Choice Hotels Buying Radisson, Here’s What It Means For Members

Choice Hotels is buying Radisson and I did not expect this.

  • Radisson Hotels was split into an Americas and an international company
  • It’s owned by Jin Jiang, effectively Chinese government-backed, and the U.S. imposed restrictions on data sharing. Hence there’s an Americas loyalty program and an international one, and customers can belong to both and transfer points between the two.
  • Radisson was shopping the hotel portfolio. It’s more upscale overall than Choice is, but a tired brand in the U.S.

The price is $675 million for the “franchise business, operations and IP” of the U.S., Canada, Latin America and Caribbean business. This also includes real estate for 3 hotels.

  • 10 Radisson Blu hotels
  • 130 Radisson hotels
  • 9 Radisson Individuals
  • 1 Park Plaza hotel
  • 4 Radisson RED hotels
  • 453 Country Inn & Suites by Radisson
  • 17 Park Inn by Radisson hotels
  • Plus the Radisson Inn & Suites and Radisson Collection brands


Radisson Red Minneapolis

With 624 hotels in total, this is just over $1 million per property (abstracting away from real estate). That actually seems low for the business, even though it includes few hard assets.

This seems like a real miss for Hyatt. Though the hotels are more downmarket than Hyatts overall, it would have given them some reach outside of the larger metro areas in the U.S. where they’re strong.

It’s unclear at this point what happens to Radisson Rewards Americas members, though for now it’s possible to transfer those points to the international program. One imagines that the program will be folded into Choice Privileges, though I’d also be surprised if points transfers are 1:1. Perhaps 1:2 is more like it.

Consider that the cheapest Radisson redemptions are 15,000 points while the cheapest Choice redemptions are just 8,000 points. And the priciest Radisson redemptions are 75,000 points while the highest-end properties within Choice’s own portfolio cost 35,000 points. So here’s a logic to 2:1 into Choice Privileges, but a more generous 1.5:1 more generate goodwill.

This deal is great for Citibank ThankYou Rewards customers, given their conversion rate of 1:2 and having more hotel redemption options once the Radisson portfolio is incorporated.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. A miss for Hyatt? I’m not a banker, financier, or analyst by any means. I’ll refrain from commenting on the business sense of the would-be Hyatt deal. I’ll comment from the consumer angle, for what it’s worth (nothing, but par for the course in these comments sections).

    Hyatt’s brand is upscale. They are already risking that brand cachet with their Hyatt Place and Hyatt House properties, a few of which are great — some of which are ok — and many of which are pretty bad. I even stayed at a Hyatt Place (nee AmeriSuites) which was a disaster in terms of mold, HVAC, insufficient bedding, and mediocre customer service — the customer service was actually the best part of the stay.

    From the consumer’s viewpoint, Hyatt needs to be careful about where and how they grow. Right now their brand is a cut above Marriott and Hilton, but willy-nilly expansion — especially via acquisition in the downmarket segments — could make them worse than Marriott and Hilton in just a few years.

    Of course I mean worse from a consumer standpoint. The investor standpoint could be completely different.

  2. $10,000 per room based on 68,000 rooms.

    Average room rate $150 (?) x 5% franchise fee x 365 days = $2,737 per room per year in fees.

    So bought for 4x revenue for a business where virtually all revenue should flow to the bottom line? Something wrong somewhere.

  3. Dumping the Americas was a good move for Radisson. I have an upcoming stay at Radisson Blu Plaza Hotel, Oslo but would never have stayed with Radisson in the US or elsewhere in the Americas.

  4. @Raffles and that doesn’t even factor growing the Choice Privileges cobrand and any growth in the brands. This just seems cheap.

  5. Huge fail for Hyatt. Hyatt has no properties in many B and C list cities in the United States. Some renovations and most of those hundred-plus Radisson properties could have easily been a Hyatt Centric or Hyatt Regency. Huge missed opportunity.

  6. Operating only in A-list cities contributes to a high end brand image. Hyatt is successful today. The question of how to be more successful is relevant, sure, but Hyatt’s success may be in part because of, not in spite of, their lack of presence in smaller cities.

  7. Gary are you thinking it’s better to keep your Radisson miles in the US program or move them to the Global one?

    That would be a great post. I’ve got over a 1M and if they cut off the ability to move points without notice it’s not clear which side to have them on.

  8. “It’s unclear at this point what happens to Radisson Rewards Americas members, though for now it’s possible to transfer those points to the international program.”

