Choice Hotels International's public pursuit of a deal to buy Wyndham Hotels & Resorts is a rarity in the hotel industry, but it carries echoes of other major events that have happened in the sector over the course of the past decade.
Choice announced Tuesday both an exchange offer to buy available Wyndham shares for $90 in combined cash and stock and the beginning of a regulatory review to get approval to acquire a bigger stake in the company. Wyndham executives remain publicly disinterested in a combination of the two companies, stating that a deal would face significant antitrust scrutiny and that they are more capable of growing value on their own.
Hotel News Now took a look at some major moments in the hotel industry, going back to 2015, including both public-to-public mergers and acquisitions and attempts at M&A to highlight how they relate to a potential Choice-Wyndham combination and the hurdles that remain.
Marriott-Starwood Deal
Among the most notable mergers and acquisitions in the hotel industry was Marriott International’s $13.3 billion purchase of Starwood Hotels & Resorts in 2016, but it didn't happen without some bumps on the road first.
Public speculation was rampant through 2015 after Starwood executives announced early in the year they were undergoing a strategic review of the company, including the potential of a sale. Media reports speculated through the course of the year about companies such as Hyatt Hotels Corp., China's Jin Jiang Hotels and the then InterContinental Hotels Group — now known as IHG Hotels & Resorts — possibly buying Starwood.
Marriott initially announced in November 2015 that it had intent to acquire Starwood for $12.2 billion — $65.33 per share — which included $11.9 billion of Marriott stock and $340 million in cash to pay for 170 million outstanding shares of Starwood stock.
Then, Marriott had to fend off last-minute bids from competitors for Starwood, including a consortium led by Beijing-based Anbang Insurance Group. The Anbang consortium in March 2016 submitted an unsolicited all-cash bid to buy all outstanding shares of Starwood common stock at $76 per share.
A few days later, Starwood said it terminated its agreement with Marriott due to the Anbang consortium’s higher all-cash bid of $78 per share. Starwood called it a “superior proposal” to Marriott.
Marriott responded to the Anbang consortium’s proposal by increasing its offer for Starwood to $13.6 billion. The pre-stock price would have carried a value of $79.53 per share.
Following that, Anbang’s consortium increased its offer to an all-cash bid valued at $82.75 per Starwood share. But just days later on the final day of the month in March 2016, the Anbang consortium informed Starwood it was withdrawing its proposal and would end its pursuit the hotel company, which then reinstated Marriott’s bid. The deal between Marriott and Starwood was completed on Sept. 23, 2016, at $13.3 billion in cash and stock.
Expedia's Acquisition Creates Antitrust Concerns
Wyndham executives have expressed concerns that a combined Choice-Wyndham will draw regulatory scrutiny over its concentration of economy and midscale hotels. It wouldn't be the first time heavy concentration within one segment of the broader travel industry caused antitrust concerns.
Expedia Group closed on two major acquisitions in 2015, spending nearly $2 billion to buy competing online travel agencies Travelocity and Orbitz. Its purchase of Travelocity and its brands went smoothly. But its Orbitz deal came under scrutiny from the federal government over antitrust concerns and complaints among hotel executives of the potential power that a "duopoly" of Expedia and Booking Holdings.
Expedia announced in late January 2015 that it would acquire the Travelocity brand and OTA platform from travel technology company Sabre Corp. for $280 million cash, according to a news release. The deal followed a strategic marketing agreement formed between the two companies in 2013 through which Expedia powered Travelocity’s tech platforms for its U.S. and Canadian websites and gave Travelocity access to Expedia’s supply and customers service program.
In the news release, Expedia’s then-President and CEO Dara Khosrowshahi praised the Travelocity brand and pointed to its 20 million monthly users.
Just a few weeks later, Expedia announced plans to buy Orbitz and its brand family for $1.6 billion in cash. The Orbitz brand portfolio was a major draw for Expedia, Khosrowshahi said in the release.
"From the flagship Orbitz.com brand, to other well-known consumer brands such as CheapTickets, ebookers and HotelClub and the business-to-business brands Orbitz Partner Network and Orbitz for Business, the Orbitz Worldwide team has built a devoted customer base and we look forward to welcoming them to the Expedia, Inc. family,” he said.
Hoteliers were concerned about anti-competitive practices that could result from the Expedia-Orbitz deal, and the American Hotel & Lodging Association in August that year urged the U.S. Department of Justice to block the acquisition. The Justice Department’s Antitrust Division investigated the deal over a six-month period but concluded by September that the deal was unlikely to harm competition and consumers.
Expedia and Orbitz announced the closing of the deal on Sept. 16, a day after being cleared by the Justice Department.
Expedia’s website currently lists the following OTA and short-term rental booking platforms as part of its brand family: Expedia; Hotels.com; Orbitz; Travelocity; Hotwire; Wotif; Trivago; Ebookers; Vrbo; and Cheap Tickets. It also has Expedia Media Solutions, its advertising arm, and Expedia Partner Solutions, its business-to-business partnership brand.
As of its third-quarter 2023 earnings report, Expedia's lodging gross bookings reached $18.5 billion, an 8% year-over-year increase. Revenue grew 9% year over year to $3.9 billion. Its net income was $425 million with adjusted net income of $778 million.
Ashford Pressures FelCor To Merge
Hostile takeover attempts are virtually unprecedented in the history of the modern hotel industry, but there are some examples of competitors trying to pressure each other into deal.
One of the more relatively recent deals was a proposed combination of two Dallas-based real estate investment trusts when Ashford Hospitality Trust sought to buy FelCor Lodging Trust in late 2016 and early 2017.
Ashford executives offered $1.27 billion to buy FelCor and publicly pressured executives to negotiate a "mutually beneficial business combination" before being spurned. This caused Ashford execs to pick up a 4.5% stake in the REIT and wage a proxy battle by nominating a slate of seven board members favorable to the deal.
Analysts warned at the time that the most likely culmination of Ashford's efforts would be a third party swooping in to complete a deal, and that's exactly what happened when RLJ Lodging Trust announced a definitive merger agreement with FelCor in April 2017, which led Ashford to back away from its pursuit.