SVC Rejects TKO’s $2 Billion Hotel Bid. Now an Activist Wants a Sale Process

Service Properties Trust has turned down TKO LLC’s $2 billion all-cash offer for its hotels. A day later, an activist shareholder demanded that the board reopen talks and run a real sale process. If you own a Sonesta-flagged hotel, or you were counting on this deal to set a price-per-key benchmark, here is where things stand.

This is a follow-up to our Oct. 18 story, What a $95,000 Key Is Really Worth, and our Oct. 27 look at what Sonesta’s layoffs mean for owners under the flag.

The board’s answer: “significantly undervalues”

In its third-quarter results on Nov. 4, SVC disclosed that its Board of Trustees, including all of its independent trustees, unanimously rejected the proposal because it believes the offer significantly undervalues the hotel portfolio. The trust said it will keep working with its hotel operators to improve performance. On the earnings call the next day, management pointed again to price when an analyst asked whether anything else about TKO or the deal structure was a problem, according to the call transcript.

TKO, the South Dakota hotel owner run by Jim Koehler, made the offer on Oct. 7. SVC did not name a price it would accept.

The numbers SVC is betting on

The trust’s case is that its remaining hotels are getting better, and are worth more than TKO offered. From SVC’s third-quarter filing:

• 77 retained hotels with 17,593 rooms: 53 managed by Sonesta, 17 by Hyatt and 7 by Radisson.
• RevPAR of $128.38 in the quarter, up 8.3% from a year earlier.
• Adjusted hotel EBITDA of $41.1 million for those hotels in the quarter, up 16.2%.
• 14 of 15 planned hotel sales done, for $116.7 million. Two more hotels with 795 rooms, including the Crowne Plaza Atlanta Perimeter at Ravinia, are on the market.
• About $4.65 billion of debt, at a weighted average rate of about 5.7%, and net debt of 9.0 times trailing adjusted EBITDAre.
• A third-quarter net loss of $87.9 million.

Skift’s Daily Lodging Report said SVC’s investor presentation values the retained hotel portfolio at $3.2 billion, based on a 13x multiple of targeted hotel EBITDA of $248 million. That is a target, not an appraisal. Spread across 17,593 rooms, it works out to roughly $182,000 a key, close to double the $94,700 a key implied by TKO’s bid for the larger, pre-sale portfolio. The two numbers cover different sets of hotels, so treat the gap as a sense of how far apart the sides are, not an exact comparison.

The activist: “without discernible process”

On Nov. 6, Blackwells Capital, an SVC shareholder, released a letter to the board signed by its chief investment officer, Jason Aintabi. Blackwells did not say how many shares it owns. The letter says TKO had already signed a nondisclosure agreement and offered a $50 million escrow, and that the board rejected the offer after four weeks with no meeting, no advisor and no disclosed analysis.

Blackwells is asking the board, by 5 p.m. Eastern on Nov. 13, to:

• Sign TKO’s nondisclosure agreement and run a competitive sale process overseen by trustees with no ties to RMR, SVC’s external manager, or to Adam Portnoy, who chairs SVC, RMR and Sonesta.
• Disclose every written offer for the hotels or the trust from the past 24 months.
• Show the analysis behind “significantly undervalues” and name any adviser.
• Commit that any payments to RMR or Sonesta tied to a sale will be negotiated by independent trustees and disclosed.
• Repeal several bylaws that Blackwells says limit shareholders’ rights.

Blackwells also points to SVC’s slide: down 85% over five years, a dividend cut of 98% and a reverse stock split in July, by the letter’s count. Those are Blackwells’ figures and characterizations. SVC had not publicly responded to the letter as of Friday evening.

What it means if you fly a Sonesta flag

For now, nothing changes at your property. But the questions from our earlier stories are still open:

• Sonesta’s biggest owner is staying put, for now. SVC is keeping 53 Sonesta-managed hotels, still a big piece of Sonesta’s system, and it owns 34% of Sonesta. A sale to TKO would have raised the question of whether those hotels stay in the system.
• The contracts are getting longer. Blackwells’ letter says Sonesta waived an $11 million fee on one hotel sale in September in exchange for extending other management contracts to 2043. That suggests SVC and Sonesta are planning to stay together.
• The exit bill hasn’t gone away. Analysts have estimated the cost of separating the hotels from Sonesta at around $500 million to $535 million, as we reported earlier. Any future buyer would still face it.
• Watch Nov. 13. If the board engages, or if other bidders appear, the price per key will come back into play, and with it the benchmark that select-service buyers and lenders were watching.

We’ll update this story when SVC, TKO or Blackwells responds. See every 2026 U.S. hotel sale on our Hotel Transaction Tracker.