What a $95,000 Key Is Really Worth: TKO’s $2 Billion Bid for SVC’s Hotels

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A little-known hotel owner bid $2 billion in cash for Service Properties Trust’s 93 hotels. The price per key will end up in your buyer’s spreadsheet. Here is why it shouldn’t stay there.

On Oct. 9, Service Properties Trust, the Massachusetts REIT that trades as SVC, confirmed it had received an unsolicited $2 billion all-cash offer for its entire hotel portfolio from TKO LLC. SVC said it had no contact with TKO before the proposal arrived. Its board said it would review the offer.

The portfolio: 93 hotels with 21,110 rooms as of June 30, a mix of full-service, select-service and extended-stay hotels across the U.S., Puerto Rico and Canada, including Sonesta-branded hotels like the Royal Sonesta New Orleans.

Do the math and you get the number every select-service buyer in America just wrote down: $2 billion divided by 21,110 rooms is about $94,700 a key.

Who Is TKO?

That is the question analysts asked too. TKO is run by Jim Koehler, Bisnow reported, and Skift’s Daily Lodging Report described it as a South Dakota owner of 58 hotels with just over 4,000 rooms. B. Riley analysts flagged the lack of public information about TKO and any record of closing a hotel deal this size, and saw a “limited chance” the deal gets done, Bisnow reported.

TKO’s pitch to SVC’s shareholders is simple. Its $2 billion is worth more than SVC’s whole stock market value, which was under $1 billion. CRE Daily reported that SVC’s shares closed at $6.49 on Oct. 6, down by more than half from a year earlier. Selling the hotels, TKO argues, would let SVC pay off more than 40% of its debt and become a pure net-lease landlord (SVC also owns 745 retail net-lease properties).

TKO Turns Up the Pressure

On Oct. 15, TKO went public again. It said it had not received a “meaningful response” from SVC and called on the board to negotiate, according to IREI. TKO said it would show proof of funds and put $50 million into escrow once SVC signs a nondisclosure agreement. It also said it was willing to keep Sonesta as the hotels’ franchisor and to negotiate other terms, including price, and that it would take part in a competitive sale process if other bidders exist.

As of Oct. 21, SVC had still not announced a response; its board says only that it is reviewing the proposal. It reports third-quarter results on Nov. 4.

Update, Oct. 20: Sonesta, which runs most of these hotels, has started layoffs, Skift reported. Employees in marketing, loyalty, quality assurance, training, food and beverage, and accounting posted that they had lost their jobs; Sonesta did not comment and the number is not known. The stakes for Sonesta are large: SVC’s 68 Sonesta-run hotels have 17,013 rooms, about 17% of Sonesta’s roughly 100,000-room system, and SVC owns about a third of Sonesta. If you fly a Sonesta flag, watch this one closely: a new owner of these hotels decides whether that 17% stays in the system that supports your reservations and loyalty.

Why It May Not Happen

The obstacles are in the fine print. Analysts at Lucid Capital Markets estimated that exiting SVC’s agreements with Sonesta, the operator that manages much of the portfolio, could cost about $535 million, Bisnow and CRE Daily reported. TKO’s original letter asked for the hotels free of management and franchise obligations. Its Oct. 15 offer to keep Sonesta as franchisor softens that, but franchising and management are not the same thing, and unwinding a management contract is still expensive and slow.

SVC’s management, meanwhile, has said it would rather streamline the portfolio selectively than exit hotels entirely, after spending about $765 million on improvements over three years.

What This Means for Your Hotel

Here is the part that matters if you own one select-service hotel and not 93.

A portfolio price is not your price. $94,700 is an average across full-service, select-service and extended-stay hotels in very different markets, bought in bulk. If a buyer brings “$95,000 a key, look at the SVC bid” to your table, you can point out that it is an average of 93 very different hotels, offered by a buyer with no public track record on a deal this size, for a deal that may never close.

SVC’s Own Price Tag

The best evidence that a portfolio average is not your price comes from SVC itself. Before TKO showed up, SVC had already split its hotels into two groups, according to its second-quarter filing: 78 it plans to keep, with 18,088 rooms, and 15 it plans to sell, with 3,022 rooms. In the second quarter, the keepers earned RevPAR of $134.53. The hotels on the way out earned $80.43 and lost money at the hotel EBITDA line.

SVC has agreed terms to sell 13 of those exit hotels, with 2,589 rooms, for a combined $98.4 million. That is about $38,000 a room, from the same seller and the same brand family as the $94,700 average in TKO’s bid. And the exit group is not all small hotels: it includes three full-service Royal Sonesta hotels.

It gets sharper. This year SVC sold two 133-room Sonesta hotels in Massachusetts. One went for $7.1 million. The other went for $18.35 million, about 2.6 times as much. Same state, same owner, same room count.

The Bottom Line

Buyers pay for profit, not for rooms. Your price per key is your hotel’s earnings divided by a cap rate, then divided by your keys, not somebody else’s portfolio math.

The more useful lesson is in what TKO first asked for: hotels with no management contract and no franchise obligations. Unencumbered hotels are worth more, because a buyer can pick the operator and the flag. If you are three to five years from selling, look at when your franchise agreement and any management contract end, and what it costs to leave early. That date can be worth more to your sale price than your next renovation.

Real U.S. hotel sales, with price per key, on our free tracker: the Hotel Transactions Desk.

Sources: Service Properties Trust release via Business Wire (Oct. 9, 2026); Service Properties Trust, Q2 2026 Financial Results and Supplemental Information (Aug. 2026); IREI (Oct. 16, 2026); Bisnow (Oct. 12, 2026); CRE Daily (Oct. 2026); Hotel Management (Oct. 12, 2026); Skift Daily Lodging Report (Oct. 13, 2026); Ad Hoc News (Oct. 16, 2026). Cover image: illustration.