Choice Hotels International executives expressed an interest in growing the company's portfolio through an acquisition back on its first-quarter earnings call in May. One month later, Choice announced it had reached a deal to acquire Radisson Hotel Group’s Americas division, Radisson Hotel Group Americas, for $675 million.
Speaking during the company’s second-quarter earnings call Thursday, Choice President and CEO Pat Pacious said acquiring Radisson’s Americas division in June was “the most significant acquisition in [the] company’s history.”
“Importantly, the cultural fit between our two companies could not be more ideal,” he said. “This unique off-market transaction is the result of a yearlong strategic conversation with the sellers and represents a win-win opportunity whereby Choice will bring our track record of brand growth and brand stewardship in the Americas to these well-known global brands.”
Pacious said the deal, which is expected to close later this month, will expand Choice’s customer reach among higher-income and younger travelers. It also expands the company’s domestic portfolio to previously underrepresented regions in the upper Midwest and West Coast, which he said is “a nice, geographic complementary aspect to the business going forward.”
Among the main benefits of the acquisition is its acceleration to Choice’s portfolio in the upscale segment, Pacious said. The company will now have approximately 80,000 upscale rooms, and he said the addition of Radisson’s upscale brands will only help with the growth of Choice’s existing upscale brands, Cambria Hotels and the Ascend Collection.
Along with the Radisson acquisition, Pacious said that the 111 WoodSpring Suites properties acquired by Blackstone and Starwood Capital Group in January for $1.5 billion will be reflagged in September. Choice will receive five years of royalty fees upon the exit, a number that will be announced once the repositioning is finalized later this year.
By The Numbers
According to Choice’s second-quarter earnings release, the company’s portfolio achieved a revenue per available room of $58.89, a 14.3% increase over the second quarter of 2019. Its average daily rate was $95.34, a 15.3% increase over 2019 levels, and occupancy was 61.8%, a 50-basis-point decrease over the same quarter in 2019.
Choice’s adjusted earnings before interest, taxes, depreciation and amortization was $129.6 million for second quarter 2022, representing a 16% increase from the same time period in 2021.
The company’s net income of $106.2 million in the second quarter was a 24% increase from the second quarter of 2021.
As of press time, Choice’s stock price was trading at $115.15 per share, down 26.2% year to date. The New York Stock Exchange Composite Index was down 11.5% for the same time period.