Back to top

Analyst Blog

Wyndham Worldwide Corporation (WYN - Analyst Report) has recently acquired substantially all the assets of The Resort Company LLC (“TRC”), an established vacation rental and property management company plus owner of Steamboat Resorts. The financial terms of the deal were not disclosed.

TRC is known for its rental offerings across 28 mountain destinations in Colorado. Names like Lion Square Lodge and Montaneros in Vail, The Lodge at Steamboat, and Trailhead Lodge at Wildhorse Meadows and Dulany in Steamboat Springs are part of its claim to fame.

Parsippany, New Jersey-based Wyndham has been on an acquisition spree over the last several quarters. In February 2010, the company acquired a European vacation rental business, Hoseasons Holdings Ltd, which is a strategic fit in the company’s European rental business.

In June 2010, the company acquired the Tryp brand, which provides significant growth opportunities and presence in Europe and Latin America. In September 2010, Wyndham purchased ResortQuest, a vacation rental firm in the U.S. On December 1, 2010, Wyndham acquired James Villa Holidays, a vacation rental specialist in the U.K.

Wyndham is a dominant player in vacation rental business and seeks further inorganic growth. This fee-for-service business reduces the capital requirement, resulting in a higher free cash flow. Wyndham believes that these above-said acquisitions will facilitate its expansion in the $10 billion U.S. serviced vacation rental market, which currently lacks a significant player.

Apart from the U.S., U.K. remains another bright spot for Wyndham's vacation properties. The company has acquired about 30 European rental brands since 2000.

The recent TRC acquisition will increase Wyndham's global vacation rental collection by approximately 1,000 units to nearly 94,000 properties in 500 destinations worldwide. Additionally, this acquisition would double Wyndham’s presence in the western U.S. ski market. Hence, we view the deal as strategically positive. Going forward, we expect Wyndham to benefit from its repositioning as a more fee-for-service based business.

Wyndham’s primary competitors include Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) and Marriott International Inc. (MAR - Analyst Report). Wyndham currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are maintaining our long-term Outperform recommendation on the stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%