Sonesta International acquires RLHC
NEWTON, MA—Sonesta International Hotels Corporation, headquartered here, wrapped up a busy 2020 filled with portfolio growth and the addition of a new brand with the acquisition of RLH Corporation (RLHC) and its more than 900 hotels. After the closing of the transaction, expected in the first half of this year, Sonesta will become one of the largest hotel companies in the U.S. with approximately 1,200 hotels in diversified brands across multiple market segments.
“RLHC is an established, highly successful franchisor of hotels,“ said Carlos Flores, president/CEO, Sonesta International Hotels Corporation. “Sonesta has been aggressively growing its footprint in the hotel industry for years. Throughout the pandemic, Sonesta seized opportunities to grow and diversify our business and extend the benefits of our approaches to client and guest service, and operational excellence. We have had our eye on Red Lion for some time, and this was the right moment. RLHC brings an established franchise base, strong brands and a tremendous platform for future growth—domestically and internationally. This was a clear win-win for all parties involved.”
Flores noted that Sonesta does not expect to change any of the RLHC brands—Red Lion Hotels, Hotel RL, Red Lion Inn & Suites, Signature Inn, Knights Inn, Americas Best Value Inn, Canadas Best Value Inn and the recently rebranded Guesthouse Extended Stay.
“We find the product type and brands to be exceedingly complimentary,” he said. “We’re invested in these additional brands and are not anticipating collapsing them into the Sonesta brands, but instead continuing to build on the work that RLHC has done to establish and make them successful. Our efforts are focused on how best to leverage and maximize the value of the new collective scale for all the brands.”
All RLHC franchisees moving over to the Sonesta family will have everything that has been available to the parent company’s owners. “The combined two organizations will offer all franchisees the power of Sonesta’s years of experience in operating hotels and systems, partner network and resources we have cultivated over 80-plus years, including advantages in areas such as purchasing, technology, training and sales/marketing,” noted Flores. “We are also planning to advance and amplify efforts to build a better, stronger and more impactful world-class franchise service and operations platform, built on a foundation of decades of experience and best practices in franchising, led by Keith Pierce.”
Pierce, a 35-year hotel industry veteran, will join the company as EVP, president of franchise & development upon the closing of the transaction. He served most recently as president and managing partner of the Passionality Group, a hospitality investment and management advisory firm. Prior to that, he worked at Wyndham Worldwide in a number of positions. He was EVP, brand operations for North America, and before that, president of hotel brand operations for the Americas, and group president for hotels at Wyndham’s predecessor company, Cendant Corporation.
“I am looking forward to welcoming RLHC franchisees to Sonesta at this dynamic and promising moment in the company’s growth,” said Pierce when the deal was announced. “I also look forward to working closely with the RLHC franchising community and building on the strong foundation RLHC has created. I believe Sonesta is currently one of the industry’s most exciting, forward-looking companies.”
Flores pointed out that the combined Sonesta and RLHC brands give the company an edge over some of its competitors. “The brands are mutually supportive, quite complementary, and very little overlap,” he said. “The complexion of the combined portfolios are highly leverageable to the entire collective’s advantage—including and especially current RLH franchisees. We look forward to applying the sum talents of the combined companies to build an even bigger, better and stronger platform for all and secure a more favorable competitive advantage in the market.”
Moving forward, Flores said, Sonesta plans to “aggressively grow the number of hotels in our newly expanded portfolio of brands, focus on improving service delivery for our guests and drive improved operating results to the benefit of our hotel owners and franchisees alike.”
Both RLHC and Sonesta have robust guest loyalty programs—Hello Rewards and Travel Pass, respectively, and Flores said it is too early in the process to address whether Hello Rewards members would move to Travel Pass, “but we have our team evaluating the best path for members of both programs.”
Before the RLHC deal was announced, Sonesta added more than 100 hotels to its branded and managed portfolio from Service Properties Trust (SVC). The properties will be converted from InterContinental Hotels Group (IHG) brands to Sonesta flags.
“Going into the pandemic, we had the advantage of working very closely with and gaining the confidence of SVC’s leadership over the previous nine years, as we extended the number of hotels we managed for SVC under one of the Sonesta’s brands,” said Flores. “That confidence grew to eventually include SVC acquiring a minority ownership interest in Sonesta in February of 2020. Perhaps there was a little serendipity at play in the overall chain of events, but we have also worked very hard over the years so we could be prepared to take on the scale of opportunities which would result in Sonesta’s material growth. But no one could have predicted the catalyst or the velocity in which that growth was realized over the last several months.”
Flores’ forecast for his company in 2021 was short and sweet. He is looking forward to “Sonesta’s continued growth—in size and capability.”