Wyndham Worldwide Corporation has entered into a definitive agreement to acquire the hotel franchise and hotel management businesses of La Quinta for $1.95 billion in cash, as the transaction has been approved by the boards of directors of both companies; and the closing of this acquisition is expected to occur sometime during the second quarter of 2018.
Wyndham Acquires LaQuinta For $1.95 Billion in Cash
As a result of the acquisition, Wyndham Worldwide Corporation will become the largest hotel company in the world in terms of the number of hotel and resort properties, as the company will have 21 brands with greater than 9,000 hotel and resort properties worldwide; but Wyndham Hotel Group is expected to be spun off from Wyndham Worldwide Corporation sometime during the second quarter of 2018. Meanwhile, La Quinta will immediately become one of the flagship brands of Wyndham Worldwide Corporation with its strong midscale presence.
“Under the terms of the agreement, stockholders of La Quinta will receive $8.40 per share in cash (approximately $1.0 billion in aggregate), and Wyndham Worldwide will repay approximately $715 million of La Quinta debt net of cash and set aside a reserve of $240 million for estimated taxes expected to be incurred in connection with the taxable spin-off of La Quinta’s owned real estate assets into CorePoint Lodging Inc.”, according to both this official press release from La Quinta. and this official press release from Wyndham. “Immediately prior to the sale of La Quinta to Wyndham Worldwide, La Quinta will spin off its owned real estate assets into a publicly-traded real estate investment trust, CorePoint Lodging.”
The La Quinta Returns loyalty program will be combined with the Wyndham Rewards program, with 13 million members and 53 million members respectively. How many of those members overlap with both frequent guest loyalty programs — as well as exactly how the programs will be combined — is still unknown at this time.
Summary
Consolidation of the lodging industry continues with this acquisition, as has been evidenced in recent years by the acquisition of Starwood Hotels and Resorts Worldwide, Incorporated by Marriott International, Incorporated and the acquisition of Kimpton by InterContinental Hotels Group.
Wyndham has been on a growth spurt lately — especially in the midscale market. Last year, the company announced its plans to acquire the AmericInn hotel brand and Three Rivers Hospitality — its management company — from Northcott Hospitality for $170 million. Also, 44 hotel properties which currently operate under the Oak Tree Inn brand — plus two more hotel properties — will be incorporated into the portfolio of Wyndham Hotel Group across three different brands.
I see this deal as mutually beneficial: Wyndham grows its brand portfolio with a known brand; and members of La Quinta Returns get to take advantage of being members of a significantly larger frequent guest loyalty program which is worldwide, as La Quinta hotel properties are located only in the United States, Canada, Mexico and Honduras.
Where this consolidation within the lodging industry will continue is anyone’s guess at this time…
Photograph ©2017 by Brian Cohen.
