman, Terrapin Hospitality founder and CEO. He added that it was “critical we found the right partner for my portfolio and my clients.”

In late March, Banyan Investment Group spun off its hotel management platform, Banyan Tree Management, and rebranded itself as Satori Collective, with a goal of focusing on raising and deploying capital. Banyan Tree Management rebranded as well, as Aperture Hotels, and began managing hotels independent of Satori.

Investment firm Mohari Hospitality announced in April plans to buy Tao Group Hospitality from Madison Garden Entertainment Corp. and other partners. The deal valued Tao Group at $550 million, and it would add restaurants, nightlife and entertainment to Mohari’s portfolio, which includes multiple luxury and lifestyle properties. The deal closed in May.

Chicago-based First Hospitality agreed to buy Hostmark Hospitality Group in September, a deal that would add 17 hotels with more than 10,000 rooms to First Hospitality’s management portfolio.

In an interview with HNN, First Hospitality President and CEO David Duncan said his company was focused on portfolio growth and talent attraction and retention as it sought a company to acquire. With Hostmark, it found a desirable portfolio and a compatible workplace culture with people who had the right experience.

“That’s going to be really a key differentiator in hotel operating companies — who attracts the best talent [and] allows that talent to thrive in their positions supported by a culture that cares for those individuals,” Duncan said. “That’s really one of our most primary objectives as we think about any strategic consideration.”

After months of spreading rumors, Choice Hotels International confirmed in October its intent to buy Wyndham Hotels & Resorts in a deal valued at $9.8 billion. Wyndham's board had walked away from the negotiating table prior to Choice making the deal publicly known and has rebuffed further public attempts.

Choice moved into hostile takeover territory, initially not denying reports in late November that it was buying shares of Wyndham to place directors on the company's board. Weeks later, it announced an exchange offer for all outstanding shares of Wyndham's stock.

In late August, private equity firm KSL Capital Partners agreed to buy hotel real estate investment trust Hersha Hospitality Trust in an all-cash deal that valued the company at $1.4 billion, taking the publicly traded company private. As of Hersha’s second-quarter earnings call, the REIT had a portfolio of 25 hotels with 3,811 rooms.

Hersha’s shareholders approved the deal Nov. 9, voting 28.7 million shares in favor of the deal to 172,106 against. The deal closed Nov. 28.

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