FelCor Lodging Trust (FCH) to Rebrand Eight Holiday Inn Locations
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FelCor Lodging Trust Incorporated (NYSE: FCH) announced that it will re-brand, renovate and reposition eight Holiday Inn® properties to the Wyndham® Hotels and Resorts brand effective March 1, 2013. Wyndham Hotel Group, the world's largest hotel company with over 7,200 properties and part of Wyndham Worldwide Corporation (NYSE: WYN), will manage the hotels under long-term management agreements with a performance guaranty.
These core hotels are located in strategic markets for FelCor. The properties in Boston, Houston, New Orleans, Philadelphia, Pittsburgh, San Diego and Santa Monica will be converted to Wyndham Hotels and Resorts properties, and The Mills House in Charleston will become a Wyndham Grand® hotel.
This agreement includes a $100 million guaranty from Wyndham Worldwide Corporation over the 10-year term of the agreement (which includes a renewal option), with an annual guaranty of up to $21.5 million that ensures a minimum annual NOI for the eight hotels. It also provides a management fee structure more consistent with prevailing industry practices, and FelCor expects to save approximately $50 million in management fees over the term. In effect, this agreement protects approximately 20 percent of FelCor’s EBITDA from future lodging cycle fluctuations, in addition to providing a return on investment that is superior to the hotels’ historical performance.
In conjunction with the renovation and repositioning of the eight hotels, FelCor will spend approximately $34 million over the next three years, net of $10 million in key money from Wyndham, in comparison to the existing $27 million capital plans over the same period.
InterContinental Hotels Group and FelCor will maintain their close business relationship going forward, as Holiday Inn will continue to flag and manage five consolidated FelCor properties located in San Francisco, Nashville, Toronto, Santa Barbara and Orlando. FelCor will pay $30.7 million to terminate its management agreements at the eight hotels.
These core hotels are located in strategic markets for FelCor. The properties in Boston, Houston, New Orleans, Philadelphia, Pittsburgh, San Diego and Santa Monica will be converted to Wyndham Hotels and Resorts properties, and The Mills House in Charleston will become a Wyndham Grand® hotel.
This agreement includes a $100 million guaranty from Wyndham Worldwide Corporation over the 10-year term of the agreement (which includes a renewal option), with an annual guaranty of up to $21.5 million that ensures a minimum annual NOI for the eight hotels. It also provides a management fee structure more consistent with prevailing industry practices, and FelCor expects to save approximately $50 million in management fees over the term. In effect, this agreement protects approximately 20 percent of FelCor’s EBITDA from future lodging cycle fluctuations, in addition to providing a return on investment that is superior to the hotels’ historical performance.
In conjunction with the renovation and repositioning of the eight hotels, FelCor will spend approximately $34 million over the next three years, net of $10 million in key money from Wyndham, in comparison to the existing $27 million capital plans over the same period.
InterContinental Hotels Group and FelCor will maintain their close business relationship going forward, as Holiday Inn will continue to flag and manage five consolidated FelCor properties located in San Francisco, Nashville, Toronto, Santa Barbara and Orlando. FelCor will pay $30.7 million to terminate its management agreements at the eight hotels.
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