RLH Corp. announced on Wednesday that it has agreed to acquire the Knights Inn brand from Wyndham Hotel Group for US$27 million in cash. The deal is expected to close in Q2 2018.
The economy segment brand has approximately 362 hotels across North America and a pipeline of approximately 47 hotels. The brand has the lowest RevPAR in the Wyndham system at about US$24.
RLH Corp. said it expects the transaction to enhance franchise revenue and EBITDA growth and boost franchise profit margins as the company will be able to leverage existing technology and support systems. The transaction will be immediately accretive to the company’s earnings and cash flow.
C. Patrick Scholes, analyst with SunTrust Robinson Humphrey, said he sees the deal as a win-win, adding distribution to RLH’s growing platform, while strengthening Wyndham’s strategy to focus on its higher quality and higher related core economy brands such as Super 8 and Days Inn.