TKO Hotels offers $2.0 billion for Service Properties Trust hotels

TKO Hotels has announced a formal written offer to acquire Service Properties Trust’s entire hotel portfolio for $2.0 billion in cash. In an announcement issued from Aberdeen, South Dakota, on Oct. 9, 2026, TKO LLC said the proposed purchase would allow Service Properties Trust (SVC) to reduce debt and concentrate on its net lease retail business.

The proposal is not an agreed transaction and remains subject to negotiation, approval by SVC’s board and definitive documentation. For investors and hotel operators, it sets out a potential change in portfolio ownership alongside a full lodging exit for SVC, rather than the selective disposals TKO said SVC’s management has favoured.

Offer targets a full exit from lodging

TKO argued that the offer values the hotels at a substantial premium to their implied market valuation. According to the bidder, the $2.0 billion proposed purchase price for the hotel portfolio alone exceeds SVC’s entire current public market capitalisation.

In support of its case, TKO cited SVC’s closing share price of $6.49 on October 6, 2026, and a decline of more than 50% over the trailing twelve-month period. Those figures formed part of TKO’s argument for a broader strategic change, rather than a valuation assessment endorsed by SVC.

Jim Koehler, TKO’s chief executive, described the proposed acquisition as significant for the bidder. “This acquisition represents a transformational opportunity for our firm,” he said, adding that TKO wanted to engage with SVC’s board and management to reach an agreement.

Debt reduction underpins TKO’s case

TKO said the sale proceeds would enable SVC to retire more than forty percent (40%) of its outstanding indebtedness while retaining its net lease platform. It described that business as a 745-property portfolio generating more than $500 million in annual EBITDA.

The bidder contrasted what it described as predictable cash flows and limited capital requirements in net lease retail with the operating complexity, capital spending and cyclical exposure of hotels. TKO’s position is that retaining both businesses on the same balance sheet allows the hotel portfolio to determine SVC’s cost of capital.

TKO also argued that SVC was unlikely to replicate its existing weighted average cost of debt in future refinancing transactions, given current and projected interest rate conditions. It said further capital could be needed to service debt and questioned whether continued hotel expenditure would materially improve SVC’s refinancing prospects.

Board negotiations and agreements still required

TKO said it had engaged legal and financial advisers and was ready to work towards definitive agreements. Koehler characterised the cash structure as eliminating financing risk, although the proposed acquisition remains conditional.

Completion would require satisfaction or waiver of customary closing conditions as well as SVC board approval and signed documentation. TKO cautioned that there was no assurance an agreement would be executed or that a transaction would close on the anticipated terms or timeline, or at all.