Hersha Hospitality Management (HHM) and Urgo Hotels & Resorts have entered into a definitive agreement that, upon closing, will result in Urgo becoming a wholly owned subsidiary of HHM and, as part of the total consideration, the founding members of Urgo will become shareholders of HHM.
The combined company will operate more than 235 hotels in North America, with HHM expanding into Canada, entering new markets in the U.S., while adding mountain leisure, development and condo-hotel management capabilities to its portfolio.
“HHM is energized by this opportunity to join forces with Urgo and together we will continue building differentiated capabilities that drive outsized results for our owners and career growth for our associates,” Naveen P. Kakarla, president/CEO, HHM told Hotel Business exclusively. “We are also delighted to announce our first expansion outside the U.S. and expect that several of our partners will want to grow with us in Canada. Stay tuned—the best is yet to come.”
This represents HHM’s second strategic M&A transaction this year, after it closed earlier in the year on its purchase of 25 long-term management agreements from White Lodging.
Notably, the Urgo transaction will mark HHM’s first international foray with its expansion into Canada. Urgo’s Canadian leadership team will continue to manage 17 hotels that are a mix of urban lifestyle, mountain leisure and extended-stay hotels throughout Quebec, New Brunswick and Newfoundland. Urgo has particularly strong market penetration in Montreal and is one of the largest operators in Canada for major brands such as Marriott and Hilton.
In the U.S., Urgo’s existing leadership team will continue managing 34 hotels that will expand HHM’s footprint in key gateway markets such as South Florida and Washington, DC, while building out in new leisure markets such as Big Sky, Lake Placid, Breckenridge and Sonoma Valley.
“The owners and team members we have served for nearly 50 years at Urgo are part of our extended family,” said Donald J. Urgo, founder/president/CEO, Urgo. “And after spending nearly two years getting to know Naveen and his leadership team, my family is confident in HHM’s ability to understand and embrace our history and our culture. Our collective leadership teams will develop capabilities to bring even more value to our hotel owners and associates.”
Don Urgo Jr., will serve as managing partner of Urgo and maintain its offices in Greater Washington, DC, while Serge Primeau will continue leading Urgo’s Canadian operations, based in Montreal.
The transaction is subject to customary closing conditions and is expected to be completed in the third quarter of this year. Moelis & Company LLC acted as exclusive financial advisor to Urgo.