Wyndham sells Knights Inn brand to Red Lion ahead of spin-off

The Knights Inn Baltimore West in Maryland. Photo credit: Wyndham Hotel Group

Ahead of Wyndham Worldwide spinning off its hotel business into two separate and publicly traded companies, the company announced it had sold its Knights Inn brand to RLH Corporation for $27 million. The transaction is expected to close in the second quarter of 2018. 

The economy-segmented brand, which at one time was known for its medieval-inspired architecture with properties resembling castles, opened its first hotel in 1974, in Columbus, Ohio. Cendant, the pre-cursor to Wyndham Worldwide, acquired the brand in 1995. Today, there are around 350 Knights Inn hotels operating across North America and a pipeline of an additional approximately 47 hotels.

Though Knights Inn is an iconic brand, Barry Goldstein, who became CMO of Wyndham Hotel Group last month, said selling the brand was part of the group's transformation journey that will result in Wyndham Hotel Group becoming a pure-play hotel franchisor.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

"For us, the rationale was we've been elevating economy for a while as part of our journey, and on that journey, our economy brands have fit in the mid to upper end of the economy segment," Goldstein said. "This was a play around fitting in that segment and not the lower end of it. It was important right before we spin."

RLHC, meanwhile, has been quietly filling in its footprint in the economy space. In September 2016, it acquired the 10 brands and brand operations of Vantage Hospitality Group for $23 million in cash. Those brands included America’s Best Value Inn and Canada’s Best Value Inn and overall represented some 1,000 mostly down-scale hotels. 

For Greg Mount, CEO of RLH Corporation, the acquisition is a play to scale up. "The acquisition of Knights Inn enhances RLH Corporation's position as one of the 10 largest hotel franchisors in the world," he said. "This acquisition will increase our franchise units by over 30 percent and we will continue to grow the brand aggressively as we have demonstrated with our other brands."

Conversely, Wyndham Hotel Group is bulking up in the midscale segment, having recently acquired the AmericInn and La Quinta brands. The latter deal was for $1.9 billion and was a transaction that, at the time, Wyndham Hotel Group CEO Geoff Ballotti called crucial. "Midscale is a segment we’ve been looking to grow in, and the acquisition creates the largest collection of midscale hotels in the business… at a time where it has never mattered more."

Of the Knights Inn disposal, Ballotti said, "Wyndham helped grow Knights Inn into a nationally known name. While we're proud of what we've been able to accomplish, we believe now is the right time to make this move and are confident that RLH Corporation will only continue to support and grow the brand."

Once the deal closes, Knights Inn will join RLHC's Hello Rewards guest recognition program.