Wyndham’s Latest Acquisition is Paying Off, Bringing the Company a Big Revenue Jump
La Quinta that increased Wyndham Hotels and Resorts’ revenue
The question for many industry insiders is quickly becoming what will Wyndham look to buy next year and beyond?
Wyndham Hotels and Resorts just became its very own public company in June, and, as such, it now finds itself primarily focused on three things: growing the number of rooms in its system; demonstrating the value of its brands to hotel owners; and integrating its $1.95 billion purchase of La Quinta.
And according to CEO Geoff Ballotti, the company is “very optimistic” about its future, as he noted on a conference call on Tuesday discussing Wyndham’s third quarter earnings for 2018.
The single biggest questions remains the integration of La Quinta.
In interviews dating back to June, CEO Ballotti has said that the acquisition of La Quinta would be “transformational” for the company, and so far, the integration, which is expected to be completed by the first half of 2019 is proceeding as planned, Ballotti noted. The press release noting Wyndham’s third quarter earnings also indicated that the remaining parts of the La Quinta integration pertain to loyalty and information technology (bringing La Quinta hotels onto Wyndham’s own cloud-based central reservations system).
Wyndham reported an increase in hotel franchising revenue in the quarter of 35 percent, largely because of La Quinta, which accounted for $72 million of incremental revenue. Without La Quinta factored in, that revenue rose 7 percent.
The company also noted that Wyndham “has terminated approximately 60 percent of the employees ultimately expected to leave the company in conjunction with the integration.”
In addition to the business with La Quinta, another recent focus for Wyndham has been improving the quality of its hotels, actively removing some 80,000 to 90,000 rooms that have not met its brand standards, especially in the U.S.
Now, however, the company is beginning to add more rooms, with 1,000 rooms added on a net basis in the third quarter.
“In fact, we’ve opened open 14,000 U.S. rooms in the first nine months this year, which is up 15 percent from last year and nearly 35 percent from two years ago, reflecting what we believe to be the growing interest in the improving quality and performance of our brands,” Ballotti said.
Ballotti and Wyndham Hotels Chief Financial Officer David Wyshner also expressed the company’s interest in pursuing future growth through acquisition — something both have discussed on previous earnings calls.
In his prepared remarks, Wyshner said, “We’ve significantly increased the earnings contributions from our acquisitions. While investors may be able to invest in our stock and the stock of an independent brand, a public market investor can’t produce the synergies that we can. This, in a nutshell, is why it you can make good sense for us to pursue some more strategic acquisitions.”
Later, when asked about the possibility of more acquisitions, Wyshner said, “We’ve averaged about a brand acquisition every 18 months, and we will continue to look for good accretive additions to our brand portfolio.”
Let’s take a look at a few other projects currently underway by Wyndham Hotels and Resorts
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