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Wyndham Worldwide, one of the world' largest operators of timeshare properties, said Wednesday it plans to spin off its hotel business, a strategic move to allow the two separate companies to focus on their strengths and find more financing opportunities.
The hotel unit, Wyndham Hotel Group, will become a new, publicly traded company by the first half of next year. Based in Parsippany, N.J., it operates or franchises 8,100 hotels across eight hotel brands, including Days Inn, Baymont Inn & Suites and Howard Johnson's.
Wyndham Worldwide will legally retain the timeshare unit, Wyndham Vacation Ownership. Based in Orlando, Fla., it will operate timeshare property manager Wyndham Destination Network and RCI, which Wyndham says is the world's largest timeshare exchange company.
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Once the spin-off is completed, the hotel and timeshare companies plan to strike license agreements to jointly run their loyalty programs, Wyndham Rewards, and cross-sell each other's properties.
The corporate names of the post-spin public companies have not yet been decided.
Wyndham's announcement follows similar moves in recent years by its competitors, Marriott International and Starwood Hotels and Resorts Worldwide, that have spun off their timeshare businesses as demand cooled.
But in the most recent quarter, Wyndham timeshare unit's sales grew at a faster rate than its hotel business. Revenue for the timeshare unit, which manages more than 220 timeshare properties worldwide, grew 6% to $750 million in the second quarter, it said Wednesday. RCI, one of the pioneers in exchanging timeshares among owners, has 4,300 properties in its network.
Meanwhile, the hotel unit reported a 3.3% revenue gain to $345 million. Wyndham says it will also explore "strategic alternatives" for its European rental brands, which could involve selling the business.
The split will enable the companies "to maintain a sharper focus on its core business and growth opportunities" and ease capital raising, Wyndham said.
Wyndham shareholders will be given shares in the newly created hotel company through a pro rata distribution.
Shares of Wyndham, which have been risen 35% so far this year, were up Thursday morning in pre-market trading. Shares were trading 4% higher before the market opening bell to $107.00.
Stephen Holmes, Wyndham Worldwide's chairman and CEO, will work as non-executive chairman of the boards of directors for both companies.
Geoff Ballotti, who runs Wyndham's hotel group, will become the spun-off company's president and CEO.
Michael Brown, current CEO of Wyndham Vacation Ownership, will be the timeshare company's president and CEO.
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