Wyndham to Buy La Quinta for US$1.95 billion

Date: January 2018

Location: 900 mid-sale, upper-mid scale and economy properties across USA and North America (many franchised)

Name: La Quinta Inns & Suites


No. of Keys: 87,500

Seller: La Quinta Holdings Inc. advised by J P Morgan. Real estate entrepreneur Sam Barshop  and his brother Phil opened the first La Quinta in San Antonio, Texas, in 1968, across the street from the site of HemisFair ’68 World’s Fair.

Ahead of the sale, La Quinta will also spin off its real estate assets into a publicly-traded real estate investment trust, CorePoint Lodging Inc.

Wyndham said it would set aside a reserve of $240 million for estimated taxes as part of La Quinta’s spin-off of its real estate assets.

La Quinta had a market capitalisation of about $2.28 billion as of Wednesday’s close. La Quinta shareholders will receive $8.40 per share in cash and Wyndham will repay about $715 million of La Quinta debt net of cash.

Buyer: Wyndham Worldwide Corp, owners of the Ramada, Days Inn, Super 8,Howard Johnson, Travelodge (USA), Wyndham, Dolce and others – 21 brands in total.

Wyndham was created in 2006, when it was floated off from Cendant.  In June, 2005, Wyndham International was acquired by affiliates of the Blackstone Group, for $3.24 billion and taken private.

In the subsequent months, many of its hotels were sold to Goldman Sachs Group and Columbia Sussex. Blackstone rebranded most of the remaining assets as LXR Luxury Resorts and sold the Wyndham and Wyndham Garden Hotel brands to Cendant.

Blackstone sold Summerfield Suites to Hyatt Hotels, which renamed it Hyatt House.

In terms of number of rooms, the deal would help Wyndham pip InterContinental
to rank third globally. Marriott is top ranked, followed by Hilton.

Barclays is Wyndham’s financial adviser. If the deal falls through, La Quinta will pay Wyndham a termination fee of US$37 million.

Besides hotels, Wyndham also owns RCI timeshare, Wyndham Vacation Rentals, including Blakes Boating, Cottages.com, English Country Cottages, Hoseasons and others in the UK and James Villa Holidays and Novasol.

Price per Key: US$2,228 (we think!)

THPT Comment: This add to Wyndham’s position as one of the Top Six hotel groups that is king of the castle when it comes to budget hotels. It begs the question as to whether Wyndham will hold onto is small five-star portfolio such as Wyndham Grand (just 40 destinations). Last year (2017), Wyndham Worldwide said it would spin off its business into two separate, publicly traded companies – Wyndham Hotel Group and Wyndham Vacation Ownership.

“(It) adds a well-performing brand to Wyndham’s mid-scale and upper mid-scale hotel portfolio – two segments that have been growing RevPAR faster than any other segment outside of the economy segment,” Peter Trombetta of Moody’s Lodging said.

First Seen: Reuters