In August, Wyndham Worldwide announced plans to spin off its hotel business from its ownership business to allow the two separate companies to focus on their strengths and find more financing opportunities. The company also announced it will explore “strategic alternatives” for the European vacation rental businesses, which CEO Steve Holmes said “aren’t a natural fit under either the hotel or timeshare umbrellas.”
In the vacation rental industry, the announcement triggered interest from buyers for the European vacation rental brands, but it also led to questions. Most notably, why would Wyndham, a company that is the world leader in vacation rentals—a sector of travel that is currently red hot—want to fully exit its market-leading position? And will Wyndham also be seeking a buyer for its North American vacation rental businesses?
Last week’s earnings call did little to answer these questions as the company pointed to solid performance by its vacation rental brands with reported net revenues generated from rental transactions and related services increasing $23 million.
Within WDN, vacation rentals grew 8%, transaction volume increased 4% including two points from tuck-in acquisitions, and average price per rental rose 3% partly due to currency movements.
Holmes did offer an update on Wyndham’s progress in finding a home for its European vacation rental businesses.
“As part of the separation, we announced that we will explore strategic alternatives for our European Vacation Rentals organization,” said Holmes. “This business operates leading brands in the European Vacation rental space, generates about $750 million of revenue at attractive margins, and are somewhat underappreciated by a largely U.S. investor base. Since our announcement, we received considerable interest in this business from potential buyers and we are responding to that interest.”
Holmes added, “As a result, we are optimistic about this process. With that being said, you should expect that it will take several months before we have something more definitive to say about the outcome of these efforts.”
Timing for Selling EU Vacation Rental Business
“[The European vacation rental] businesses are fantastic businesses and they have great management over there. So the amount of interest in those businesses is reflective of how strong the businesses are,” said Holmes. “So we’re very proud of those businesses.”
Homes continued, “As to timing a normal M&A process like this, which we kicked off once we saw the level of interest that existed, would probably take us to completing it before the spin. That is our hope. The hope is not being a good plan, of course, but we would hope to be able to get it done, it all depends on how quickly things move. But we have we’ve done everything we can to keep the process running slightly ahead of the spin, and we’ve got a great team working on it. So I’m sorry I can’t give you any more detail but M&A deals are always a little difficult to put a specific timeframe to.”