Choice Is Pursing Wyndham

The DJIA fell 231 points, Nasdaq was down 161, the S&P 500 fell 47 points and the 10-year treasury yield was down .02 to 3.70%. The indexes fell more and more as the day wore on, probably something that will continue until there is movement on how to handle the debt ceiling issue. In the midst of all this, a rumor came out of nowhere, sending WH up 5% and CHH down -5%. SOND was the big loser again, down -17% while SHCO was down -7%.

The big news was a rumor with the Wall Street Journal reporting Choice Hotels is making a move to acquire Wyndham Hotels & Resorts. The WSJ reported this, WH stock surged, CHH stock fell and then they included in there that it is not clear whether WH even wants to do a deal. The article suggested CHH could go hostile if WH’s board was not interested and go right to shareholders. This is an extremely interesting situation as the cash flow would be tremendous, enough possibly to offset the high interest rates on the debt that would be needed to pull this off. Would anyone really want equity (stock) given the shaky stock market and macro concerns? Is this the right time to attempt a hostile deal? Would the government even allow one company to dominate the economy segment like the combined companies would?

Truist upped their price target on Hyatt Hotels to $149 from $145. This follows H’s Investor Day and the tours of Apple Leisure Group resorts. Truist said the bottom line is they find the H long-term runway to and beyond 2025 as highly encouraging from Legacy H and ALG. Besides raising their target price, Truist also upped adjusted EBITDA and EPS estimates.

Pebblebrook Hotel Trust gave their monthly update saying for 2Q23, overall demand and profitability trends continue to remain within expectations. Leisure demand is not as strong as the prior year but business transient and group categories are experiencing solid demand. The booking window remains short term but group room night and ADR pace is higher than it was in 2022. PEB’s urban portfolio same property total revenues for April were up 9% over the 2022 level, led by Chicago, San Francisco and Washington, DC. Renovations at Hilton San Diego Gaslamp Quarter, Viceroy Santa Monica and the Hotel Solamar conversion to Margaritaville is hurting performance. PEB’s resort portfolio revenue was down -10.5% year over year in April, mostly due to renovations at the Jekyll Isla