This business believes a night's lodging shouldn't put you in the red. Red Roof Inn is a leading budget motel chain with nearly 350 locations in some 35 US states. Its hotels are primarily located in the Midwest, the East, and the South. While popular with families, the brand also caters to business travelers with such amenities as continental breakfast, meeting rooms, photocopy services, and wireless Internet access. It also offers larger suites and deluxe rooms with executive-style desks and microwave ovens. Red Roof Inn was founded by James Trueman in 1973.
Red Roof underwent a restructuring with its lenders after being hit hard by a recession that ravaged the hospitality industry. In late 2010 it reached a deal with its lenders on $754 million of past-due mortgages. (Red Roof investors racked up a heavy debt when they acquired the firm for a whopping $1.2 billion in 2007, right before the market crash.) In addition, in 2011 Red Roof turned over about 140 hotels to affiliates of Five Mile Capital Partners and Westmont Hospitality Group. It completed a similar deal earlier that year, selling about 50 hotels to Dune Real Estate Partners and Westmont Hospitality Group affiliates. Red Roof will continue to manage the properties.
The recent recapitalization includes significant funding for renovations. The Five Mile and Westmont Hospitality venture has committed more than $70 million for renovating and upgrading its portfolio, while the Dune Real Estate and Westmont Hospitality venture is contributing an additional $20 million for upgrades. The remodel plans include a sleek "NextGen" redesign and revamped "Superior King Rooms".
Meanwhile, Red Roof is continuing its transformation from a hotel owner to that of a management and franchise company. Specifically, it is focused on growing the franchising side of the business. Starting in 2011 the company is adding 40 franchised properties per year for the next five years. It is also focused on expanding west of the Mississippi, with plans to grow the brand in the New Orleans and Las Vegas markets.
Previously the chain was owned by French hotel giant Accor, which had acquired the business in 1999. Red Roof operated as part of that company's Accor North America division. Accor sold Red Roof in 2007 in order to focus on its Motel 6 operations. – less
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