The RLHC portfolio is about to double on the heels of an $8.5 million acquisition. On April 23, RLHC (Red Lion Hotel Corporation) announced the purchase of GuestHouse International and Settle Inn & Suites, two Boomerang Hotels franchise economy brands. The purchase will bring the RLHC brand portfolio from 57 to 130 and add 5,187 guestrooms to its repertoire.
The deal, which is expected to close on April 30, includes a potential additional payment of up to $1.5 million. Per the terms of the agreement, RLHC will acquire the franchise agreements of all 73 GuestHouse International and Settle Inn & Suites franchised hotels. RLHC plans to continue to operate the majority of the newly acquired hotels under their existing branding while converting brand standards to match that of RLHC. Greg Mount, president and CEO of RLHC, said he expects a quick transition period of about 60 to 90 days.
“We looked at what type of an operating platform and hotel operation support they have and what is it they’re actually seeking,” Mount said. “In speaking with some of the people within GuestHouse, we learned that the types of functionality that we offer and support that we offer is exactly what they are seeking and that they do not currently have, so immediately we saw this be a wonderful relationship and an opportunity for us to add a creative value.”
The first step is to get GuestHouse International and Settle Inn & Suites on to RLHC’s system, for which Mount said RLHC is footing the bill to speed up the process.
The original Boomerang Hotels partners will stay on board as the company switches gears to focus on development. Brendan Watters, Boomerang Hotels CEO, said he feels comfortable shifting his attention elsewhere and leaving the two franchises in RLHC’s hands.
“For my brands and my franchisees, [RLHC] is not one of the big boys. They’re not going to come in and crush them. They’re going to work with them, and it just makes perfect sense for my guys,” Watters said. “If you look at the landscape at the moment, some of the smaller brands, like mine, need to be part of something bigger. It’s getting to that point because of the distribution that is required. I can keep going down and plowing money into it, but I’m never going to be able to compete with some of the bigger boys. Likewise, Red Lion needed to grow a broader footprint of brands.”
With no overlap across the country for the two brands, the acquisition was a win-win situation, Watters said.
“This is an incredibly positive move for both Boomerang Hotels and RLHC. When you combine distribution maps for the RLHC brands and ours, the acquisition makes perfect sense,” Watters said. “This transaction will benefit our GuestHouse and Settle Inn franchisees by creating a larger network, with no tier overlap, that boats a combined strength to drive reservations through a truly national franchise system.”