 Stamoutsos WYNDHAM |
PARSIPPANY, N.J.–The deal Interstate Hotels & Resorts and FFC Capital Corp. brokered in February to acquire Excel Inns of America's 22-property portfolio represented a continuation of the investors' goals—and a unique positioning opportunity for Wyndham Hotels & Resorts.
The final sale price was not disclosed, but the portfolio included 2,397 rooms at properties ranging from 89 guestrooms to 124 guestrooms. The hotels are located in Illinois, Iowa, Michigan, Minnesota, Texas and Wisconsin.
All were immediately reflagged as Wyndham properties, making the deal Wyndham's largest collective conversion involving the Days Inn, Baymont Inn & Suites, Super 8, Howard Johnson and Travelodge brands.
 Ng INTERSTATE |
"Usually you get a one- or two-property deal package [in a portfolio sale]," said Gus Stamoutsos, Wyndham Hotel Group senior v.p. of franchise sales and development. "I've been with the hotel group for five years, and in that time, I haven't seen a regional chain that sells and converts to one brand."
Wyndham's brand opportunities made the decision to reflag simple, said Fred Branovan, FFC Capital president and c.o.o.
"These are our first Wyndhams," Branovan said. "When we first approached Wyndham to talk about this, they had a brand for all 22 properties. We're happy."
FFC was founded in 1998 by Milton Fine, former chairman and co-founder of Interstate. The company now owns 29 hotel properties, among its other asset class interests. Of its owned hotels outside the Excel Inn portfolio, four are Hyatt Place properties and three are Courtyard by Marriott.
"We have a tendency to go for these undervalued, reposition-type opportunities where we can reflag, put in better professional management and raise the bottom line," Branovan said.
"In many of these submarkets, these Excel properties are 100 rooms or larger, have interior corridors and are, I think, much better than their competitive set," he said.
Branovan said FFC and Interstate will invest in renovations, including exterior upgrades, lobby refreshes and new breakfast areas. These renovations should be completed in nine months, he predicted.
The acquisition made Wyndham brands a significant addition to Interstate's ownership portfolio as well.
"It was not a big brand for us, but [it] is now," said Leslie Ng, chief investment officer for Interstate. "Originally we were about 5 percent Wyndham [brands]; now we are probably 15 percent."
Interstate has ownership in 54 hotels and manages 218 properties.
CB Richard Ellis Hotels represented the Madison, Wis.-based Excel Inns in the deal. An Interstate subsidiary, Crossroads Hospitality, manages the hotels.
Ng echoed Branovan when he said the recognizable Wyndham brands made the decision to go with one brand family financially sound.
"This portfolio matches up well [with Wyndham] because we're converting these not-well-recognized brands to Wyndham products, and we'll see immediate return on revenue per available room," he said.
Stamoutsos said Wyndham foresees continued consistent growth in number of properties for its select-service brands.
Branovan said the select-service segment should weather any pending recession just fine.
"We always view the hotel business as a very local market, local partners-specific," he said. "If the economy softens, we'll still do well because the economy segment won't be affected as much, and we're taking these [properties] two steps up on the branding ladder. We're not just buying existing hotels, keeping the flags and betting on the fact they'll ramp up with the economy. We're looking at repositionings that will do better [in any economic condition]."
