Calls Out Wyndham's Campaign of
Disinformation
Reiterates Commitment to Completing
Pro-Competitive, Pro-Franchisee, and Pro-Guest
Combination
NORTH BETHESDA, Md.,
Jan. 10,
2024 /PRNewswire/ -- Choice Hotels International,
Inc. (NYSE: CHH) (the "Company" or "Choice"), today issued an
investor presentation and infographic disputing the false and
misleading antitrust claims made by Wyndham Hotels & Resorts,
Inc. (NYSE: WH) ("Wyndham") in connection with Choice's proposal to
acquire Wyndham. The presentation has been filed with the U.S.
Securities and Exchange Commission and is also available at
CreateValueWithChoice.com.
Patrick Pacious, President and
Chief Executive Officer of Choice Hotels, said, "We are
disappointed Wyndham is pushing this disinformation campaign. Their
take on the antitrust risk on our proposed combination is
misleading and further reflects the board's apparent entrenchment.
Wyndham's characterization of the lodging industry's competitive
landscape and relevant regulatory criteria is incorrect. Our
pro-competitive combination is well positioned to obtain approval,
and we remain committed to completing it for the benefit of both
companies' franchisees, shareholders and guests."
Highlights of the presentation include:
- Wyndham is hinging its argument on a manipulated version of
the lodging industry, fabricated to drive unsubstantiated antitrust
concerns: Wyndham arbitrarily segments hotels based on
STR1 chain scales, but STR1 chain scales are
not meaningful under antitrust law. Wyndham overlooks that Choice
and Wyndham account for only 10% of U.S. room revenue. Wyndham
willfully ignores the intense competition between hotel brands for
guests and franchisees and the fact that existing brands regularly
move up and down STR chain scales. Wyndham further ignores
independent hotels, which comprise approximately 45% of the market.
Wyndham's overly narrow definition of the market is contradicted by
clear legal and regulatory precedent and has already been rejected
by antitrust enforcers in their approval of the Marriott-Starwood
combination.
- Wyndham's improperly constrained market definition still
includes nine other major competitors, including Marriott, Hilton,
and IHG: While Wyndham implies that even the biggest hotel
companies would be unable to compete with the combined company for
franchisees, these companies' brands are already competing today.
Wyndham is focused on the past, ignoring the many new and legacy
competing brands that are rapidly growing in the STR midscale and
economy segments. A Choice-Wyndham combination would leave the
combined company well positioned to compete in this increasingly
competitive landscape.
- Combining Choice and Wyndham would help franchisees reduce
costs, improve profitability and counteract dominant market players
and OTAs: By combining the two companies, franchisees would be
better positioned to compete against larger, well capitalized hotel
brand rivals. They would also compete more effectively with leading
OTAs, which currently account for more than half of online hotel
bookings and have a marketing spend that is 10 times larger than
Choice and Wyndham combined. Together, Choice and Wyndham would
drive top-line growth for franchisees through increased brand
marketing spend and expand customer reach with a more robust
rewards program.
- Combination would provide guests with expanded lodging
options and an enhanced rewards program: The combined company
would offer a fulsome suite of participating properties across
hotel types and locations, providing more opportunities for guests
to earn and redeem points. This combination would also expand
benefits and rewards for guests by creating an enhanced rewards
program on par with the leading hotel rewards programs.
Importantly, a Choice-Wyndham combination would not change
competition for guests because franchisees would continue to
control pricing.
- Choice is proceeding along the expected path of regulatory
review: Despite Wyndham's refusal to engage, Choice is making
progress on the regulatory process with the U.S. Federal Trade
Commission ("FTC"). Choice expects to continue cooperating with the
FTC during the Second Request process, which Choice expects to
commence on January 11. Choice
remains confident that it can complete the combination within a
one-year customary timeframe.
Advisors
Moelis & Company LLC, Goldman Sachs & Co. LLC and Wells
Fargo are serving as financial advisors to Choice and Willkie Farr & Gallagher LLP and Axinn,
Veltrop & Harkrider LLP are serving as legal advisors.
About Choice Hotels®
Choice Hotels International, Inc. (NYSE: CHH) is one of the
largest lodging franchisors in the world. The challenger in the
upscale segment and a leader in midscale and extended stay, Choice®
has nearly 7,500 hotels, representing almost 630,000 rooms, in 46
countries and territories. A diverse portfolio of 22 brands that
range from full-service upper upscale properties to midscale,
extended stay and economy enables Choice® to meet travelers' needs
in more places and for more occasions while driving more value for
franchise owners and shareholders. The award-winning Choice
Privileges® loyalty program and co-brand credit card options
provide members with a fast and easy way to earn reward nights and
personalized perks. For more information, visit
www.choicehotels.com.
