Wyndham adds La Quinta to portfolio in $1.95B deal
Wyndham Worldwide Corp. will acquire La Quinta Holdings Inc.’s hotel management business in a $1.95 billion cash deal announced Thursday.
The acquisition will be completed in the second quarter of this year, bringing Wyndham’s portfolio of hotels to more than 9,000 properties and 21 brands.
La Quinta has about 900 managed and franchised hotels.
The hotel industry has seen massive consolidations and acquisitions in recent years. Last year, Marriott International bought Starwood Hotels and Resorts, making Marriott the largest hotel company in the world. InterContinental Hotels Group acquired Kimpton Hotels and Restaurants. And AccorHotels bought the Fairmont, Rafles, and Swissotel brands.
“We really believe this industry will continue to consolidate and that size has never mattered more,” says Geoff Ballotti, president and chief executive officer of Wyndham Hotel Group.
Ballotti says the acquisition of La Quinta, considered an upper midscale brand, will complement its portfolio, which is heavy on economy, or budget, hotels.
“This is a brand that is in and will become our flagship upper midscale brand in a space in the market we want to grow in,” he says. “We are very large and very present in the economy space. This brand with 900 hotels does so many things for us from a growth perspective and does a lot from a consumer perspective with our loyalty program.”
Wyndham Rewards has 53 million members while La Quinta has 13 million.
“It will make it such a great value proposition for our consumers at a time when loyalty has never mattered more,” Ballotti says.
The Wyndham Rewards program is known for allowing guests to redeem a night’s stay for 15,000 points across the board. La Quinta Returns has a Redeem Away program that lets customers use points for everyday purchases such as buying a cup of coffee, even from their mobile phones. The two loyalty programs will be combined.
“It’s about growing this business and leveraging revenue and expansion and units with franchise partners by plugging into this great network,” says Keith Cline, president and chief executive officer of CorePoint Lodging, La Quinta’s new real estate business.
La Quinta will continue to manage 300 of its 900 properties and keep its headquarters in Irving, Texas. Wyndham is based out of Parsippany, N.J.
Before the sale is completed, La Quinta will spin off the real estate it owns into a publicly-traded real estate investment trust, CorePoint Lodging.
Under the agreement, stockholders of La Quinta will get $8.40 per share in cash. Wyndham Worldwide will repay about $715 million of La Quinta debt and set aside another $240 million for estimated taxes related to La Quinta’s spin-offs of its real estate.