Barcelo Crestline Corp., a hotel owner-manager with a portfolio of 125 properties, last week announced it will acquire John Q. Hammons Inc., an owner-manager of 60 properties. The resulting firm, to be called Barcelo Hammons Hotels & Resorts, will manage full-service and midprice hotels under a range of flags, including Embassy Suites, Holiday Inn and various Marriott International brands. The deal, expected to close in January, is reported to be worth $64 million.
In a capital-intense industry, the proposed combination will allow McLean, Va.-based Barcelo and JQH to "accelerate long-term growth in terms of new property development, as well as improve the service delivery across the existing portfolio," said John Hammons, a 46-year lodging-industry veteran.
Owner-managers in recent years have more frequently approached buyers on behalf of their properties. Especially during the 2001 to 2003 downturn, when hotels struggled for occupancy, buyers reported being approached by both the brand and the owner-manager on behalf of the same individual hotel or portfolio of hotels. This trend is expected to continue. Conflict arises when the owner-manager is promoting properties in a market that belong to different hotel company brands.
As owner-managers have expanded, they also have grown increasingly influential in decision making at the brand level. Roughly one-third of Hammons' 60 properties, for example, are Embassy Suites properties. There are approximately 160 of the Hilton Hotels Corp. brand's properties systemwide, making Hammons a major owner within the chain. The Embassy Suites stake will grow, as Hammons in 2005 is scheduled to open four properties and begin construction on two more. "Mr. Hammons believed in the all-suites concept as a good value for both business and leisure travelers, so our position has continued to grow," said Scott Tarwater, senior vice president of the Springfield, Mo.-based company.
The acquisition is the latest in the past few years affecting owner-managers, following the 2003 acquisition of RFS Hotel Investors by CNL Hospitality, and the 2002 combination of MeriStar Hotels & Resorts and Interstate Hotels, which retained the Interstate name. Since the mergers, those owner-managers aggressively expanded their portfolios. For example, Interstate in August assumed management of 54, mostly full-service hotels owned by Sunstone Hotel Investors. Interstate's portfolio now numbers approximately 320 hotels. CNL Hospitality in April acquired six resort meeting properties from the KSL Recreation Corp., bringing CNL's total property count to 136.