Industry NewsBrandsCommune, Destination Hotels Merge

Commune, Destination Hotels Merge

SAN FRANCISCO and DENVER—Commune Hotels & Resorts, the international lifestyle hotel management company comprising Joie de Vivre Hotels, Thompson Hotels, Tommie, and Alila Hotels & Resorts, and Destination Hotels, operator of independent hotels, resorts, and residences in the United States, today announced that they have merged to create the leading operator of independent and lifestyle hotels and resorts. The merger creates an opportunity for two successful and growing companies to leverage their respective strengths and competitive advantages to better compete in a dynamic industry. The combined company will drive superior financial and investment performance for property owners and will offer greater options to guests and career opportunities for employees. Together, Commune and Destination will retain their nimble entrepreneurial spirit and unique capabilities while honing their focus on creating personalized and engaging guest experiences.

Geographically, Commune and Destination operate in highly complementary markets, and with very little overlap. In addition, through the merger, each company significantly strengthens a key portion of its portfolio: Commune brings a broader set of urban offerings across North America, Asia, and Europe, while Destination contributes a wide array of resort properties in premier destinations from coast to coast. The respective customer bases are also complementary, giving each company immediate access to new individual travelers and groups focused on the independent and lifestyle market. Together, Commune and Destination will have a larger sales, marketing and revenue management platform and distribution system through which to drive enhanced property revenues and performance.

Commune and Destination are committed to maintaining individuality across each property and brand, and offering the independent traveler a compelling array of properties from which to choose. The combined company will manage over 90 hotels and resorts in seven countries with approximately $2 billion of total property revenues under management, and will look to opportunistically broaden the geographic reach of its brands both domestically and internationally in urban and resort markets.

“We are thrilled to join with Destination. Their team and the Lowe family share our passion and commitment for offering locally relevant, unique and personal experiences to our guests, while also delivering strong financial results for our property owners,” said John Pritzker, chairman of Commune Hotels & Resorts. “As well, we are fortunate to have such fantastic depth of leadership in both Jamie Sabatier and Niki Leondakis. I am confident that together they will lead the company into a new era.”

Robert Lowe, Jr., co-CEO of Lowe Enterprises, parent company of Destination Hotels, added, “This is an exciting step forward for all of us as we bring together these two great and complementary hospitality companies. Joining forces with Commune will allow us to position the combined company as the most sought after operator in this exciting segment of the industry and enhances our ability to deliver differentiated experiences to travelers across the globe. We will stay true to our guests and brands while driving enhanced performance for our owners as we continue to grow together.”

The combined company will be based in Denver, Colo., with offices in San Francisco, New York, Singapore, and Shanghai, and will leverage the strengths of its leadership under Jamie Sabatier and Niki Leondakis. In addition, hospitality veterans John Pritzker and Robert Lowe, Jr. will serve as co-chairmen of the combined company.

The transaction offers Commune and Destination an exciting opportunity to combine the respective strengths of both companies to create a single platform that will excel in three areas:

For Commune and Destination’s property owners, the combination will leverage both companies’ competitive advantages resulting in market leading performance. The transaction will also deliver a robust distribution system equally strong in serving leisure, corporate, and group guests attracted to independent and lifestyle properties, increased brand awareness, and a broader base of existing and potential new guests across all of its properties. The combined company will leverage its passion for hospitality to create personalized guest experiences, and bold, nationally-recognized restaurant, bar and nightlife offerings.

For its guests, the combined company will offer a greater selection of options at both urban and resort properties that create unique and memorable experiences. With distinctly local and service oriented focus across a broader range of geographies and price points, guests will be able to experience a greater array of what they have come to know and appreciate about Commune and Destination properties.

Commune and Destination have built strong reputations as employers, which attract top talent and create work environments that engage and empower their employees to thrive and succeed. In fact, in 2014 and 2015, Commune and Destination were named among the best places to work in multiple cities. The combined company will provide its more than 20,000 employees with greater opportunities for personal and professional growth.

The merger encompasses hotel-management operations and brands of both companies. Commune and Destination manage hotel and resort properties on behalf of some of the largest institutional owners including REITs and Private Equity firms, as well as high net worth individuals and family offices.

Lowe Enterprises and Geolo Capital will continue to maintain independent investment platforms managed respectively by Michael Lowe and Tom Gottlieb, both of whom will serve as members of the Board of the combined company. Lowe’s affiliate, Lowe Enterprises Investors, will also continue to operate independently.

Moelis & Company LLC is acting as financial advisor to Commune Hotels & Resorts and Destination Hotels.