Acquiring Master License Rights for Travelodge Canada
Company also obtains controlling share of Super 8 Canada development rights
April 9, 2015. Boca Raton, FL and Calgary, AB Canada – Waramaug Hospitality Canada LLC, in partnership with Superior Lodging Corporation, announced today the purchase of the master license rights to Travelodge Canada from Halifax-based Holloway Lodging Corporation (TSX: HLC, HLC.DB, HLC.DB.A).
Realized under a newly formed joint entity by the name of Superior Lodging Development TL Corporation, the company, which will look to oversee the continued growth of the Travelodge brand in Canada, will be led by Marc Staniloff, CEO of Superior Lodging Corporation, while Michael Rapps, Chairman of Holloway, will join as a member of the newly formed company’s board of directors.
Today’s announcement builds on a separate but related agreement between Waramaug and Superior that gives Waramaug a controlling share of the development rights for Super 8 Canada. This will make the combined portfolio for both brands 221 hotels. Wyndham Hotel Group, the world’s largest hotel company with over 7,600 hotels in 70 countries worldwide, grants the rights for both deals.
“Canada’s strong economy bodes well for our organization and we expect Super 8 and Travelodge to benefit greatly from the augmented management experience that this newly formed team brings to the table,” stated Paul Nussbaum, Chairman, Waramaug Hospitality Canada LLC. “Marc has been instrumental in developing a number of brands across Canada and we have no doubt that he’ll help us to do the same under this newest endeavor. As a company that’s focused on acquiring legacy branded assets, it’s our goal to help further expand and improve the Super 8 and Travelodge brands, aiding in the continuation of their market leadership positions in Canada.”
The Canadian hotel industry has experienced a rapid recovery in the last few years. In particular, both RevPAR and occupancy rate have shown positive growth in every year since 2009. Moreover, 2015 is poised to be another record year for the Canadian economy and midscale lodging sector in terms of RevPAR and ADR according to HVS. In terms of the Canadian travel outlook, total domestic travel is expected to rise 2.5% in 2015 and national accommodation demand growth is expected to grow at 2.7%. The Canadian market also poses a great opportunity for branded hotels as 77% are unbranded compared to only 40% in the U.S. (based on the number of units).
“Over the past two decades, my team and I have been extremely successful in developing hotels across Canada with a specific focus on branded, limited-service hotels,” commented Staniloff. “I strongly believe the market is ripe for continued expansion as it relates to these brands and look forward to lending my expertise on this new venture. We intend to remain on the forefront of the market and appeal to new and existing franchisees and investors alike to realize a solid investment from our foothold in Canada.”
Super 8 and Travelodge are expected to expand their presence by converting above referenced unbranded hotels across Canada, particularly where the highest numbers of unbranded guestrooms reside in Alberta, British Columbia, Quebec and Atlantic Canada. Geographically, 64% of Super 8’s Canadian hotels are located in Western Canada, 29% of hotels are located in Central Canada, 6% of hotels are located in Atlantic Canada and 1% of hotels are located in Northern Canada. For Travelodge, 58% of all Canadian hotels are located in Western Canada, 38% are located in Central Canada, and the remaining 4% is located in Atlantic Canada, leaving room for both Super 8 and Travelodge to strategically expand in either side of the country.
“Both Super 8 and Travelodge possess several key benefits that we were looking for in terms of having a stable revenue base, high margins and low capital requirements. There are significant growth opportunities in Canada, which we intend to gain from with our capital partners as we expand these brands,” said Scott Silver, principal, Waramaug Hospitality Canada LLC. “Our strategy will be to grow these franchises further through acquisition, development and conversion of existing hotels. We will also be able to offer financing to existing and prospective franchisees, which is a unique opportunity for them and hopefully provide the impetus to further our footprint in the dynamic Canadian market. We also have identified a senior sales person with a premier track record of converting multiple units per year. This in-house sales person, along with two Travelodge sales people will focus on the growth of both brands to add leverage to our platform. In addition, Superior Lodging, through their management agreement will focus on sourcing development opportunities for direct co-invest opportunities.”
