Wyndham Hotel Group, an operational arm of Wyndham Worldwide Corporation (WYN), recently entered into an agreement with Hospitality Properties Trust (HPT) for branding of 20 hotels under the Wyndham Hotels and Resorts and Hawthorn Suites by Wyndham brands.
Hospitality Properties is a real estate investment trust (:REIT) primarily engaged in buying, owning, and leasing hotels designed for business, governmental, and family travelers. It currently owns 290 hotels and 185 travel centers located throughout the United States and in Puerto Rico and Ontario, Canada.
As per the agreement signed between the two parties, 4 hotels will be branded under the brand name Wyndham Hotels and Resorts and the other 16 under the brand name Hawthorn Suites by Wyndham. Under a 25-year management contract, all properties will be managed by Wyndham Hotel Group management company. Moreover, Wyndham Hotel Group can exercise two consecutive 15-year renewal options for all properties.
The rebranding and reconstruction of the hotels will cost around $75 million for Hospitality Properties. In addition, around 5% of the hotels’ gross revenues for an FF&E Reserve will be kept aside for periodic renovation of the hotels going forward. Wyndham Worldwide’s payment of the management fee is subject to maximum cap of $20 million for the first 7 years and an annual cap of $10 million.
Wyndham Hotel Group remains optimistic regarding the agreement and expects to extend this alliance with Hospitality Properties in future.
Of late, Wyndham Hotel Group also signed an agreement with Hoteles Costa del Sol hotel group to franchise three new hotels under the Ramada Worldwide brand in Peru, South America. The agreement marked the extension of Wyndham Hotel group’s alliance with Costa del Sol hotel group.
Headquartered in Parsippany, New Jersey, Wyndham Worldwide, having more than 55 brands, provides various hospitality products and services to individual and business customers in the United States and internationally. The company operates three business units namely Wyndham Hotel Group, Wyndham Exchange & Rentals and Wyndham Vacation ownership.
Wyndham Worldwide, which competes with Marriott International Inc. (MAR), currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are maintaining our long-term Neutral recommendation on the stock.
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