Thayer Lodging Group and Chinese Partner Acquire Interstate Hotels & Resorts for $307 Million

Thayer Lodging Group and Chinese Partner Acquire Interstate Hotels & Resorts for $307 Million

Published by Frank Ahrens in The Washington Post on December 19, 2009

Washington D.C. - Frederic Malek's Thayer Lodging Group, a prominent Washington area businessman, has announced a strategic partnership with Shanghai Jin Jiang International Hotels to acquire the large hotel management firm Interstate Hotels & Resorts for $307 million. The acquisition is part of a 50-50 joint venture between Thayer and Jin Jiang, with the deal being completed in an all-cash transaction.

Interstate Hotels & Resorts, headquartered in Arlington, currently manages a portfolio of 232 properties comprising 46,000 rooms across various locations including the United States, Russia, India, Mexico, Belgium, Canada, Ireland, and England. The acquisition is subject to approval by Interstate shareholders and is expected to close in the first quarter of 2010.

Thomas Hewitt, Chairman and CEO of Interstate Hotels & Resorts, commented on the deal, stating, "The hotel industry remains in deep recession, and we believe this transaction offers the highest and best value to our shareholders."

Among the properties managed by Interstate in the Washington area are the Hamilton Crowne Plaza at 14th and K streets NW and the Latham Hotel Georgetown. The company also oversees properties affiliated with renowned brands such as Holiday Inn, Marriott, Hilton, and the well-known Westin Bonaventure in Los Angeles.

Jin Jiang Chairman Yu Minliang expressed his enthusiasm for the acquisition, saying, "This acquisition significantly accelerates our ability to expand internationally, giving us immediate access to a worldwide platform."

In an interview, Frederic Malek explained that Thayer's connection with Jin Jiang began several years ago when Thayer's senior executive, Teddy Zhang, who is of Chinese nationality and was recruited from Cornell University's hotel administration school, introduced the two entities. Thayer sought to establish an online, real-time reservation system for China, similar to the one in the United States, and Zhang played a pivotal role in building this business. Zhang's introduction paved the way for Thayer to partner with Jin Jiang, China's largest hotel company, and both companies became shareholders in the Chinese reservation system.

Malek highlighted the value that Interstate Hotels & Resorts would bring to Jin Jiang, emphasizing their management expertise. He stated, "One of their motivations is they realize they're going to need a lot of management techniques they may not have access to. They can learn from Interstate, which has an excellent management team."

As co-chairman of Thayer, Malek has an extensive background in the hotel industry. He served as the president of Marriott Hotels & Resorts for eight years, led the acquisition of the Ritz-Carlton hotels, and was the president of Northwest Airlines. Additionally, he was an owner of the Texas Rangers and was involved in a bid to acquire an ownership stake in the Washington Nationals.

Looking ahead, Malek revealed that Thayer has plans for further hotel acquisitions. The company recently announced the successful raising of a $280 million fund for future acquisitions. Founded in 1991 by Malek and Leland C. Pillsbury, Thayer Lodging Group, based in Annapolis, aims to leverage these funds by borrowing an additional $420 million, allowing them to acquire up to 15 hotel properties over the next three years.

© 2009 The Washington Post Company