    That’s the theory at least, but only if the address on both programs matches exactly. The international website is broken to the extent that you cannot enter a full US address (at least it was the last few times I’ve tried it), so I’m unable to move points from Americas to international.

  9. Not good news for me. I suspect this will lead to a devaluation of the Choice loyalty program.

  10. The Radisson properties of relevance in this situation have owners who are pretty free to dump their affiliation with the acquiring party. So that alone should should drive down the valuation of a company on the brink of a major struggle in an era at high risk of stagflation and recession.

  11. While extremely disappointed that Radisson Americas was acquired by Choice Hotels, I too wonder why Hyatt didn’t go after them. Yes, some of Radisson’s brands tend to be lower end, but so are Fairfield Inn’s when it comes to Marriott’s portfolio.

    We are using five Radisson free night certificates this summer in Montana, as well as some points.
    Hyatt doesn’t have a single property in that state. When it comes to the two Country Inn and Suites we are staying at, and we’ve stayed at previously, they aren’t too shabby.

  12. If Hyatt or Marriott or Hilton were to have picked up this Radisson stuff, the loyalty program devaluation wouldn’t really be there. But with Choice picking this up, I’m concerned that Choice’s acquisition will lead to a devaluation of Choice points as the acquisition will drive re-evaluations of how the loyalty program operates and prices award nights.

  13. Hyatt is faux upscale. They managed to create a (false) image of upscale and charge accordingly.
    There is nothing of value for them here.

    I too am afraid of the devaluation of Choice points with this 🙁

  14. I wouldn’t stay at a single Choice property in the United States before this news and I’m unlikely to stay at a single Choice property in the United States after this announcement. Just as Choice has some great European properties — think Sweden or Norway — so does Radisson. Unfortunately, both brands pretty much suck domestically. I don’t ever remember full-service Radisson properties ever being a viable option for me in the United States, except a couple of mediocre cities with old full-service Radissons. I would rather stay at Best Western than Choice.

  15. I think Hyatt did well to stay away from this. Some deals are no deals. I bet Hyatt has more information regarding this than all of us together. They know why they did not engage.

  16. Radisson does have some decent airport properties and also some beach properties. If this is a move for them to be more upscale, it could work. The loyalty program will be key. Related, I think Choice has way too many brands to begin with…they need to consolidate around specific target markets (Marriott is now in the same position with the Sheraton buy…but at least they are better segmented).

  17. This is a perfect match in that both Choice and Radisson are focused on franchisees over guests and have mostly mediocre properties.

    Choice hasn’t developed a meaningful footprint for Cambria so this deal lets them buy their way into the upscale segment. And come renewal time the owners that are too cheap to renovate can downgrade to Quality or Clarion.

    Since there are still some nice Country Inns, this does open some doors for Citi cardholders.

  18. Poor Radisson, after a great start in Minneapolis back in the days of Cowboys and Indians, they just never got their act together in the US. The Country Inns I’ve used are great. After experiencing some excellent European Radissons, it has been difficult to even remember Radisson when planning a domestic trip. I spend a great deal of business time at the Holiday/Hampton kinds of hotels around the US, use my points for the big personal trips. Rarely find a Radisson that works. I’ve never seen the inside of a Choice hotel, so this will be a new experience.

  19. This is sad news. We’ve been forced to stay in some Choice (I use that word ironically) hotels and they’ve been among the lowest-quality ever…and one was a Quality Inn. If you’re a road-tripper, and don’t mind what you sleep in, go ahead and stay at the Quality Inn in Pecos, Texas — or the EconoLodge in Albuquerque. There are many others over the years and we had come to shun ANY hotel under the Choice umbrella.

    I’m hoping that Comfort Inns will meet our needs as well as Radisson’s Country Inns have. But know how poorly-managed (or never inspected) Choice hotels are, I have no hopes. We have almost 500,000 hotel nights to use and had planned a major road trip to use them.

    Now? I have no idea.

  20. I find this move a little confusing from Choice’s standpoint. As mentioned in another comment, they already have too many brands. What’s the difference between a Sleep Inn and a Quality Inn and a Clarion Inn? Now we have to ask what’s the difference between a Sleep Inn, Quality Inn, Clarion Inn, and Country Inn? I wonder if the price was just too good for them to pass up. Or perhaps they plan on converting some of their Sleep Inns or Quality Inns to Country Inns which probably is a stronger brand. Or maybe they think it will give them some monopoly power in some of the small towns where there’s only a handful of hotels.

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