Wyndham Worldwide Corporation’s subsidiary, Wyndham Hotels & Resorts, has completed the buyout of La Quinta Holdings' hotel franchising and hotel management business.
The acquisition will help Wyndham to significantly improve its hotel management business and strengthen its brand presence globally. La Quinta has an asset-light, fee-for-service business structure, which consists of nearly 900 managed and franchised hotels. On the flipside, Wyndham operates a portfolio of 20 lodging brands and has approximately 9,000 hotels across 80 countries and six continents.
La Quinta, being one of the largest midscale brands in the industry, is likely to drive Wyndham Hotel Group's midscale presence and help it enter the fast-growing upper-midscale segment. Earlier, Wyndham had projected that the deal will result in $55 million to $70 million of annual cost savings and also boost revenues significantly by the end of 2019.
As it is, Wyndham is constantly trying to expand globally through acquisitions as the firms acquired so far have properties in Europe, North America and Latin America.
We believe that expansion through acquisitions is helping hotels consolidate and strengthen their presence worldwide. With intensifying competition from different sites like Airbnb or Priceline, the fusing of different hotels will lend a scale advantage to individual hoteliers. Also, companies can rake in higher profits in the competitive market by uniting their resources.
As announced earlier, Wyndham Worldwide’s board of directors has given a green signal for spinoff of its hotel business – Wyndham Hotel Group – resulting in two separate publicly traded companies. Wyndham Hotels & Resorts will trade under the symbol “WH” on the New York Stock Exchange (NYSE) beginning Jun 1, 2018.
In a year’s time, shares of this Zacks Rank #3 (Hold) company have gained 5.4% compared with the industry’s increase of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Also, Hyatt Hotels Corporation (H - Free Report) , Hilton Worldwide Holdings Inc. (HLT - Free Report) and Marriott International, Inc. (MAR - Free Report) have witnessed a gain of 41.2%, 19.7% and 23%, respectively, in the past year.
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