Report: Carlson could be exploring options for its hotel business

Minnetonka-based Carlson Cos Inc., which owns the Radisson and Country Inns and Suites brands, is exploring "strategic alternatives" for its hotel unit that could include a sale, according to Thursday reports.

The hospitality and travel company, according to the Wall Street Journal, has asked Morgan Stanley to help it in the process of exploring the possibility of a merger, partnership or sale of Carlson Rezidor Hotel Group.

Carlson declined to comment, but the news did not surprise industry insiders who pointed out that Carlson's hotels have been struggling behind other brands.

"While they've made improvements in their brand positioning for Radisson and they have done a lot of good things, it's hard to keep up with hotel companies that have more capital and more traction and stronger loyalty programs," said Kirby Payne, president of HVS Hotel Management.

The company's Carlson Rezidor Hotel Group has more than 1,370 hotels in operation and under development in more than 110 countries and territories, making it one of the largest hotel companies in the world.

In 2014, it had a 4.1 percent increase in systemwide revenue totaling $7.8 billion and gross room revenue up to $4.8 billion. The hotel group's revenue was dwarfed by its business travel management arm Carlson Wagonlit Travel, which had systemwide revenue of $27.3 billion in 2014.

Last year, Radisson ranked second from the bottom and below average in customer satisfaction out of the upscale hotels tracked by market research group J.D. Power and Associates.

Payne said the company does not have many real estate assets, but its franchise and management agreements have value. He said he believes that Carlson is more likely to sell the brands than to partner with another company.

A partnership of brands would not be far-fetched either, though, said Sam Winterbottom, senior managing director in the hotel investment sales group at Newmark Grubb Knight Frank. He pointed to last year's $12.2 billion deal for Marriott International Inc. to acquire Starwood Hotels & Resorts Worldwide Inc.

Winterbottom, whose office is in Atlanta, used to be the executive vice president of development in the Americas for Carlson Hotels Worldwide.

"In the age of consolidation," said Winterbottom, "it wouldn't be surprising."

Tom Hubler, founder of the family consulting firm Hubler for Business Families, said that exploring alternatives for the hotel business could have something to do with the family's estate planning strategies.

Nicole Norfleet • 612-673-4495

Twitter: @nicolenorfleet