Which Hotel Group Could Club Carlson Merge With?

Oh boy. We’ve seen the “big three” US airline emerge as a result of some huge mergers over the past decade, and it looks like we’re now slowly seeing the same thing in the global hotel industry.

It started with IHG taking over Kimpton, followed by an announcement of Marriott taking over Starwood, followed by an announcement of Accor taking over Fairmont, Raffles and Swissôtel.

The Marriott takeover of Starwood will likely send other hotel groups into a frenzy, given that they don’t want other groups beating them to consolidation, thereby leaving them with fewer options. It’s the same principle as not wanting to be the last person to be picked for kickball.

Well, another hotel group is now officially considering a merger. Club Carlson is exploring the option of a merger or sale, and has asked Morgan Stanley to start the process for them. While this is of course in the very early stages, it seems like it’s fairly likely to happen, given the other activity in the hotel industry at the moment.

Radisson-Blu-1919
Radisson Blu 1919 in Reykjavik, Iceland

Per the Wall Street Journal:

Carlson, the owner of Radisson and other hotel brands that are part of Carlson Rezidor Hotel Group, is exploring strategic alternatives for the hotel company that could include a partnership, merger or sale of the company, according to people familiar with the matter.

The parent, a privately held hospitality and travel company based in Minnetonka, Minn., has asked its regular banker, Morgan Stanley, to run this process, these people said.

This raises the question of which hotel group Club Carlson could most realistically merge with. The thing about hotel mergers is that they don’t have to be “ideal” fits in the same way airline mergers should be. Hotel groups largely make money off of management fees on properties, and they often have a large and varied portfolio of properties. For example, the merged Starwood and Marriott group will have roughly 30 hotel brands, which is sort of insane, when you think about it. These range from Ritz-Carlton and St. Regis to Springhill Suites and Four Points. On the surface many of these brands seem to overlap.

Brands-Marriott Brands-Starwood
Combined Marriott & Starwood brands

Club Carlson is very strong in Europe (particularly in Northern Europe), and also very strong in the limited service and budget market, with their Radisson and Country Inn & Suites properties. They also have some nice Radisson Blu properties, though the quality of those can vary significantly.

Club-Carlson-Brands
Club Carlson brands

In theory I could see their portfolio potentially being a good fit with a few other hotel groups:

  • Hyatt has been trying to expand in the limited service market, and is also quite weak in Europe, so Club Carlson’s portfolio could complement that nicely; at the same time, Hyatt has long had a focus on quality properties, and I’m not sure how well that would work given the quality of some Club Carlson properties
  • Wyndham has a similar portfolio to Club Carlson, and could increase their market share in the limited service sector even more; I’m not sure such a merger would really expand the variety of the group’s reach, but it could certainly make them the leader with limited service hotels
  • I don’t see Club Carlson being a good fit for Hilton, though you never really know; in many cases these mergers aren’t only about finding the best fit, but also about trying to expand as much possible and not be left behind in a merger-happy environment

Wyndham-Brands
Wyndham brands

Bottom line

While this is obviously still in the very early stages, further consolidation in the hotel industry seems inevitable, so I’d be surprised if something didn’t happen here soon.

Which hotel group do you see as the best fit for a merger with Club Carlson?

(Tip of the hat to View from the Wing)

Comments

  1. I grew up in Minnesota but I haven’t stayed at a Radisson or any Carlson Property in many years. I don’t know if it is a mistaken impression, but I always feel that they are poorly located for where I want to be in a city or just that there are usually better options in places I travel to. Overall,I think I just have a somewhat negative opinion of the brand although I have no specific reason for this. I quess Wyndham would be a good fit as I have the same vaguely negative feeling about that brand as well.

  2. Hyatt might be a good fit. Wyndham would ruin them. There are already board line in some areas and Wyndham would push them over the edge.

  3. dunno. Carlson strikes me as the girl who could not get a prom date.

    It hardly fits within itself – how do they expect to market themselves to others?

  4. I can count the number of Radisson hotels in the United States that I’ve stayed at on less than a single hand. Every one has been barely better than a Holiday Inn, sometimes worse. I agree in the Nordic countries the Radisson Blue brand is better, sometimes anyways. Park Plaza is equivalent to a Marriott — so OK, but the London hotels are tired.

    As for Marriott, there’s absolutely no difference — on average — between a Sheraton, Marriott and Delta.

  5. hyatt can take over radisson brand and wyndham can buy the rest.
    give club carlson members option to chose either program to convert their existing points.

  6. I would bet on it not being a US chain, it might be one of the last chance to buy a position in the US. Accor might be a good fit, it would expand them in the budget space in the US, ibis etc. Are strong elsewhere and I’m not sure there would be that much of a clash in Northern Europe.

