AAHOA steps up to disapprove of a Choice-Wyndham deal

If Wyndham Hotels & Resorts is acquired by Choice Hotels International, there will be winners and losers on both sides. Caught in the middle, however, will be the owner-franchisee community who will become concerned about their areas of protection and have to battle for shelf space in what will become a crowded central reservation system.

With that in mind, AAHOA (Asian American Hotel Owners Association), with 20,000 members representing so many budget, economy and midscale owners, stated it doesn’t support the deal that would create a company with 16,500 hotels and 46 brands dominating the economy and limited-service 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,” said AAHOA Chairman Bharat Patel. “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.”

Choice Hotels told Hotel Investment Today they had no comment about the AAHOA statement.

However, a Wyndham franchisee who did not want to be identified said, “In general, this is not a good deal for Wyndham franchise owners. We have been very happy with the Wyndham organization and the way they operate -- they put the owners first in conducting their business. I don't think that is the culture Choice promotes and practices. So, we are definitely not in favor of this deal.”

AAHOA President and CEO Laura Lee Blake added, “We have seen in the past the major impact that mergers and acquisitions by the big hotel franchisor corporations can have on our members as the hotelier franchisees. 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.”

As it stood on Wednesday, Wyndham had rejected the Choice offer of $90 per share, with 45% in stock and 55% in cash, stating that it was not in the best interest of shareholders to accept the proposal. However, most industry observers expect the negotiation to continue.

“We support Wyndham’s rejection of this proposal,” Blake said. “We further call on the federal agencies, including the Federal Trade Commission, to do a thorough investigation to fully protect competition in this segment of the industry.”