Franchisees are fighting Choice Hotels’ attempted takeover of its biggest rival, which would create a dominant player in the budget hotel sector.
When Patrick Pacious, the chief executive of a large portfolio of hotel brands, promoted a blockbuster attempt to acquire a competitor in October, he said the proposed merger would lower costs and attract more customers for the families and small businesses that own most of the company’s locations.
“Our franchisees instantly grasped the strategic benefit this would bring to their hotels,” Mr. Pacious, who leads Choice Hotels, said on CNBC.
As the weeks have passed, however, the reaction has not been positive. Wyndham Hotels and Resorts, the target of the proposed deal, rejected the offer from Choice, which is now pursuing a hostile takeover. And in early December, an association representing the majority of hoteliers who own Choice and Wyndham-branded properties came out strongly against it.
“We all don’t know what’s driving this merger. Many of us feel it’s not needed,” said Bharat Patel, the chairman of the organization, the Asian American Hotel Owners Association. The group surveyed its 20,000 members and found that about 77 percent of respondents who own hotels under either brand or both thought a merger would hurt their business.
“I’m not against Choice or Wyndham,” said Mr. Patel, who owns two Choice hotels. “We just need robust competition in the markets.”
That opposition illustrates a growing resistance to consolidation in industries that have grown more concentrated in recent years. Even some Wall Street analysts have expressed skepticism that Choice’s proposal is a good idea.
How a Choice/Wyndham merger would stack up
Combining the two companies would create America’s largest branded hotel chain
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