ATLANTA — Choice Hotels International made a big splash last summer when it acquired Radisson Hotel Group’s Americas division for $675 million in June 2022.
As the deal nears its one-year anniversary, Mark Shalala, senior vice president of development for upscale brands and real estate at Choice, said the biggest priority is to complete the full integration of Radisson into the Choice portfolio. He estimated that will be completed this August.
“We see a tremendous amount of lift to the existing franchisees that we’re acquiring, as well as all sorts of synergies that can happen both in business delivery as well as the loyalty program, which will all just create more benefits for everyone involved in the system,” Shalala said in an interview with Hotel News Now during the 2023 Hunter Hotel Investment Conference.
He said Choice has historically been prudent and deliberate when it delves into its balance sheet, and this deal is a continuation of that strategy.
“We’re really excited about the synergies we think we can create not only for our existing franchisees, but the benefit that can come to the Radisson franchisees that we’re assuming and working with now, as well as just overall driving shareholder value,” Shalala said.
He said the deal both filled white space in Choice’s portfolio and nearly doubled its upscale presence.
“We have a strong desire to punch up into the upscale segment. We’ve been doing so successfully with our brands, Cambria and Ascend,” he said. “We now have something like 400 hotels in North America with over 80,000 rooms. That’s going to give us platforms and opportunities to continue to drive growth in segments where we weren’t necessarily represented.”
Choice isn’t done with growth in the upscale segment, though. Shalala said the company has developers looking for opportunities in secondary and leisure markets to grow its Cambria brand.
The brand has a new, less expensive prototype that will fit especially well in secondary markets, he said. A key to its success has been picking up on the current trends and adjusting accordingly.
“It’s important for brand companies to be nimble enough to pivot and follow trends and invest in those cyclical trends to drive future growth,” he said. “We’ve done that pretty successfully with the Cambria brand in those markets.”
Banking Crisis
There are still some lingering concerns regarding the U.S. banking collapses earlier this year. The Federal Reserve said Wednesday that the crisis will likely result in a recession later this year.
Shalala said Choice is “watching with caution” but is hopeful a downturn won’t have a big impact on the hotel industry.
“What you had, hopefully, is a little bit of an anomaly where a handful of banks, with the way they invested in instruments or other investments that were a little more sensitive to interest rates in this inflationary environment, got a little bit over their skis and maybe got in some trouble,” he said. “Seeing the government step in and guarantee the FDIC deposits and above, as well as watching UBS acquire Credit Suisse, seems to have calmed the market.”