\n<\/p>\n
The battle of the budget hotel brands<\/a> is moving to all-out war.<\/p>\n Choice Hotels, owner of brands like Cambria Hotels and Comfort Inn, announced Tuesday morning a proposal to acquire Wyndham Hotels & Resorts \u2014 owner of brands like La Quinta and Ramada \u2014 for $7.8 billion. Factoring in Wyndham’s debt, Choice leadership claims the deal values its takeover target at nearly $10 billion.<\/p>\n The company also noted it had been engaged with Wyndham regarding a deal for six months before those talks stalled. Wyndham made a “decision to disengage with further discussions with Choice,” per the announcement.<\/p>\n The potential tie-up, first reported in the Wall Street Journal in May, has been the talk of the hotel industry for months \u2014 especially as as competitors like Marriott<\/a> and Hilton<\/a> enter the more affordable end of the hotel market<\/a> where Choice and Wyndham have significant market share.<\/p>\n Choice Hotels would not comment further on the deal, and Wyndham Hotels & Resorts did not respond to TPG’s request for comment in time for publication Tuesday. Wyndham CEO Geoff Ballotti declined to answer a reporter’s question regarding the then-rumors of a potential deal during a press roundtable at a recent Wyndham owners’ conference in Southern California.<\/p>\n “We have long respected Wyndham’s business and are confident that this combination would significantly accelerate both Choice’s and Wyndham’s long-term organic growth strategy for the benefit of all stakeholders,” Choice Hotels CEO Patrick Pacious said in a statement. “For franchisees, the transaction would bring Choice’s proven franchisee success system to a broader set of owners, enabling them to benefit from Choice’s world-class reservation platform and proprietary technology to drive cost savings and greater investment returns.”<\/p>\n “Additionally, the value-driven leisure and business traveler would benefit from the combined company’s rewards program, which would be on par with the top two global hotel rewards programs, enabling them to receive greater value and access to a broader selection of options across stay occasions and price points.”<\/p>\n Pacious alluded to the now-hostile takeover nature of his company’s bid for Wyndham and noted that, a few weeks ago, the two companies were “in a negotiable range on price and consideration” over the deal before Wyndham walked away. The Choice CEO claimed both companies saw value in the deal.<\/p>\n “While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies’ franchisees, shareholders, associates and guests to not continue pursuing this transaction,” Pacious said. “Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it.”<\/p>\n Daily Newsletter<\/p>\n Reward your inbox with the TPG Daily newsletter<\/p>\n Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG\u2019s experts<\/p>\n<\/div>\n<\/div>\n Choice and Wyndham joining forces makes sense in a world where companies like Hilton, Marriott, Hyatt<\/a> and IHG Hotels & Resorts<\/a> are all signaling in various ways a need to compete in more affordably priced territory.<\/p>\n Most investor analysts saw the arrival of Hilton’s new premium economy Spark brand as one that would start to siphon business away from Choice and Wyndham, and they’re not wrong: The first Spark hotel was formerly a Days Inn<\/a>, a brand owned by Wyndham. Having a larger combined company would help Choice and Wyndham defend their turf, so to speak.<\/p>\n Choice Hotels appeared to allude to those concerns by noting the combined company’s rewards program would be on par with the world’s largest loyalty programs. Hilton leadership has been vocal about using Spark as an affordable entry point into the Hilton Honors ecosystem.<\/p>\nWhy a Choice and Wyndham marriage makes sense<\/h2>\n