PARSIPPANY, N.J.—Wyndham Worldwide announced plans to spin off the company’s timeshare business from its hotel business, resulting in two separate, publicly traded companies. Wyndham Hotel Group, with headquarters in Parsippany, N.J., will become a new, publicly traded pure-play hotel company with a portfolio of brands while Wyndham Vacation Ownership, with Orlando headquarters, will become the world’s largest publicly traded timeshare company, which will be joined with Wyndham Destination Network, home to RCI, the world’s largest timeshare exchange company. The transaction is expected to be completed in the first half of 2018.
The two public companies intend to enter into long-term exclusive license agreements to retain their affiliation with Wyndham Rewards and to continue collaborating on key inventory sharing and customer cross-sell initiatives. The corporate names of the post-spin public companies have not yet been decided.
The transaction is expected to improve the strategic flexibility of both post-spin companies, allowing each to maintain a sharper focus on core business and growth opportunities, facilitate future capital raising as needed, and position each to better respond to developments in their respective markets. Following the planned separation, both companies will have significant scale and leadership positions within their industries, strong cash flows, rich portfolios of trusted brands, and the existing relationships in place to drive growth and shareholder value.
“After a comprehensive review process, the Board of Directors has determined that a spin-off 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,” said Stephen Holmes, chairman and CEO of Wyndham Worldwide. “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.”
Holmes added, “Over the past decade, we have attracted incredible teams of dedicated professionals who have built these businesses and brands into industry leaders which are now connected by the industry’s top rated loyalty program. With this strong platform in place, our businesses are now able to move forward individually, each positioned for a very strong future, based on a shared history and culture and an ongoing affiliation with Wyndham Rewards.”
The transaction is expected to be tax-free to Wyndham Worldwide and its shareholders and will be effected through a pro rata distribution of the new hotel company’s stock to existing Wyndham Worldwide shareholders. As two separate public companies, the vacation ownership company and the hotel company will have separate boards of directors. Holmes will serve as non-executive chairman of the Board of Directors for both companies.
Geoff Ballotti, Wyndham Hotel Group’s current CEO, will continue to lead the hotel company as president and CEO. He has more than 30 years of experience and will continue efforts to advance Wyndham in the economy and midscale hotel segments and growing its upscale portfolio and management business.
Michael Brown, Wyndham Vacation Ownership’s current CEO, will continue to lead the timeshare company as president and CEO. A 25-year industry veteran, Brown was appointed to lead the timeshare business earlier this year, bringing strategic vision, people-centric focus, and industry knowledge to the company.
Gail Mandel, CEO of Wyndham Destination Network, will continue to lead that business through this transition, and Tom Conforti, CFO of Wyndham Worldwide, will move into an advisory role, working with the company through the transaction.
“Tom has worked closely with the Board and me to get to our announcement today. He has been a passionate leader for our business and a vocal champion of our culture and values. His contributions to the Company and for our shareholders are significant, and our gratitude to him runs deep,” said Holmes. “As we begin this next chapter, Tom and I agreed that now is a good time to make this change to support a seamless transition to the leadership of the new companies.”
David Wyshner will assume the role of Wyndham Worldwide CFO and will become CFO of the hotel company upon spin. Wyshner was most recently president and CFO of Avis Budget Group, the global vehicle rental service provider, and served as Avis Budget’s CFO for more than 10 years.
Michael Hug will serve as CFO of the timeshare company. Hug has been executive vice president and CFO of Wyndham Vacation Ownership since 2005. Previously, he served as senior vice president and controller. Prior to joining Wyndham Vacation Ownership, Hug spent 11 years with EY.
The pure-play, publicly traded hotel company is expected to have: a fee-for-service, global franchise model; high margins; free cash flow; a growing pipeline of 150,800 rooms; and an experienced management team.
“We have spent the past three years on a transformation focused on improving the quality and awareness of our hotel brands, moving our legacy hotel and central systems to cloud based technology on an unprecedented scale, and building one of the top-rated hotel loyalty programs in the world,” said Ballotti. “We are excited about moving forward as one of the largest pure-play hotel portfolios anchored by iconic hotel brands in the economy and midscale segments. With a proven asset-light, fee-for-service model and attractive opportunities to grow and further diversify our brand portfolio, we are well positioned to drive value for our shareholders.”
Wyndham Vacation Ownership develops and operates a portfolio of more than 220 resorts throughout the United States, Canada, Mexico, the Caribbean, South America, and the South Pacific, managing vacation ownership sales, marketing, consumer financing operations, and property management. RCI is the world’s largest vacation exchange network, with around 4,300 affiliated properties in more than 100 countries. The post-spin, publicly traded timeshare company is expected to have: the largest global timeshare network; free cash flow; a diversified timeshare business model; and an experienced management team.
“By joining the largest timeshare company in the world with the largest timeshare exchange network and connecting them seamlessly to the Wyndham Rewards platform, we will be positioned to provide the widest variety of vacation opportunities to our owner base and network affiliates,” said Brown. “We will focus on building on our proven strengths and unmatched scale to meet evolving consumer vacation needs while continuing to drive value for shareholders.”
The separation is subject to final approvals, but will not require a shareholder vote. Wyndham Worldwide expects to complete the separation in the first half of 2018.
Photo: Wyndham Boston Beacon Hill