NEW York—Wyndham Worldwide Corp.’s pending acquisition of US Franchise Systems, including the Microtel Inn & Suites and Hawthorn Suites brands, from Global Hyatt Corp. is a perfect fit for Wyndham, according to company leaders.
“This is right down the center of the fairway for us,” Steve Rudnitsky, Wyndham Hotel Group chairman and CEO, said while announcing the deal during the 30th Anniversary NYU International Hospitality Industry Investment Conference.
“It’s a franchise system and we’re the largest franchisor,” said Stephen P. Holmes, chairman and CEO of Parsippany, N.J.-based Wyndham Worldwide. “It’s a nice fit for us.”
Rudnitsky said the deal, when completed, will allow WWC to raise earnings before interest, taxes, depreciation and amortization to one third of its total enterprise from one quarter of its total enterprise.
“It helps move us in the direction of our strategic goal of expanding the hotels proportion of contribution,” Holmes said. “We need to grow in organic ways and inorganic ways. This is the first step.”
Wyndham Worldwide also includes vacation ownership in its business mix.
Details of the acquisition were undisclosed; however Chicago-based Global Hyatt is to provide specified support services during the course of the ownership transition. Upon completion, which is expected to occur by the end of July, the deal will add 383 hotels and more than 29,000 guestrooms to Wyndham’s roster. It will bring Wyndham’s portfolio to nearly 7,000 properties comprising more than 580,000 guestrooms.
What will happen to Atlanta-based USFS’ headquarters and staff was not clear. When the acquisition is completed, the two brands are expected to fall into Wyndham’s core brands division led by Keith Pierce.
Microtel, a chain with 292 new-construction hotels open and 38 more under construction, competes in the economy segment. The brand has won six consecutive J.D. Power & Associates guest satisfaction awards. Hawthorn Suites has 91 hotels open and competes in the extended-stay segment.
Holmes said an agreement between Wyndham and Global Hyatt made sense in part because of the economic environment. He said the reduced number of private-equity players that are active in the hotel industry made it easier for a deal to be struck.
Holmes also said he doesn’t expect any franchisees of Wyndham brands that compete in the economy segment to be negatively affected by the deal for Microtel.
“I don’t think they’ll feel any more competition with Microtel in our system than they did without Microtel in our system,” Holmes said. “They all compete at the street corner level regardless of who owns the brand.”
Wyndham Worldwide’s hotel brands include Wyndham, Ramada, Days Inn, Super 8, Wingate by Wyndham, Baymont, Howard Johnson, Travelodge, Knights Inn and AmeriHost.