Forward-looking Statements
Information set forth herein includes "forward-looking
statements". Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of
forward-looking terminology, such as "expect," "estimate,"
"believe," "anticipate," "should," "will," "forecast," "plan,"
"project," "assume," or similar words of futurity. All statements
other than historical facts are forward-looking statements. These
forward-looking statements are based on management's current
beliefs, assumptions and expectations regarding future events,
which in turn are based on information currently available to
management. Such statements include, but are not limited to, the
ultimate outcome of any possible transaction between Choice and
Wyndham (including the possibility that the parties will not agree
to pursue a business combination transaction or that the terms of
any definitive agreement will be materially different from those
described herein); uncertainties as to whether Wyndham will
cooperate with Choice regarding the proposed transaction; Choice's
ability to consummate the proposed transaction with Wyndham; the
conditions to the completion of the proposed transaction, including
the receipt of any required shareholder approvals and any required
regulatory approvals; Choice's ability to finance the proposed
transaction with Wyndham; Choice's indebtedness, including the
substantial indebtedness Choice expects to incur in connection with
the proposed transaction with Wyndham and the need to generate
sufficient cash flows to service and repay such debt; the
possibility that Choice may be unable to achieve expected synergies
and operating efficiencies within the expected timeframes or at all
and to successfully integrate Wyndham's operations with those of
Choice, including the Choice loyalty program; the possibility that
Choice may be unable to achieve the benefits of the proposed
transaction for its franchisees, associates, investors and guests
within the expected timeframes or at all, including that such
integration may be more difficult, time-consuming or costly than
expected; that operating costs and business disruption (without
limitation, difficulties in maintaining relationships with
associates, guests or franchisees) may be greater than expected
following the proposed transaction or the public announcement of
the proposed transaction; and that the retention of certain key
employees may be difficult. Such statements may relate to
projections of Choice's revenue, expenses, adjusted EBITDA,
earnings, debt levels, ability to repay outstanding indebtedness,
payment of dividends, repurchases of common stock and other
financial and operational measures, including occupancy and open
hotels, revenue per available room, Choice's ability to benefit
from any rebound in travel demand, and Choice's liquidity, among
other matters. We caution you not to place undue reliance on any
such forward-looking statements. Forward-looking statements do not
guarantee future performance and involve known and unknown risks,
uncertainties and other factors.
These and other risk factors that may affect Choice's operations
are discussed in detail in the applicable company's filings with
the Securities and Exchange Commission, including its Annual Report
on Form 10-K and, as applicable, its or Wyndham's Quarterly Reports
on Form 10-Q. These forward-looking statements speak only as of the
date of this presentation or as of the date to which they refer,
and Choice assumes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law.
Additional Information
This communication relates to a proposal that Choice has made
for a business combination transaction with Wyndham and the
exchange offer which Choice, through WH Acquisition Corp., its
wholly owned subsidiary, has made to Wyndham stockholders. The
exchange offer is being made pursuant to a tender offer statement
on Schedule TO (including the offer to exchange, the letter of
election and transmittal and other related offer documents) and a
registration statement on Form S-4 filed by Choice on December 12, 2023. These materials, as may be
amended from time to time, contain important information, including
the terms and conditions of the offer. In furtherance of this
proposal and subject to future developments, Choice (and, if
applicable, Wyndham) may file one or more registration statements,
proxy statements, tender or exchange offers or other documents with
the Securities and Exchange Commission (the "SEC"). This
communication is not a substitute for any proxy statement,
registration statement, tender or exchange offer document,
prospectus or other document Choice and/or Wyndham may file with
the SEC in connection with the proposed transaction.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended. Investors and security holders
of Choice and Wyndham are urged to read the proxy statement(s),
registration statement, tender or exchange offer document
(including the offer to exchange, the letter of election and
transmittal and other related offer documents), prospectus and/or
other documents filed with the SEC carefully in their entirety if
and when they become available as they will contain important
information about the proposed transaction. Any definitive proxy
statement(s) or prospectus(es) (if and when available) will be
mailed to shareholders of Choice and/or Wyndham, as applicable.
Investors and security holders may obtain free copies of these
documents (if and when available) and other documents filed with
the SEC by Choice through the web site maintained by the SEC at
www.sec.gov, and by visiting Choice's investor relations site at
www.investor.choicehotels.com.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, Choice and its directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. You can find information about
Choice's executive officers and directors in the Annual Report on
Form 10-K for the year ended December 31,
2022 filed by Choice with the SEC on March 1, 2023. Additional information regarding
the interests of such potential participants will be included in
one or more registration statements, proxy statements, tender or
exchange offer documents or other documents filed with the SEC if
and when they become available. These documents (if and when
available) may be obtained free of charge from the SEC's website at
www.sec.gov and by visiting Choice's investor relations site at
www.investor.choicehotels.com.
In this communication, we reference information and statistics
regarding the Travel Industry. We have obtained this information
and statistics from various independent third-party sources,
including independent industry publications, reports by market
research firms and other independent sources, such as Euromonitor
International Limited. Some data and other information contained in
this communication are also based on management's estimates and
calculations, which are derived from our review and interpretation
of internal surveys and independent sources. Data regarding the
industries in which we compete and our market position and market
share within these industries are inherently imprecise and are
subject to significant business, economic and competitive
uncertainties beyond our control, but we believe they generally
indicate size, position and market share within these industries.
While we believe such information is reliable, we have not
independently verified any third-party information. While we
believe our internal company research and estimates are reliable,
such research and estimates have not been verified by any
independent source. In addition, assumptions and estimates of our
and our industries' future performance are necessarily subject to a
high degree of uncertainty and risk due to a variety of factors.
These and other factors could cause our future performance to
differ materially from our assumptions and estimates. As a result,
you should be aware that market, ranking and other similar industry
data including in this communication, and estimates and beliefs
based on that data, may not be reliable. We cannot guarantee the
accuracy or completeness of any such information contained in this
communication.
1 STR, a division of CoStar Group, Inc., provides
premium data benchmarking, analytics and marketplace insights for
the global hospitality industry.
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SOURCE Choice Hotels International, Inc.