Prior To La Quinta Spin Off, Wyndham Sells Knights Inn Brand
Red Lion is acquiring the economy brand for $27 million in cash.
SPOKANE, WA–Red Lion is buying one of Wyndham Hotel Group’s six economy hotel brands — the Knights Inn — for $27 million in cash. Wyndham is selling the brand, which originally made its mark with its medieval-like design, ahead of its previously-announced plans to spin off La Quinta Holdings’ 315 assets into a publicly-traded REIT, CorePoint Lodging.
There are more than 350 Knights Inn hotels across North America and a pipeline of an additional approximately 47 hotels. The transaction is expected to close in the second quarter of 2018, subject to customary closing conditions.
Red Lion CEO Greg Mount said the acquisition is part of the company’s plan to grow aggressively via acquisitions and that the acquisition of Knights Inn will increase its franchise units by over 30%.
“Knights Inn owners will be quickly brought onto our state-of-the-art systems, a handpicked suite of the industry’s finest customer acquisition, guest management, and business intelligence tools proven to increase RevPAR, grow market share and boost revenue for our brands,” Mount said.
According to Baird Equity Group’s hotel REIT analyst Michael Bellisario, the Knights Inn brand had the lowest RevPAR in Wyndham’s system at $23.67 (45.9% occupancy). He also noted that Wyndham earned $3.54 million of royalty fees in 2017, and Red Lion expects to generate more than $3 million of EBITDA on an annualized basis. “Royalty fees should increase under Red Lion’s ownership when the 47 hotels in the Knight’s Inn pipeline open,” Bellisario wrote in an analyst note.