WYNDHAM HOTEL GROUP plans to acquire Minnesota-based AmericInn, a move that will increase its portfolio by 200 hotels and 11,600 rooms in 21 states. Wyndham is purchasing the brand and its management company, Three Rivers Hospitality, from privately held Northcott Hospitality for $170 million.
Most AmericInn properties are franchised, and Wyndham plans to “explore options” for divesting the brand’s owned portfolio of 10 hotels, it said in a news release. AmericInn also has 23 hotels in its U.S. pipeline; most of its properties are in Minnesota, Wisconsin, Iowa, Michigan and North Dakota.
Wyndham is not new to the midscale market. Its Baymont Inn & Suites, Wingate, Ramada and Hawthorn Suites have long served the segment. But the AmericInn deal will give Wyndham a bigger footprint in the Midwest. “It will give us access to developers we could not reach before,” said Geoff Ballotti, president and CEO of Wyndham Hotel Group, a division of Wyndham Worldwide.
It also will expand its reach in the midscale segment – a traveler demographic other major franchisers are targeting by creating new brands or reviving existing portfolios. Hilton Worldwide introduced Tru in January 2016 and has opened three so far with plans to open 70 by the end of next year. InterContinental Hotels Group last month said it plans to launch a midscale brand which it has not yet named. Best Western Hotels & Resorts launched GLō in late 2015 in a bid for travel-hungry-but-thrifty millennials; and Choice Hotels International has refreshed existing brands like Sleep Inn.
STR reported June’s U.S. pipeline has 9,500 midscale rooms under construction, a 48.2 percent increase over June 2016; and 57,150 rooms under contract, 65.7 percent more than a year ago.
Ballotti expects the AmericInn deal to close in October.
He is spending this week in Minnesota and surrounding states, visiting franchised hotels and their owners. He and Paul Kirwin, president and chief executive officer of Northcott Hospitality, had a conference call Tuesday with most of the franchisees. Ballotti said owners’ reaction to the news was “very, very positive.”
For some time, AmericInn franchisees have wanted to see the brand grow beyond its Midwest borders. “Owners want distribution; to become a part of something bigger,” Ballotti said. “They want the brand to grow to scale and all that comes with it.”
AmericInn has been signing more Asian American franchisees in the past two years than ever before. Last week, for example, the company announced two new AmericInn Hotel & Suites opening in Boscobel and New Lisbon, Wisconsin. Both hotels are conversions and are the second and third AmericInn properties for Lal Patel and Mahesh Patel.
Bhupen Patel and his son Kalpesh of VKB Management in Des Moines, Iowa, opened their first AmericInn in 2009, and today they have five.
AmericInn is a new build and a conversion brand. The pipeline totals 23 properties, most of them new construction, Ballotti said. AmericInn is well known by residents of and frequent travelers to the Midwest.
Besides growing through traditional franchise development, Northcott Hospitality also identifies small cities in need of a hotel. Its development marketers will pool together local investors to open new properties, which are usually operated by a third-party management company, frequently Three Rivers Hospitality.
For example, a group of 25 investors this month opened a 41-room AmericInn Hotel & Suites in Humboldt, Iowa. The project cost $4 million to build, with investors pitching in $1.2 million in equity, according to local news reports. “The Humboldt hotel was built because of the demand the city had for a hotel in its market,” Ballotti said. The chief executive wanted to stay at the Humboldt hotel this week, but it is sold out.
Ballotti said Wyndham is attracted to the overall deal because of AmericInn’s focus on quality. “What we love about this brand is its exceptional guest-service scores,” he said, noting 85 percent of the portfolio has four stars or more on TripAdvisor. “It is a brand powerhouse in the Midwest, and we believe it will translate nationwide.”