Choice Hotels International is reportedly in discussions to acquire Wyndham Hotels & Resorts, with the aim of creating a major budget hotel company in the United States. A confidential source has revealed the potential deal to Reuters.

Early-stage talks between Choice Hotels and Wyndham are currently underway. However, it remains uncertain whether Wyndham is interested in pursuing a merger with Choice, according to the anonymous source.

Hostile takeover possible

If Wyndham decides against proceeding with a deal, Choice Hotels may resort to a hostile takeover strategy by presenting an offer directly to Wyndham’s shareholders, the source explained.

This news comes at a time when concerns about high inflation and the possibility of a recession could impact consumer spending on travel. There may therefore be an increased demand for affordable hotel options like Choice Hotels and Wyndham.

Market response and company statements

The Wall Street Journal initially reported the potential deal, resulting in Wyndham Hotels’ stock closing 5.1% higher, while Choice Hotels’ shares ended approximately 4.6% lower.

Wyndham responded to the reports with an emailed statement: “We don’t comment on rumours. We are focused on business as usual, driving value for our franchisees, team members, guests and stakeholders.”

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Financial details and company profiles

As of the market’s close on Monday, 22 May 2023, Wyndham Hotels had a market value of $5.9 billion while Choice Hotels had a market capitalisation of $5.8 billion. Wyndham, which includes the Days Inn and Travelodge brands, operates and franchises a portfolio of 24 hotel brands, primarily located in secondary and tertiary cities.

Wyndham was established in 2018 when Wyndham Worldwide spun off its $11 billion hotel business, resulting in two separate publicly-traded hospitality companies. Wyndham Worldwide is now known as Travel + Leisure and focuses on timeshare resorts.

Choice Hotels operates brands including Econo Lodge, Quality Inn and Clarion. It franchises more than 7,000 hotels catering to customers in the mid to upscale range.