Our Take: Wyndham Acquires LQ!

Big things keep getting bigger; Jeff Bezos’ bank account balance has gone from an integerto a long data type, Bitcoin keeps reaching new hi- (wait. nevermind), and the Wyndham hotel group – already the largest by property count—has now added a whole new portfolio of midscale hotels thanks to its latest corporate endocytosis. Make no mistake, another big acquisition was to be expected, the only unknowns being the ‘who’. Our very own Laura Daviau predicted this trend in 2016, and big outlets like Skift have also been bullish on the prediction that Big mergers would continue to be the norm into this year.

Here are five takeaways and predictions from this merger:

1.      La Quinta Properties will see their OTA margins lower in the near to mid-term. One of the hindrances of LQ’s smaller size pre-merger was that it didn’t have the negotiating power of a property-count powerhouse like a Hilton or Wyndham. LQ’s margin percentages were some of the highest in the industry, a number that almost certainly will come down with new ownership.

2.      Former LQ properties will see a slight boost in performance due to a marginally more recognizable rewards program. To be brutally honest neither loyalty program really wows me with their visibility or reputation for quality. The only thing that comes to mind when you mention La Quinta’s loyalty program is the fact that Fred Willard did some voice over work in a recent commercial (which ultimately just makes me want to re-watch ‘Best in Show’ for a 100th time). Wyndham’s bizarre obsession with wizardry at least makes them slightly more recognizable, and they seem to be in good standing with their member’s, winning the ‘Hotel Payback Survey’ two years running indicating that they are at least a good perceived value.

3.      Expect a Change in Operating Systems if you are an owner/operator, but a very slow roll-out. This should be another no-brainer. It is most likely that Wyndham will migrate their new properties to the SynXis PMS rather than MICROS’ Opera system, but don’t expect this change to happen any time soon (think Marriott-transitioning-to-Opera timeline here, or famous Beckett play).

4.      Wyndham will be more of a presence in the midscale and upper midscale space. I think it’s safe to say that Wyndham’s aspirations of having the Wingate brand be a direct competitor to Hilton’s Hampton product and Marriott’s Fairfield product was not a success, but with the new injection of La Quintas and especially the new La Quinta Del Sol brand, Wyndham now looks to be a fiercer competitor in the crowded midscale space.

5.      La Quinta will likely keep a Dallas office due to it’s massive presence in the state, as well as the South/Southwest in general. Wyndham’s Parsippany office is half the country away from Irving, Texas where LQ’s main operating hub has existed since 1999. Keeping an office in Dallas would keep a leadership presence in Texas, and near Florida the two states with the most LQ properties, respectively.

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