Choice Hotels International, Inc. (NYSE: CHH) completed its acquisition of the brand and franchise business of WoodSpring Suites, an extended-stay lodging brand, from WoodSpring Hotels LLC. The acquisition was announced on December 18, 2017, and adds nearly 240 extended-stay hotels in 35 states to the Choice Hotels portfolio, creating an extended-stay portfolio of more than 350 properties with existing brands, MainStay Suites and Suburban Extended Stay.
WoodSpring Suites highlights include:
- The nation's fastest growing economy extended-stay hotel brand with a demonstrated ability to expand its franchisee base.
- Experienced 21 percent RevPAR growth and 48 percent Gross Room Revenue (GRR) growth over the last three years.
- Increased net units by more than 25 percent since 2014 with nearly 20 properties currently under construction, and additional new market opportunities identified for continued growth.
- A focus on new construction, resulting in a portfolio of hotels that, on average, were built within the last seven years.
"I'm thrilled to officially welcome the WoodSpring Suites brand and its franchisees and owners to the Choice family. WoodSpring developers represent some of the best in the nation, and we look forward to introducing them to Choice's powerful platform of technology and resources, helping to create further return on their investments," said Patrick Pacious, president and CEO, Choice Hotels. "Choice has a strong pipeline for its new construction brands, including Cambria, Sleep Inn, MainStay, and Comfort, and this acquisition offers another new construction brand for our growth-oriented developer community. More importantly, the acquisition enables us to incorporate best practices from WoodSpring's proven model across our extended-stay brands, and further strengthens Choice's position as a leader in both hospitality and franchising."
Choice Hotels acquired the WoodSpring Suites brand, including franchise operations, marketing and development, for $231 million, subject to customary closing adjustments. The acquisition was funded with a combination of cash on hand and borrowings under Choice's existing credit facility. The acquisition is expected to be accretive to financial performance in 2018, excluding one-time transaction and integration costs. Choice's acquisition of WoodSpring constitutes an asset purchase for U.S. tax reporting purposes, and, as a result, the company expects to realize tax benefits that would lower the effective purchase price.
WoodSpring represents an asset-light franchise business with market leading capabilities that complements Choice's existing extended stay business and serves a range of guests, from business travelers in need of temporary corporate accommodations to people seeking short-term lodging during relocation. The WoodSpring hotel management operations will remain a separate company and be renamed Nationwide Hotel Management Company LLC. A private real estate fund sponsored by Brookfield Asset Management Inc. simultaneously completed its purchase of over 100 company-owned hotels from WoodSpring. In addition to the current portfolio, the partnership is expected to serve as a source of future growth for the brand and Choice Hotels. The transaction was announced and effectively closed within a 45-day period.
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