Wyndham Worldwide Corporation (NYSE: WYN) completes the spin-off of its Hotel Group business into a separate public company, Wyndham Hotels & Resorts Inc. (WH).
On May 31st, 2018, Wyndham Worldwide Corporation (WYN) is expected to complete the spin-off of its Hotel Group business into a separate public company, Wyndham Hotels & Resorts Inc (WH). The parent will retain the vacation ownership and vacation exchange businesses and will be renamed Wyndham Destinations Inc. (WYND). The spin-off is anticipated to be tax-free and was announced on August 2nd, 2017.
We believe the spin-off of the hotel business makes sense as its simplifies the business structure and will result in higher net valuation multiple. Investors generally ascribe a higher valuation multiple to the capital light management & franchise segment than vacation ownership business.
WYND will be the world's largest vacation ownership and vacation exchange company, with significant scale advantage (nearly 2x the size fo the next largest peer). The company's ~60% of timeshare owners on its vacation exchange platforms provides a network effect advantage, which in our view is hard for competitiors to replicate. High recurring revenue (~73% as of FY17) provides revenue and cash flow visibility. The exclusive license agreement with WH provides access to a database of ~56 million loyalty members and ~140 million annual guests, allowing significant cross-selling opportunities.
WH will be the world's largest hotel company, with ~9,000 properties and presence across 80 countries. It's high franchise mix (~99% of properties franchised) results in switching-cost barriers as contracts are long term (15-20 years) with high penalties for early cancellation. The acquisition of La Quinta will boost WH's presence in the upper/midscale segment. The company boasts one of the industry's largest loyalty programs (~56 million members), which ensures high customer engagement and repeat business.
Of the two, we prefer WYND owning to more upside potential. In our view, both WYND and WH are undervalued.
Wyndham Destinations is a vacation ownership and exchange company. The company provides everyday travelers the opportunity to own, exchange or rent their vacation experience. The company's operations are grouped into two segments: Vacation Ownership, which is a timeshare business with resorts and owners that develops and markets vacation ownership interests (VOIs) to individual consumers, provide consumer financing in connection with the sale of VOIs, and provides property management services at resorts; and Vacation Exchange, which operates the vacation exchange network with members, and has relationships with vacation ownership resorts located in various countries and territories.
Wyndham Hotels & Resorts is a hotel franchisor, licensing its hotel brands to hotel owners around the world. The company operates in the following segments: Hotel franchising, which licenses the company's lodging brands and provides related services to third-party hotel owners and others; and Hotel management, which provides hotel management services for full-service and limited-service hotels as well as several hotels that are owned by the company
WhiteSand Research, LLC is a minority-owned company offering research solutions to the financial industry, including institutional investors, hedge funds, and investment firms. Founded in 2006 as a boutique research group, we focus on proprietary research reports on publicly-traded companies facing event-driven catalysts, including mergers and acquisitions, corporate buyback situations, turnarounds, spin-offs, post-bankruptcies and capital restructurings.
Producing quality, in-depth, and unbiased research to help our client's shape their investment processes has been the cornerstone of our company's success. WhiteSand Research employs a value-oriented, event-driven investment strategy that seeks to capitalize on the most inefficient and attractive investment opportunities.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.