Questions About the Combination?

Support for the Combination

Analysts

January 21, 2024
Michael J. Bellisario
Baird
“A Choice-Wyndham merger makes strategic sense. We continue to see the merits of a combined company – 'bigger is better' in the hotel franchising business.”
October 17, 2023
Michael J. Bellisario and Daniel Hogan
BAIRD
"Strategically, we continue to believe a merger makes long-term sense...”
“The ball is in Wyndham's court now; management needs to outline a stand-alone path to ~$90/share, in our opinion.”
October 17, 2023
Ian Zaffino and Isaac Sellhausen
OPPENHEIMER
“In an offer we find attractive to WH shareholders, CHH announced a proposal to acquire WH for $90/share (55% cash, 45% CHH stock).”
“While the size of the combined company could bring some regulatory scrutiny, we note the Marriott-Starwood deal faced few obstacles from US regulators under the Obama administration. Further, since then, the vacation rental industry has continued to grow and has increased what can be used to define the market size."
October 18, 2023
Shaun C. Kelley, Dany Asad and Julie Hoover
BANK OF AMERICA
“…[t]he math works and would be materially accretive to Choice at a premium above WH’s current price."
October 17, 2023
Dan Wasiolek
MORNINGSTAR
"We think narrow-moat Choice’s hostile bid for narrow-moat Wyndham would, if completed, make a combined entity more competitive than each of them is on a stand-alone basis as scale entices both third-party owners and travelers to join operator ecosystems in the hotel industry.”
"From a regulatory standpoint, we think the deal is likely to clear. The combined company’s 4% revenue share would still trail Hilton’s 6% and Marriott’s 9%. And while the merged entity would have the leading presence in budget hotels, it would just be on equal footing with Hilton and Marriott in midscale, and still in a nascent position in the upscale and luxury segments."
October 17, 2023
Jamie Rollo, Stephen W Grambling, Ed Young and James S Harden
MORGAN STANLEY
"Historically, major transactions (e.g. Marriott-Starwood, Accor-FRHI) have led to material SG&A savings as well as commission savings for owners from OTA renegotiations."
October 17, 2023
"Strategically, we continue to believe a merger makes long-term sense...”
“The ball is in Wyndham's court now; management needs to outline a stand-alone path to ~$90/share, in our opinion.”
Michael J. Bellisario and Daniel Hogan
Baird
October 18, 2023
“…[t]he math works and would be materially accretive to Choice at a premium above WH’s current price."
Shaun C. Kelley, Dany Asad and Julie Hoover
Bank of America
October 17, 2023
"Historically, major transactions (e.g. Marriott-Starwood, Accor-FRHI) have led to material SG&A savings as well as commission savings for owners from OTA renegotiations."
Jamie Rollo, Stephen W Grambling, Ed Young and James S Harden
Morgan Stanley
October 17, 2023
"We think narrow-moat Choice’s hostile bid for narrow-moat Wyndham would, if completed, make a combined entity more competitive than each of them is on a stand-alone basis as scale entices both third-party owners and travelers to join operator ecosystems in the hotel industry.”
"From a regulatory standpoint, we think the deal is likely to clear. The combined company’s 4% revenue share would still trail Hilton’s 6% and Marriott’s 9%. And while the merged entity would have the leading presence in budget hotels, it would just be on equal footing with Hilton and Marriott in midscale, and still in a nascent position in the upscale and luxury segments."
Dan Wasiolek
Morningstar
October 17, 2023
“In an offer we find attractive to WH shareholders, CHH announced a proposal to acquire WH for $90/share (55% cash, 45% CHH stock).”
“While the size of the combined company could bring some regulatory scrutiny, we note the Marriott-Starwood deal faced few obstacles from US regulators under the Obama administration. Further, since then, the vacation rental industry has continued to grow and has increased what can be used to define the market size."
Ian Zaffino and Isaac Sellhausen
Oppenheimer

