Jameson Hotels throughout the Southeast, which were converted to Choice brands. “We are looking for multiple hotel portfolios like this,” David Pepper, SVP of global development for Choice, said. “We’re making more of a concerted effort to look at more regional chains or portfolios of hotels to convert with us. You’ll see this as a strategy going forward coming off of this success.”
The current deal started at a meeting at last year’s ALIS conference and included a lengthy RFP process. “They were looking to reposition their portfolio to increase the asset value,” Pepper said. “They did a lot of research and a lot of due diligence on what brands can deliver from an operational perspective, from cost deduction and future asset appreciations. We were part of the RFP process, and then Colony Capital went through their decision making and decided that they would reposition half their assets to the Choice portfolio.”
Pepper explained that it was a very thorough process on the part of Colony, on the part of Aimbridge, and on the part of Choice. “They did an incredible amount of work on analyzing their portfolio, analyzing brands and what they viewed would be the best for them going forward. It was a pretty lengthy process, very involved and researched, but, at the end, I think they made the right decision.
“We were also pretty thorough on our part,” he continued, “[examining]which hotels we thought we could be of value to, while taking into account impact on our existing hotels because we didn’t want to hurt any of our existing properties within our portfolio.” After much research, both sides agreed on the 46 properties they thought would be a good fit for everyone.
Forty-two of those properties have been reflagged as Quality Inns, two as Comfort Inns and another two are now Econo Lodges. Pepper explained that they looked at product, locations and how much money Colony wanted to spend on repositioning each asset to figure out with which brand each property would fit well. “Most of the products fit and were in the type of location that were more Quality Inn, and we felt that we could deliver for them with that brand.” According to the company, Choice’s loyalty program—which has over 16 million members—as well as the CRS and Q amenities in all Quality Inn hotels, were leading factors in making the Quality Inn brand an attractive choice for the portfolio’s owners because they were comparable to or exceeded what Jameson guests were used to at those properties.
All of the properties—located in Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia—have already opened under their new brands. “The assets were in pretty good shape,” Pepper said, adding that the owners put aside roughly 15 million to meet brand standards and reposition their assets. “They’re still taking a fair amount of money in renovations because [Colony] wants great assets, but, in general, they were in good shape before their renovation dollars were put in.”
Although Choice has worked with Aimbridge, which has assumed management of all of the hotels in the portfolio, prior to this deal—the Comfort Suites DFW Airport in Irving, TX, and the Cambria Suites Roanoke in Roanoke, VA, are part of the management company’s current portfolio—this is Choice’s first time working with Colony. “Aimbridge is an excellent management company with good leadership and good people,” Pepper said. “They work extremely well with Choice Hotels, and we feel that we can grow with them in the future.” Likewise, Pepper described Colony as a “terrific” company. “They’re extremely thorough, and we’re glad we have this first foot in the door with them. We think there might be some potential opportunities down the road to work with a fine company like theirs. And vice versa, I think they think the same of us.”
This acquisition marks Choice’s single largest conversion transaction, with the exception of brand acquisitions. “It says a lot about Choice Hotels that they recognize the strength of our system and the reputation of our brands,” Pepper remarked. “This transaction clearly demonstrates the value and appeal of our brands in the hotel investment community.”