FelCor Lodging Trust announced on Tuesday that it is rebranding eight of its Holiday Inn-branded hotels in the U.S. to the Wyndham Hotels and Resorts brand.
Wyndham Hotel Group, Parsippany, New Jersey, will manage the hotels under a 10-year agreement with a performance guarantee. As part of the management switch IHG, Denham, England, will receive US$31 million in damages from FelCor Lodging Trust, Irving, Texas.
In conjunction with the renovation and repositioning of the eight hotels, FelCor will spend approximately US$34 million over the next three years, net of US$10 million in key money from Wyndham Hotel Group, in comparison to the existing US$27 million capital plans over the same period.
“This agreement is focused on repositioning our portfolio in order to improve our portfolio quality and increase hotel operating income,” said Richard Smith, president and CEO of FelCor.
The agreement includes a US$100 million guarantee from Wyndham Worldwide Corp. over the 10-year term of the agreement (which includes a renewal option), with an annual guarantee of up to US$21.5 million that ensures a minimum annual NOI for the eight hotels. It also provides a management fee structure more consistent with prevailing industry practices, FelCor said, and FelCor expects to save approximately US$50 million in management fees over the term.
“This is a great opportunity for Wyndham Hotel Group to significantly increase our presence without significant capital outlays,” said Eric Danziger, Wyndham Hotel Group president and CEO.
The hotels to be converted include:
- Holiday Inn – Santa Monica Beach-At The Pier, located in Santa Monica, California
- Holiday Inn – Philadelphia-Historic District
- Holiday Inn – Boston-at Beacon Hill
- Holiday Inn – San Diego-On The Bay
- Holiday Inn Hotel & Suites – Houston-Medical Center
- Holiday Inn – Pittsburgh @Univ Ctr (Oakland)
- Holiday Inn – New Orleans-French Quarter
- Holiday Inn – Charleston-Mills House, located in Charleston, South Carolina