Saturday, September 17, 2005

Cendant buys Wyndham hotel brand Cendant Corp., the #2 hotel franchising oligopoly, has announced it will buy the luxury Wyndham Hotel brand and franchising system. Cendant buys no actual physical hotels, just the right to charges fees to franchisees along with a smaller number (29) of management contracts. The deal is for only $100 million, but it consolidates even further Cendant's hold on the lodging industry, putting over 100 high-end hotels under its umbrella. It's also a move upscale for Cendant, which has operated the more moderately-priced Days Inn and Ramada chains, among others. The move, combined with its Orbitz online travel agency, gives Cendant a wider variety of rooms to sell in any location. The deal was with the US equity group Blackstone Group, which took the Wyndham International company private in August 2005, one month ago. That $2.4 billion deal included many of the Wyndham properties, which Blackstone will retain. Blackstone has also been snapping up hotel chains, including Extended Stay America ($3.1 billion) and Prime Hospitality Group ($762 million). It's hard to imagine that the investment group will hold on to the properties for long, and it certainly can't be interested in managing the daily operations and replacing the towels and fixing dripping faucets. Selling of the Wyndham brand may be the first step in selling off the assets piecemeal when it can get the right price. This is another illustration of an equity group acting as a buffer by buying properties and feeding them back to companies in the actual business in bite-size pieces. 9:56:27 PM

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