Let the consolidation games begin. Vantage Hospitality Group fired the first salvo this morning in what is sure to be the first of many mergers in the hotel industry with the announcement the company has purchased Atlanta based Americas Best Franchising.
When the companies complete the merger, which is expected to happen later this year around the time Vantage hosts is annual owners conference the first week of December, the company will add more than 225 hotels to the system from a variety of brands such as America’s Best Inns & Suites®, Country Hearth Inns & Suites®, Jameson Inn®, Jameson Suites®, Signature Inn®, and 3 Palms Hotels & ResortsSM, and ABF’s license for the Budgetel® Inns & Suites brand.
They join Vantage’s brands, which already includes more than 1,000 Americas Best Value Inn®, Canadas Best Value Inn®, Value Inn Worldwide®, Value Hotel WorldwideSM, Lexington® Inn, Lexington Hotel and Lexington Legacy properties. Vantage also owns Cruise Inns, which is geared to the RV industry and debuted last year.
Vantage Founder, President & CEO Roger Bloss said it is too premature to talk about the future direction of the combined companies but said in a conference call this afternoon the company plans to hold the brands for the long term. The only exception could be Budgetel which is not owned outright but operates under a sub-licensing agreement.
“By combining brands under the Vantage umbrella, we will strengthen our synergies and continue to enhance our competitive advantage with a full line of brand segments that address the needs of both hotel owners and consumers. This will offer our members greater distribution, more marketing dollars and enhanced exposure, and additional revenue-generating programs and resources,” said Bloss.
The deal has been in the making since last spring after former ABF CEO Doug Collins resigned after more than a decade to pursue other interests. He was replaced by current America’s Best Franchising President & CEO Sterling Stoudenmire.
Bloss indicated he started talks with Stoudenmire and both men realized the synergies that could be achieved between the companies. “”They seemed to align with each other so well we continued the dialogue. This was a relationship before a transaction,” said Bloss.
Stoudenmire was hired by the ABF Board of Directors to evaluate the future shareholder potential of the company and said the Vantage deal offered all the advantages ABF executives were looking for.
“The ABFI team eagerly embarked on an immediate transformation of the company, its culture, and our products. We have already made substantial progress, but the team is aiming very high…to transform our existing brands into market leaders and create tremendous value for property owners. After numerous discussions with our board, our existing franchisees
and industry experts, it became very clear that the best way to realize this vision was to find a strategic partner with the scale, resources and expertise necessary to compete – and win – in this demanding market…and to do so in a manner consistent with our ‘owners first’ philosophy,” said Stoudenmire.
“After getting to know Roger and the Vantage corporate team, I have no doubt that they are the right fit for ABF. Their conviction to educate, not mandate, and their existing resources and programs will allow them to offer new opportunities to our property owners that will help them improve their bottom lines and position them to succeed in the long term,” Stoudenmire continued.
Bloss indicated the ABF offices will remain open and there will be no layoffs at the corporate level. He also said the deal will help the combined companies compete more effectively against legacy hotel companies.
Starting next week Vantage executives will start talking to owners of hotels in the ABF system to educate them on the changes and seek input and feedback to craete a dialogue before “settling into a direction” the company will take.
He said not to expect any changes or news before fall as this is the hotel operator’s busiest season and Bloss wants those owners to focus on running their businesses first. The rest will come later as the annual conference approaches. Plus it will take time to begin integrating technology systems.
The transaction was arranged by Brown Nester Hospitality Services (an affiliate of Vantage) and its President, Chuck Nester. The terms of the transaction, which is expected to formally close later this year, are confidential.
“It’s exciting to experience a continued evolution of our brands and philosophies,” added Bloss. “All of our properties will benefit as we reach the right consumer, with the right brand, at the right price, at the right time – which means more ROI for our hotel owners.”