Choice Hotels to Buy WoodSpring Suites for $231M
- Dec 20, 2017
Choice Hotels has reached a definitive agreement to acquire WoodSpring Suites, an extended-stay hospitality brand consisting of approximately 240 extended-stay hotels in 35 states, from WoodSpring Hotels Holdings LLC, a portfolio company of Lindsay Goldberg, for $231 million.
“Since opening its first property in 2003, WoodSpring Suites has been one of the fastest-growing hospitality brands,” Dominic Dragisich, Choice Hotels International’s chief financial officer, told Commercial Property Executive. “The WoodSpring Suites acquisition expands Choice Hotel’s runway for growth, and will continue to create value and benefit our franchisees, employees, associates, shareholders and customers.”
Under terms of the deal, Choice Hotels will become the franchisor of the WoodSpring Suites brand and handle franchisee operations, development and marketing. WoodSpring Hotels Holdings LLC will be renamed and retain its hotel management operations.
Choice expects to hire the WoodSpring Suites franchise business employees and strengthen the existing multi-unit developer and franchisee relationships that has contributed to the brand’s success.
“WoodSpring Suites will be a terrific addition to the Choice Family,” Dragisich said. “The brand will strengthen our position in extended stay and increase our extended-stay portfolio to over 350 properties—including MainStay Suites and Suburban Extended Stay—and allows us to leverage best practices from each brand.”
Since 2014, WoodSpring Suites has executed a brand relaunch and repositioning, resulting in unit growth of more than 25 percent and franchise fee revenue increases of 45 percent. As part of its efforts, more than 25 hotels are expected to open in 2018.
“Extended stay is a fast-growing segment, reporting some of the strongest gains in demand and has led the hospitality industry in annual RevPAR growth,” Dragisich said. “The addition of the WoodSpring Suites brand creates more options and opportunities for guests as well as MainStay Suites, Suburban Extended Stay and WoodSpring Suites franchisees.”
Art of the deal
The purchase will be funded by cash and is expected to be accretive to financial performance in 2018, excluding one-time transaction and integration costs.
The deal is expected to be finalized in the first quarter of 2018, subject to regulatory approval.
Moelis & Company LLC is serving as financial advisor to Choice Hotels on the transaction, and Willkie Farr & Gallagher is serving as legal advisor. Morgan Stanley and Co. LLC is serving as financial advisor to WoodSpring, and Weil, Gotshal & Manges LLP is serving as legal advisor.
Earlier this summer Choice announced that Patrick Pacious, current president & COO, will take the position of CEO when Stephen Joyce steps down at the end of this year.
Image courtesy of Choice Hotels International