Carlson swaps franchise deal for 25% of Rezidor SAS

Carlson Hotels Worldwide has swapped its future franchise fees for two seats on the board and a 25% stake in the ownership of its franchisee, Rezidor SAS Hospitality.

Rezidor operates nearly 250 Carlson hotels in Europe, the Middle East and Africa. Its franchise agreement had been until 2032, and there had been plans to add 500 more hotels by 2012. These combined factors mean the long-term value of this deal could run into hundreds of millions of dollars.

Rezidor predicted that the deal, which was termed "substantial", would add about $15m (£7.9m) in pre-tax profit to its bottom line this year.

The agreement will give Carlson a much greater say over franchisee Rezidor. Jay Witzel, president and chief executive of Carlson Hotels Worldwide, said: "Though franchising is a very good business model, it does leave you at the whims of the franchisee."

He admitted the company was broadening its approach to its assets and would be using different structures, including franchising and ownership deals, to secure its brands' long-term future. He added: "Now that we're an investor in the company it solidifies our position in Europe."

by Emily Manson

Buy this week's Caterer magazine for more industry news and analysis