Why Wyndham didn’t buy Radisson Hotel Group Americas

Although Choice Hotels’ announcement of its intention to buy Radisson Hotel Group Americas seemingly came out of nowhere, there had long been rumours that a sale was on the cards. A fragmented structure and fewer brands meant left Radisson exposed.

There were however, suggestions that others might have been interested, namely Wyndham, and unusually that firm’s CEO decided to outline exactly why it didn’t fancy the acquisition.

Speaking on a conference call with analysts at the end of July, CEO Geoff Ballotti said that Wyndham had looked at Radisson “multiple times” over the years but that it had never been a “a strategic fit” before giving two specific reasons as to why he passed on a deal:

  • Brand overlap

Ballotti pointed out that there was a lot of crossover with Wyndham’s La Quinta and Radisson’s Country Inn & Suites brands as well as with Radisson Blue, which competes with the Wyndham and Wyndham Grand brands.

  • Real estate

Wyndham has been more aggressive than most in shedding its real estate over the years, becoming an asset-light franchiser. “[W]e've been successful in exiting our owned real estate and our management guarantees, which would have come back with an acquisition of Radisson,” Ballotti said.

To sum up, Ballotti added: “ [H]aving looked at it before in the past, it's never been for us strategically. And it's not brands that we've ever felt we could grow more quickly than our brands, which compete with Radisson in those segments.”

What Wyndham wants to buy

Even though Wyndham may have passed on Radisson Americas it is still looking to grow through M&A. Speaking on the same call Michele Allen, chief financial officer at Wyndham, said there were a couple of areas where the company was looking.

“[F]rom an M&A landscape perspective, we are looking for opportunities, both domestically and internationally, particularly in what we consider to be high growth markets with high demand generators out into the future. And that probably looks more like smaller regional [businesses] in the mid-scale select service or even upscale space,” she said. [bolding by Hospitality Insights]