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Red Lion Buys Knights Inn Hotel Brand from Wyndham for $27 Million

Knights Inn signageRed Lion Hotels Corporation [NYSE:RLH] announced today that it has agreed to acquire the Knights Inn hotel brand from Wyndham Worldwide [NYSE:WYN] for $27 million in cash. The deal is expected to close in the second quarter of 2018.

As finalization approaches of the spinoff of its timeshare from its hotel business, Wyndham sees the opportunity to offload a brand that has properties with lower revenue per available room (RevPAR) in favor of brands in the midscale sector, which have higher RevPAR and royalties for the franchisor. The franchisor, like almost all others, gains income through royalty payments from franchisees based on their franchised hotel’s top-line revenue.

“While we’re proud of what we’ve been able to accomplish, we believe now is the right time to make this move,” said Geoff Ballotti, the president and CEO of Wyndham Hotel Group, the division of Wyndham Worldwide that is selling the Knights Inn brand.

In contrast, RLH has been buying and expanding a lineup of brands in the economy segment. In the fall of 2016 Red Lion bought Vantage Hospitality and its ten mainly economy brands with its thousand licensed properties for coincidentally the same amount as the Knights Inn brand, $27 million.

The purchase of the Knights Inn brand and its 350 hotels in North America will increase the number of affiliated hotels under RLH Corporation’s various brands by over 30 percent. 

Knights Inn is best known to this journal as pioneering the simplification of franchise contracts back in 2007 when it chiseled its densely legalistic 35 pages of contract down to 4 pages. It attempted to simplify the legal language as well. A few years later, its standard franchise contract of 2016 had grown to 7 pages, with a number of addenda that could also be signed, depending on applicability.

“Knights Inn owners will be quickly brought onto our state-of-the-art systems, a handpicked suite of the industry’s finest customer acquisition, guest management, and business intelligence tools proven to increase RevPAR, grow market share and boost revenue for our brands,” reassured Greg Mount, RLH Corporation’s president and CEO to Knights Inn franchisees. “Knights Inn will also feature our unique Hello Rewards guest recognition program, giving guests personal touches and extra perks across all our hotel brands,” added Mount.

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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email don@bluemaumau.org.