    I could see an Indian or Chinese chain being interested, very little overlap, although the latter is less likely right now due to the Chinese economic situation.

    Remember there’s no ownership restrictions on hotels like there are for airlines.

  7. BL – You’re leaving out that Gary was accused of “stealing material again” in that post. What subject don’t you see repeated? What’s wrong with getting a few slants?

  8. I enjoy Carlson properties in Europe; in America, not so much. Here, I stay at Park Inns and CI & Suites only for promotional purposes, but they generally tend to be tired franchises.
    Abroad, Hyatt would seriously benefit from a Carlson alliance as Carlson would from Hyatt’s footprint in the US. So jettisoning the less appealing Carlson properties stateside is a must.
    Liking both programs, I’d be pleased with this merger.

  9. I’ve stayed in one Carlson property ever – Rad Blu ZRH airport. It was a decent 3-3.5 star property (though ridiculously overpriced at around 400 USD). It’s also a top category CC hotel… which tells you what you need to know.

    As a property portfolio, Carlson is essentially devoid of locations where one could aspire to redeem points–which to me is really the only reason to be brand loyal. Sure upgrades to the club floor are nice and all, but if I really wanted it I can always pay the $30 or whatever it costs… Essentially, the only reason I choose a $150 Westin night over a $150 Renaissance or Hilton night is because I want to redeem my points at a StR/LC and have a great chance at a suite upgrade when I arrive. If the Marriott merger preserves this, I’ll stay. If not, I’ll become a total free agent, become brand agnostic and just use cash back/Arrival miles on Virtuoso properties.

  10. If Carlson married Best Western and they had children those kids would qualify for food stamps and shop at Dollar Tree.
    Why the owners of any decent property would hitch their wagon to either one of these programs is beside me. Before the Carlson devaluation, I had never stayed in one but I decided to get the Barclay’s card and score 85K points. I mean how bad could they be? A question that was answered loudly and clearly when I decided to blow the points and the free night at the Radisson Corpus Christi Bay. This aging relic was apparently once a gem in 1970 I reckon. I does have a sort of retro meets 80’s modern flair if you like that sort of thing.

  11. I quite like some of the properties that Radisson has in London but the Club Carlson loyalty scheme website look like it’s from 1998, or something, it’s got really clunky functionality and a dated look (last time I looked which was november) the shots of the prperties are limited when you search too. I mean I don’t want to see a picture of a folded napkin I want to see the room!

  12. With exception of some nice Radisson Blue properties in Europe, the chain has very little to offer over the competition. HHonors could integrate all the Club Carlson properties into the existing brands very easily and add some good hotels to their European portfolio. IHG could do the same by adding new “Blue” line of properties and treat it similar to Intercontinental. So the big chains could grow even bigger.

  13. In actuality I disagree with Ben. Hilton seems to be the best suitor and needs to step up with its DC based rival, Marriott, with a move. Many of the Radisson Blu properties (which I find quite good in N.A. as well as in Europe i.e Chicago, Minneapolis) could either be continued as a brand or converted to Hilton. County Inn and Suites has a very high rating and strong following in the budget sector and, again, could be advanced as a brand (especially in the West) or converted to a Hampton Inn quite easily. The lower end Radisson properties and Park Inn are mostly tired and uninspired and could go towards any mid-level placement finding a spot as Hilton Garden Inn or a low end Hilton in less competitive areas (I see no point in continuing them as they have virtually no recognition or identity). Or, perhaps a new brand altogether that reinvents those two.

    I personally feel the culture at Carlson is also better suited for Hilton and not at all a Hyatt style approach. While Blu could be argued as being Hyatt oriented in its focus on design centric hotels there is a drastic difference between the muted modern of Hyatt and the colorful modern of Blu. If I was in M&A I would suit Hilton right off the bat. Plenty of cash, hungry shareholders (after Marriott and Starwood) and an overall fit that would nicely integrate.

    Locations in Europe would overlap for Blu and Hilton, sure. Who cares? They do already and why not share in the wealth and lower costs of consolidation.

  14. I think Hyatt would be a great fit – Radisson Blu is a great brand and strong in Europe where Hyatt is weak! Carlson Rezidor doesn’t have many upscale properties in the US, but they have great properties in Europe and Asia!
    Hilton could also use more properties in Europe and Asia – they are much smaller there than IHG or Marriott!
    Accor would be an ok fit – a lot of overlap in Europe, but they could use the Rad Blu properties to fill out their upscale portfolio!
    I posted some facts & figures recently to see how Carlson Rezidor looks like in more detail: http://dreamtravelonpoints.com/2015/08/carlson-rezidor-hotels-facts-figures/

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