After Choice Hotels International went public with its bid to acquire Wyndham Hotels & Resorts for a total of $9.8 billion, the Asian American Hotel Owners Association said the possible merger would disrupt business for franchisees.
AAHOA has nearly 20,000 members who own more than 60% of all hotels in the U.S.
AAHOA President Laura Lee Blake said in a news release that this proposal sent a "shock wave of high concern and even fear through our AAHOA membership."
Members say that a combined Choice and Wyndham, which would result in more than 16,500 hotels with 46 brands, will dominate the economy and limited-service segment.
Wyndham's latest portfolio count had 9,100 hotels in 95 countries with 24 brands and nearly 1,850 hotels in the development pipeline. Choice has 22 brands with roughly 7,500 hotels in 46 countries and 899 hotels in its pipeline.
HNN's Sean McCracken reports that separately, the two companies are already among the biggest players in the economy and midscale segments.
“As the owners of more than two-thirds of both Choice Hotels and Wyndham-branded hotels, AAHOA Members have much at stake with Choice’s potential purchase of Wyndham,” AAHOA Chairman Bharat Patel said in a news release. “To have one franchisor Choice Hotels control so many economy and limited-service hotels will give our members little opportunity to have a say in whether the franchise mandates and requirements are fair, and significantly limit their options to find a different brand under which they could successfully operate their hotels.”
Blake added that AAHOA has seen the impact that past mergers and acquisitions of large franchise corporations can have on its members.
"Indeed, our AAHOA members fear a significant further dilution of the brands, and fighting over the guest reservations on one reservation system. The changes can be highly disruptive to their business practices, and even cause a significant decrease in revenues overall," she said.
Wyndham on Tuesday released a statement rejecting Choice's $90 per share offer and calling it "underwhelming" and "an opportunistic attempt to take advantage of point-in-time stock price fluctuations coinciding with a time period where the exchange ratio is favorable to Choice."
Choice's offer includes $7.8 billion in combined cash and stock and another $2 billion in assumed debt.
Blake said AAHOA supports Wyndham's rejection of Choice's proposal and is calling on federal agencies, such as the Federal Trade Commission, "to do a thorough investigation to fully protect competition in this segment of the industry."