Red Lion Hotels Corporation
) recently inked a franchise license agreement with the owners of a
hotel located at the Denver International Airport. The 87-guestroom
property will now become the Red Lion Inn and Suites Denver
Airport. This new property is scheduled to be unveiled by November
2012. Financial terms of the deal were not disclosed.
The new property, adjacent to the Denver International Airport,
is strategically located in a dynamic, high-barrier-to-entry market
as the Denver International Airport is the fifth busiest airport in
the nation. Owing to its prime location, the property has easy
downtown access and is in close proximity to several important
venues, some of which are used by sports teams like Denver Broncos,
Colorado Avalanche and Denver Nuggets.
We view the deal as strategically positive for both the parties.
The deal paves the way for the owners of the hotel, Tower
Hospitality, to reap the benefits from Red Lion's much greater
scale and brand name. This will aid the property in its competition
in the mid-scale market.
On the other hand, Red Lion will enjoy the excellent positioning of
the property. The company had been in search of an asset in the
Denver Airport location. Management at Red Lion believes that the
location of the property will complement and highlight its brand
Also, this partnership will extend Red Lion's reach into the
Denver market - the largest city and the capital of the U.S. state
of Colorado, where tourism is the second largest industry, fueling
the hospitality sector.
Denver itself is considered to be a prime destination for
business and leisure travelers. With the presence of the Rocky
Mountains as well as the prevailing cultural attractions and
outdoor activities, Denver offers itself as one of the thriving
markets in Colorado.
Presently, Red Lion has one property - Red Lion Hotel Denver
Central - operating in that market. The company has decided to
offload yet another property - Red Lion Hotel Denver Southeast. The
sale of the Denver Southeast property is expected to close on or
before October 31, 2012.
However, Red Lion's new property will likely face stiff
competition from its peers like
Starwood Hotels & Resorts Worldwide Inc.
Hyatt Hotel Corp.
Choice Hotels International Inc.
) which are present in that airport location. Red Lion currently
carries a Zacks #3 Rank, which translates into a short-term Hold
CHOICE HTL INTL (CHH): Free Stock Analysis
HYATT HOTELS CP (H): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis
RED LION HOTELS (RLH): Free Stock Analysis
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