Whatever Happened With: Red Lion Hotels Corp.
Acquiring company’s strategy to grow via franchising platformMay 19th, 2022
Five years after quietly moving its corporate headquarters to Denver and divesting of its Spokane properties, Red Lion Hotels Corp.’s franchise platform is being hailed as the engine through which its new owner intends to continue growing.
Red Lion was acquired last year by Newton, Massachusetts-based Sonesta International Hotels Corp. in an all-cash transaction totaling $90 million, giving Red Lion shareholders $3.50 a share.
Harry Sladich, Red Lion’s former chief operating officer and executive vice president of franchise development, says he was involved in the selling of Red Lion, but chose to leave the company last year rather than move to the Boston area, where Sonesta is consolidating operations.
The acquisition included a franchise support system and a national sales team, Sladich says.
“That’s why they bought it,” he says. “It was for the franchise platform. Sonesta didn’t have to recreate the wheel.”
Sladich owns Spokane-based security company GoJoe Patrol and is working as its chief development officer. In that role, he is working to establish franchisees for GoJoe.
“The beauty of franchising is you can grow the system without having to purchase the assets,” Sladich says.
Upon closing the Red Lion acquisition, Sonesta brought on Brian Quinn as chief development officer to lead franchise growth, Sladich says. Quinn has more than 20 years of experience in senior development and sales management experience, including three years as chief franchise sales officer at Red Lion starting in 2014, during which Red Lion grew to be one of the leading hotel franchisers in the U.S. and its share prices topped $9 per share.
Sonesta launched its global franchising organization, Sonesta Franchising, in September.
Quinn says the Red Lion acquisition jumpstarted the formation of a team to sell a portfolio of 12 brands, including eight Red Lion brands and four Sonesta brands.
“Sonesta’s acquisition of Red Lion Hotels Corporation … was a strategic transaction, which allowed us to accelerate the launch of Sonesta Franchising domestically,” Quinn says via email in response to a Journal inquiry.
Sonesta grew from 58 properties prior to the pandemic to more than 1,200 in eight countries in just over a year, making it the eighth-largest hotel company in the U.S., the company claims. Most of that growth was through the acquisition of Red Lion, which has more than 900 franchise locations.
While the franchising operations now will fall under the Sonesta Franchising name, Red Lion brands will keep their identities.
Quinn contends the Red Lion name resonates well with travelers.
Red Lion brands range from upscale Hotel RL to economy Americas Best Value Inn. Other Red Lion Brands include Red Lion Hotels, Red Lion Inn & Suites, Signature Inn, GuestHouse Extended Stay, Canadas Best Value Inn, and Knights Inn.
“The Red Lion legacy continues, and the brand will have a named presence in our portfolio … with significant brand growth in the pipeline,” he says.
Quinn says the company recently has opened the Red Lion Inn & Suites, in Yakima, Washington, and has several others due to open this summer.
Sonesta-named franchise brands are Sonesta Hotels & Resorts, Sonesta Select, Sonesta ES Suites, and Sonesta Simply Suites.
Sladich says he’s confident Sonesta will continue to gain strength in the hospitality industry.
“Demand is coming back, and hotels can charge rates again,” he says. “The industry is getting close to where it was at in 2019, which is the year they all aspire to.”
Red Lion’s roots here trace back to 85-year-old, Spokane-based real estate brokerage Goodale & Barbieri Cos., which entered the hotel business in 1976.
Red Lion had been based at 201 W. North River Drive, on the periphery of downtown Spokane, before moving its headquarters to Denver in 2017 after becoming a prominent national hotel franchising company.
The six story, 188,700-square-foot former RLHC office building and adjoining three-story, 84,200-square-foot parking garage have changed hands twice since the headquarters moved out of Spokane, most recently being acquired in September by Seattle-based ICP Spokane II LLC for $21.3 million, according to state real estate tax records.
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