Is a new hotel giant emerging in the United States? Visit Wall Street Journal reported in an article on 23 May that Choice Hotels was interested in buying its competitor Wyndham. " According to people familiar with the subject" states the American daily, adding that the two parties have not entered into any " serious discussions" . This possible merger would give a group close to the size of Marriott International, the world's leading group with 1.502 million rooms at the end of last year. These two hotel franchisors, the largest in the world, have a combined total of almost 1.5 million rooms, 842,500 for Wyndham and 627,800 for Choice.
Unlike their competitors, Marriott, Hilton or Hyatt, these two players have the distinctive feature of being pure franchisors, but also of having a strong presence in the hotel market. in the economy and mid-range segments. With key brands such as Travelodge and Days Inn for Wyndham, as well as Clarion and Comfort for Choice. This is despite the fact that both groups also have a number of upmarket brands in their portfolios, including Wyndham Grand, Dolce and Vienna House, and Choice's Ascend Collection, which is currently expanding rapidly. In a bid to expand in this segment, Choice last year acquired the Radisson group's franchising business, operations and brand intellectual property on the American continent, for 675 million dollars.
For Choice, there are many advantages to this possible merger: getting bigger and bigger - size being essential for a franchisor - to increase its share of the top-of-the-range segment, and also to extend its offer internationally. Wyndham has a greater presence outside the United States than Choice, which has also embarked on a refresh of all its brands in Europe.
The fact remains that this merger between two groups of equivalent value - around six billion dollars - is still a long way off. far from a foregone conclusion. For the time being, neither of the two groups, when questioned by the American media, wished to comment on the rumours put forward by the Wall Street Journal. A number of analysts, quoted in particular by Skift, seem to have doubts about the value of this takeover, as the fall in Choice's share price on the day the article was published may confirm that the market's enthusiasm is limited. Furthermore, with Choice and Wyndham's combined offering in the budget segment in the US just exceeding 50%, such a merger could be subject to certain conditions from the US antitrust authorities.
Beyond all these uncertainties, the Wall Street Journal article does not rule out the possibility that, if Wyndham's management did not agree to move closer to its competitor, its potential buyer would adopt a smore aggressive strategy : " Choice Hotels could make an offer directly to Wyndham shareholders, according to some respondents" . He concluded: " It is also possible that the offer will come to nothing" . Between rumour and reality, caution is always called for.
