Thayer Lodging joins Chinese firm to buy Interstate Hotels
Saturday, December 19, 2009
Washington area businessman Frederic Malek's Thayer Lodging Group is joining with a Chinese hospitality company to acquire a large hotel management firm for $307 million, the companies said Friday.
Thayer is teaming up with Shanghai Jin Jiang International Hotels in an all-cash, 50-50 joint venture to purchase Arlington-based Interstate Hotels & Resorts, which manages 232 properties with 46,000 rooms across the United States and in Russia, India, Mexico, Belgium, Canada, Ireland and England.
The deal is scheduled to close in the first quarter of 2010, pending Interstate shareholder approval.
"The hotel industry remains in deep recession, and we believe this transaction offers the highest and best value to our shareholders," Thomas Hewitt, Interstate's chairman and chief executive, said in a statement.
In Washington, Interstate manages the Hamilton Crowne Plaza at 14th and K streets NW and the Latham Hotel Georgetown. Other properties include Holiday Inns, Marriotts and Hiltons and the well-known Westin Bonaventure in Los Angeles.
"This acquisition significantly accelerates our ability to expand internationally, giving us immediate access to a worldwide platform," Jin Jiang Chairman Yu Minliang said in the statement.
In an interview on Friday, Malek said Thayer learned of Jin Jiang "about four or five years ago" via a Thayer employee named Teddy Zhang, a Chinese national whom Malek recruited from Cornell University's hotel administration school.
Malek said Thayer wanted to develop an online, real-time reservation system for China like the one that exists in the United States, and Zhang helped build the business. Zhang introduced Thayer to Jin Jiang, the largest hotel company in China. Thayer and Jin Jiang are shareholders in the Chinese reservation system.
Interstate brings special management expertise to Jin Jiang, Malek said.
"One of their motivations is they realize they're going to need a lot of management techniques they may not have access to," he said. "They can learn from Interstate, which has an excellent management team."
Malek, Thayer's co-chairman, was president of Marriott Hotels & Resorts for eight years, led the acquisition of the Ritz-Carlton hotels and was president of Northwest Airlines. He was an owner of the Texas Rangers and lost out on his bid to win an ownership stake in the Washington Nationals.
Malek said Thayer plans to buy more hotels. The company recently announced that it had raised a $280 million fund for acquisitions. The Annapolis-based company, founded in 1991 by Malek and Leland C. Pillsbury, hopes to use the money as a basis to borrow another $420 million, giving it resources to buy up to 15 hotel properties over the next three years.