A Small Hotel Owner Wants a Portfolio Four Times Its Size

Jim Koehler, the chief executive of South Dakota hotel owner TKO, used an interview published October 27 to make his case for a $2 billion cash bid for the hotels of Service Properties Trust. It was his first public interview since the offer. The target portfolio has 92 hotels with nearly 21,000 rooms, roughly four times the size of TKO’s own holdings, which CoStar puts at 44 hotels and a little over 4,000 rooms.

The financing question hangs over the offer. TKO has not said publicly how it would fund the full amount. Koehler says he will share his personal financial statement with the trust and claims at least $100 million in cash. For a bid that size, those figures leave a large gap, and Service Properties Trust has not responded. It declined to comment, citing a quiet period ahead of its November 5 earnings report.

The bid has already shifted once. In an October 9 letter, TKO sought to end Sonesta’s management and franchise agreements with the hotels, but it dropped that condition on October 15. If the deal went through, TKO would control roughly 17 percent of Sonesta’s system of about 100,000 rooms. Koehler also argues the hotels have been under-invested, saying they needed about $3 billion in capital spending since 2020, while the trust’s filings show about $1.1 billion in improvements from 2020 to 2025.

Koehler says TKO would spend $50,000 to $60,000 per room over the first 24 months. For travelers, the practical stakes are a possible change in who owns and renovates hotels they may already book, though nothing changes unless the trust engages with the offer. The next checkpoint is the trust’s November 5 earnings report, though it has not said whether it will address the offer.

Sources: Skift, Service Properties Trust