ROCKVILLE, Md.—Choice Hotels completed its acquisition of WoodSpring Suites’ brand and franchise business for $231 million. First announced in December 2017, the deal adds nearly 240 extended-stay hotels in 35 states to Choice’s portfolio. Choice says that WoodSpring’s asset-light franchise business complements its existing extended-stay business, which includes the brands MainStay Suites and Suburban Extended Stay. The WoodSpring acquisition increases Choice’s extended-stay portfolio to more than 350 properties.
The nation’s fastest growing economy extended-stay hotel brand, WoodSpring Suites experienced 21 percent RevPAR growth and 48 percent Gross Room Revenue (GRR) growth over the last three years. The brand also 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. Because WoodSpring focuses on new construction, the brand has 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,” Pat Pacious, president and CEO of Choice Hotels, says. “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.”
“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,” Pacious adds. “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.”
Subject to customary closing adjustments, the $231 million acquisition—which includes the WoodSpring Suites brand, franchise operations, marketing, and development—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. The deal 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.
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 more than 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.
Photo: WoodSpring Suites Seattle Everett
