Choice Hotels International closed out 2017 with a rare hotel portfolio acquisition: the $231-million purchase of WoodSpring Hotels Holdings. WoodSpring, formerly known as Value Place, is a staple in the extended-stay hotel landscape, and through its acquisition, Choice added more than 240 properties in the segment to its portfolio, which is buttressed by its Mainstay Suites and Suburban Extended Stay brands. The company now has a total of 350 hotels in its extended-stay pocket.
With three brands in the extended-stay segment, Choice’s commitment to extended stay is clear. That’s why the company appointed Ralph Thiergart to VP and general manager of extended-stay brands in mid-March. Thiergart joined Choice’s franchise services team in 2005, and most recently was VP of franchise services at the company. Now, he is making it his mission to grow Choice’s extended-stay portfolio from coast to coast.
But why WoodSpring? After all, Choice Hotels is considered a disciplined buyer and doesn’t take part in many portfolio bidding wars or full-on portfolio acquisitions. The company’s last acquisition was the Suburban chain in 2005. Since then, Choice introduced the Ascend Collection in 2008, but its decision to buy its way into a third extended-stay brand can be easily explained by Thiergart.
“Extended stay is on fire,” Thiergart said. “It led the industry in [revenue per available room] in 2017, and some of the strongest results came from economy extended stay, which only grew [supply] about 3 percent last year. If economy is posting the highest year-over-year RevPAR gains, but the slowest supply additions, that’s simple math. What’s working for WoodSpring works for us.”
One Big Hurry
Choice isn’t wasting any time. Since the acquisition, the company has added 19 new WoodSpring Hotels franchise agreements to its pipeline, and is targeting 25 new hotel openings by the end of 2018. Thiergart said WoodSpring has earmarked future development locations in Redmond, Wash.; Seattle; Miami; New York; Denver; Chicago; and Dallas, and is interested in developing in Los Angeles, San Francisco, Portland, Ore.; and Washington, D.C.
Developmental challenges for the future of WoodSpring, Thiergart said, stem from the need to properly take advantage of the opportunities available to Choice at the current time. On the brand side, however, Thiergart said Choice must frequently resist the temptation to attempt to be all things to all people, particularly when developing extended-stay hotels.
“The way we see it, Choice has a clearly segmented portfolio of brands,” he said. “For WoodSpring, we offer guests exactly what they need for a stay that is typically a week, and is often three weeks at a time. As for economy extended stay, the biggest challenge is also an opportunity, which is to focus on the basics.”
Economy extended-stay hotels are straightforward by nature, but in practice they can be implemented in an adroit manner that is welcomed by guests. To achieve this, Thiergart stressed the basics of clean guestrooms, fast Wi-Fi and technology that consistently works.
“The more things change, the more they stay the same,” he said. “These guests want the basics done well, and fast Wi-Fi counts for a lot.”
Thiergart’s mention of Wi-Fi and technology shouldn’t come as a surprise. Under the Choice umbrella, WoodSpring also will tap into Choice’s newly launched global reservation system. choiceADVANTAGE, as well as its association with property-management-systems developer SkyTouch Technology.
Future Bids?
Is Choice planning any more portfolio acquisitions like WoodSpring in the future? Thiergart is cagey on the subject, but he doesn’t specifically say ‘no.’
“Choice views mergers and acquisitions with an opportunistic mindset, and we are a very opportunistic buyer,” her said. “We like the WoodSpring product, its market presence, performance, business model and crazy strong franchisee loyalty. It fits well into our market segmentation, and that’s all I can say there.”
Thiergart also said that WoodSpring has been successful on its own since its inception, and offered his reassurances that Choice won’t be messing with what is already a winning formula.
“This is such a successful brand that our biggest opportunity to turn this into a successful integration is to listen and learn,” he said. “WoodSpring has posted some great numbers, and we want to understand where we can integrate, and make use of what we bring to the table.”