Wyndham to spin off hotels, seek options for European brands

[SEATTLE] Wyndham Worldwide Corp, owner of the Ramada and Days Inn brands, said it will spin off its hotel unit into a new publicly traded company and consolidate its timeshare business while exploring strategic alternatives for its European rental brands.

The company will split into Wyndham Hotel Group, based in Parsippany, New Jersey, and Wyndham Vacation Ownership, headquartered in Orlando, Florida, the company said Wednesday. The latter will be combined with Wyndham Destination Network, which includes the RCI timeshare exchange network. The names of the post-split companies haven't been decided.

Wyndham Worldwide shares shot up in after-market trading, rising above US$109, after closing Wednesday at US$103.

"A spinoff of the hotel business and the combination of Wyndham Vacation Ownership with RCI is the best structure to unlock shareholder value and enable strong growth across the businesses," Stephen Holmes, chairman and chief executive officer of Wyndham Worldwide, said in a statement. "We will work with the leadership of our European rental organisations, which have outstanding brands in their regional markets, to explore options to fully realise their future growth potential."

Wyndham is following a path taken by other large hotel operators. Hilton Worldwide Holdings Inc in January spun off its real estate into Park Hotels & Resorts Inc and its timeshare business into Hilton Grand Vacations Inc. Marriott International Inc took similar steps in 1993, when it created what is now Host Hotels & Resorts Inc, the largest US hotel real estate investment trust.

Timeshare companies have been strong stock-market performers in the past year. Marriott Vacations Worldwide Corp is up more than 54 per cent, and Hilton Grand Vacations Inc is up more than 38 per cent since it began trading in December.

Wyndham had hinted at spinoff plans in its past few earnings calls.

"Management and the board believe the current market multiple does not reflect the true value of the standalone, pure-play businesses," said Michael Bellisario, an analyst at Robert W Baird & Co. Comparable companies for both the timeshare and hotel-brand businesses are trading at higher valuations, he said.

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