RLH franchise signings up 60% YOY in first half of 2019

The Red Lion Hotel Lake Buena Vista South opened following a 2.5-year, $20-million renovation.
The Red Lion Hotel Lake Buena Vista South in Kissimmee, Fla., belongs to RLH Corp.'s upper-midscale Red Lion Hotel brand. Photo credit: RLH Corp.

RLH Corp. executed 40 hotel franchise agreements during 2019’s second quarter, an increase of approximately 38 percent compared to the same time last year. With contract signings up 60 percent compared to the first half of 2018, the company raised its executed contract range for the year to 175 to 210.

Of the 40 contracts it made in the second quarter, five were midscale and upscale hotels and 35 were select-service hotels. Out of the 96 it signed so far this year, 13 were midscale or upscale and 83 were select service.

Year to date, contracts for new and existing locations for its midscale and upscale brands had an average net present value of more than $255,000 as compared to an average net present value of approximately $74,000 for the terminated hotels in this category. For its select-service hotels, these values came to $36,000 and $24,000.

Thirty of the 96 contracts RLH signed in the first half of the year were for new locations coming onto the company’s platform. These hotels will have phased openings over the next two years. RLH anticipates they will contribute approximately $228,000 in royalty revenue in 2019. The 30 hotels have an anticipated royalty revenue baseline of approximately $875,000 for their first 12 months of fees, after application of incentives and fee deferments. This royalty fee stream does not include incremental revenues generated from transaction, marketing or other franchise fees.