Wyndham strikes a clever deal to buy well-known travel publication Travel + Leisure from Meredith Corporation. Michael Brown, Wyndham Destinations CEO joins Yahoo Finance Live to discuss.
BRIAN SOZZI: The deal news continues in the first week of the new year, Timeshare giant Wyndham Destinations said today, buying the travel and leisure brand from publisher Meredith for $100 million. Once the deal is completed in mid-February, Wyndham will change its name to Travel and Leisure Co and have a new ticker symbol, TNL. Wyndham Destinations CEO Michael Brown joins us for more on the deal. Michael, good to speak with you again here.
When I first saw this, I admittedly said, I didn't see this coming. I don't think a lot of other people in the market saw it coming. Your stocks up about 8% on the news. What's the rationale behind it, and how do you ultimately drive a return out of this type of business?
MICHAEL BROWN: Well, first of all, it's great to be here and great to be able to share an exciting news for us. We're now able to attach the most respected and iconic brand in leisure travel to a company, Wyndham Destinations, who's already a leader in the vacation ownership and exchange business. And the key here is leisure travel. This gives us the opportunity to begin to expand our business into the broader leisure travel market. Today, the timeshare industry serves about 10 million households, and the broader leisure market is tenfold that amount. The Travel and Leisure acquisition will give us the opportunity to begin offering products and services to that broader market and therefore grow the business.
MYLES UDLAND: And when you think about branding in the space, and you look at what's happened with, you know, Airbnb over the last 10 years, they've made a verb out of staying in one of their locations. Does the Travel and Leisure brand, from your vantage point, kind of offer you a way to play in that space where it's about the branded experience of staying at one of your locations and not just, oh yeah, my friend down the street said that they got this great place that, you know, I'm going to go rent for a couple of weeks.
MICHAEL BROWN: Well, it's unquestionable one of the things we've learned in this post-COVID environment is that people want to travel with the name that they can trust. And as we spoke to the team at Travel and Leisure, that's a name that people trust, not only for the name, but for the content that they produce. And it was it was core to this deal that we wanted them to continue to inspire travel, and then we wanted to be the delivery mechanism to put people on vacation. And the combination of these two companies and the use of the Travel and Leisure name to really broaden the experience of putting people on vacation, yes, I think it exactly fits where consumers are today is they want to travel with the name that they can trust. And as we've heard this morning from really everyone we've spoken to, the Travel and Leisure name is, again, one of the most respected and iconic names in this space.
JULIE HYMAN: Michael, it's Julie here. I have to chime in on that. As a consumer, Travel and Leisure is a source that I go to when I'm looking at vacation destinations, but I am more wondering about the overlap of customers and what you stand to gain. Because I think of a timeshare customer, I am not a core timeshare customer, shall I say. I think of it as somebody who's retired, perhaps. I think of it also is a shrinking market, and I could be wrong on that point. So I'm just wondering, do you actually see the Travel and Leisure name bring more people into the timeshare orbit?
MICHAEL BROWN: It's a great question, and there's two answers there. I'll just briefly say, actually, the timeshare market is growing dramatically over the last 10 years, about 6% CAGR under the biggest hospitality names, and that industry has changed dramatically. But the point of this acquisition is not about timeshare, it's about to begin developing a product for the broader leisure travel market outside of timeshare. There's a lot of people that, as you read articles, I did last night about our national parks in the United States, I wanted to click on that article and start to plan the vacation with my family. And that's really what we're going to be able to offer is tying in incredible content to the actual vacation that people can go on.
And that is not tied to the timeshare industry, it is simply a new, it's an existing segment, but is a new segment for us of the market that we can begin to provide our great travel services that we have today already in our portfolio to a different audience. So this is about expansion into new markets as opposed to adding to our timeshare business. That business is great, is doing extremely well as we saw in our quarter three results, but this is a new business line to grow our entire ecosystem.
BRIAN SOZZI: Michael, how is your team? How are you going to keep the journalistic independence of Travel and Leisure? Because when you see a deal like this, you immediately think, well, OK, it makes sense on paper, but you know, how do you ensure that the editors and the reporters are not churning out 75 stories on Wyndham timeshares?
MICHAEL BROWN: It's a great question, and candidly in our first meeting, the meeting of the minds that really set our discussions on was that we wanted them to retain editorial independence, and obviously, they did as well. That's what they do, and they do it better than anyone in the world, and that's why we've agreed to a license agreement of 30 years back to the Meredith Corporation. Their editorial independence is paramount to us. We want them to promote leisure travel. Our objective is to focus on our core competency, which is the actual putting people on vacation. So that was fundamental to this deal, and it's critical going forward that they retain that editorial independence.
BRIAN SOZZI: That is good to hear. Michael, last time we spoke, it was in May 2020. Since, then the COVID-19 situation, by a lot of measures, has continued to get worse. How many of your resorts are open? The last number I have for you is 97% of your resorts were open in the third quarter, 75% of your gates centers were open. Are those numbers still standing?
MICHAEL BROWN: So the numbers you quoted were accurate. Those numbers have pulled back simply because of the news that we see every day about the restrictions in California and a few other independent restrictions that have been applied. We know those are short term in nature and don't really affect the long term perspective for leisure travel. I say long term, really the matter of the fact is we expect that a little later in 2021, restrictions will begin to get lifted as vaccines are distributed, and we think the leisure market is really going to return strong later in 2021.
But yes, we've had to close additional resorts due to restrictions that states have applied. We think it's the right thing. The health situation is the most important, and the sooner we get to the other side of it, the quicker leisure travel is going to return and be good not only for our business, but for general employment and the economy.