Deal sends Wyndham into top 3

W yndham

Worldwide Corp said on Thursday it would buy La Quinta Holdings Inc’s hotel operations for $1.95 billion, adding another well-known US brand and nearly 900 mid-scale, upper mid-scale and economy locations to its portfolio.

Wyndham Hotel Group, known for its own-brand hotels as well as Ramada, Days Inn and Super 8 budget lodgings, will have a total of 21 brands when the La Quinta deal closes as expected in the second quarter of 2018.

In terms of number of rooms, the deal would help Wyndham pip InterContinental Hotels & Resorts to rank third globally, SunTrust analyst Patrick Scholes said.

Marriott International is top ranked, followed by Hilton Hotels & Resorts.

Moody’s Lodging analyst Peter Trombetta said the deal would be “credit-positive” for Wyndham by giving it more exposure to a segment where revenue per available room (RevPAR) — a key industry metric — was outperforming other businesses.

“(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,” he said.

Last year, Wyndham Worldwide said it would spin off its business into two separate, publicly traded companies — Wyndham Hotel Group and Wyndham Vacation Ownership.

“The planned spin-off of Wyndham Hotel Group remains on track for the second quarter of 2018,’’ the company said on Thursday.

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.

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.