Media

February 20, 2024
Why the Hotel Industry Would Benefit From More Consolidation
Allan Grafman
RealClearMarkets
“Similarly, major hotel brands like Marriott, Hilton, IHG, and Hyatt are pervasive and competitive. They collectively control about 100 brands across all tiers of service. With that competitive landscape in mind, the proposed merger between two smaller hospitality companies, Choice Hotels and Wyndham Hotels & Resorts, will make the combined company a stronger competitor in an already competitive field.
Regarding competition, this merger has a clear regulatory path to close. How? Per new merger guidelines issued by the U.S. Department of Justice and the Federal Trade Commission in December of last year, ‘a merger that creates a firm with a share over thirty percent is also presumed to substantially lessen competition or tend to create a monopoly.’ Together, Choice and Wyndham will only account for 10% of U.S. room revenue.”
“A deal makes a lot of sense for both Wyndham and Choice from a franchisee perspective and an ownership standpoint. There are lots of financial synergies in this deal - the franchisees are going to get a significant amount of coordination between what can be done with the increase in the revenue capabilities,’ said Mike Leven, who co-founded the Asian American Hotel Owners Association (AAHOA).”
“If a deal is reached, the merger still needs regulatory approval. A combined company could help it compete against its larger rivals, like Hilton and Marriott.”
“There are several aspects of the potential Wyndham and Choice marriage that make sense. It combines the two key players in the budget and midscale hotel sector, a segment that is beginning to catch the attention of heavy hitters like Marriott International, Hilton, IHG Hotels & Resorts and Hyatt.”
October 17, 2023
Choice Hotels Unveils $7.8 Billion Takeover Offer For Wyndham
Lauren Thomas and Will Feuer
THE WALL STREET JOURNAL
“Choice is no stranger to mergers and acquisitions.”
“A merger of the two companies would also position the combined company to compete against much larger lodging rivals Marriott and Hilton, which cater more to higher-end travelers.”
“Choice and Wyndham joining forces makes sense in a world where companies like Hilton, Marriott, Hyatt and IHG Hotels & Resorts are all signaling in various ways a need to compete in more affordably priced territory.”
“Operating like a cartel, OTAs extract excessive fees from franchisees in exchange for reservations, whereas a larger brand – like a combined Choice and Wyndham - has more leverage to push back on the OTAs and give franchisees more resources to encourage guests to book directly through the hotel’s reservation system.”
December 12, 2023
Choice Hotels officially goes hostile in Wyndham takeover attempt
Cameron Sperance
The Points Guy
“A Choice-Wyndham marriage makes sense as far as offering a compelling low-cost juggernaut against Marriott, Hilton and IHG.”
“The buyer sees a path to completion — despite the target’s stated antitrust concerns and value arguments — and believes it has the tools to achieve a deal.”
“Choice has a variety of tools at its disposal, it is understood, including not only a proxy fight but also a possible exchange offer. Despite an outpouring of public opposition from a large industry group, on which CTFN has reported, shareholders and franchisees have expressed views that are generally supportive of a combination.”
“Choice has argued that not only is the market for franchisee business already competitive, with multiple offerings from existing players, but there is already new competition from higher-end, better-capitalized entities: Hilton, Marriott and IHG. These parties have moved down market specifically in an attempt to capture customers for their rewards programs sooner.”
October 18, 2023
Wyndham suitor is unprepared to check in just yet
Jonathan Guilford
BREAKINGVIEWS
“Combining the two companies makes strategic sense: both focus on the mid-tier to discount hotel segments, where occupancy rates were less brutally hit by the pandemic than more upscale peers. Each also serves similar types of franchisees and can unite to cut costs and possibly lift revenue.”
October 17, 2023
Wyndham rejects Choice Hotels' $7.8 billion takeover bid
Priyamvada C and Shivansh Tiwary
Reuters
“Choice is no stranger to mergers and acquisitions.”
“A merger of the two companies would also position the combined company to compete against much larger lodging rivals Marriott and Hilton, which cater more to higher-end travelers.”
October 17, 2023
View Article
Lauren Thomas and Will Feuer
The Wall Street Journal
"Choice is no stranger to mergers and acquisitions."
"A merger of the two companies would also position the combined company to compete against much larger lodging rivals Marriott and Hilton, which cater more to higher-end travelers."
October 18, 2023
View Article
Jonathan Guilford
Breakingviews
"Combining the two companies makes strategic sense: both focus on the mid-tier to discount hotel segments, where occupancy rates were less brutally hit by the pandemic than more upscale peers. Each also serves similar types of franchisees and can unite to cut costs and possibly lift revenue."
October 17, 2023
View Article
Priyamvada C and Shivansh Tiwary
Reuters
"A potential combination would marry Choice Hotels' brands such as Econo Lodge, Quality Inn and Clarion with Wyndham's Days Inn and Travelodge, offering inflation-hit customers a wide choice of affordable hotels."
October 17, 2023
View Article
Cameron Sperance
The Points Guy
"Choice and Wyndham joining forces makes sense in a world where companies like Hilton, Marriott, Hyatt and IHG Hotels & Resorts are all signaling in various ways a need to compete in more affordably priced territory."
November 7, 2023
View Article
Jonathan Spitzer
CTFN
“The buyer sees a path to completion — despite the target’s stated antitrust concerns and value arguments — and believes it has the tools to achieve a deal.”
“Choice has a variety of tools at its disposal, it is understood, including not only a proxy fight but also a possible exchange offer. Despite an outpouring of public opposition from a large industry group, on which CTFN has reported shareholders and franchisees have expressed views that are generally supportive of a combination.”
October 26, 2023
View Article
Cameron Sperance
The Points Guy
“There are several aspects of the potential Wyndham and Choice marriage that make sense. It combines the two key players in the budget and midscale hotel sector, a segment that is beginning to catch the attention of heavy hitters like Marriott International, Hilton, IHG Hotels & Resorts and Hyatt.”
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