The Wyndham Grand Chicago Riverfront Hotel in downtown Chicago, IL on Thursday July 27, 2017. Photographer: Christopher Dilts/Bloomberg *** Local Caption ***
Christopher Dilts Christopher Dilts / Bloomberg

Wyndham owns the Ramada and Days Inn brands.

By Bloomberg
August 3, 2017

Wyndham Worldwide Corp., owner of the Ramada and Days Inn brands, said it will spin off its hotel unit into a new publicly traded company and consolidate its timeshare business while exploring strategic alternatives for its European rental brands.

The company will split into Wyndham Hotel Group, based in Parsippany, New Jersey, and Wyndham Vacation Ownership, headquartered in Orlando, Florida, the company said Wednesday. The latter will be combined with Wyndham Destination Network, which includes the RCI timeshare exchange network. The names of the post-split companies haven’t been decided.

Wyndham Worldwide shares shot up in after-market trading, rising above $109, after closing Wednesday at $103.

“A spinoff of the hotel business and the combination of Wyndham Vacation Ownership with RCI is the best structure to unlock shareholder value and enable strong growth across the businesses,” Stephen Holmes, chairman and chief executive officer of Wyndham Worldwide, said in a statement. “We will work with the leadership of our European rental organizations, which have outstanding brands in their regional markets, to explore options to fully realize their future growth potential.”

Wyndham is following a path taken by other large hotel operators. Hilton Worldwide Holdings Inc. in January spun off its real estate into Park Hotels & Resorts Inc. and its timeshare business into Hilton Grand Vacations Inc. Marriott International Inc. took similar steps in 1993, when it created what is now Host Hotels & Resorts Inc., the largest U.S. hotel real estate investment trust.

Strong Performers

Timeshare companies have been strong stock-market performers in the past year. Marriott Vacations Worldwide Corp. is up more than 54 percent, and Hilton Grand Vacations Inc. is up more than 38 percent since it began trading in December.

Wyndham had hinted at spinoff plans in its past few earnings calls.

“Management and the board believe the current market multiple does not reflect the true value of the standalone, pure-play businesses,” said Michael Bellisario, an analyst at Robert W. Baird & Co. Comparable companies for both the timeshare and hotel-brand businesses are trading at higher valuations, he said.

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