Skift Take
Analysts find more reasons to doubt a merger between Choice Hotels and Wyndham than supportive arguments. Yet the mental exercise reveals interesting dynamics in the U.S. hotel market today.
Some analysts aren't buying the idea that Choice Hotels International is seriously contemplating an acquisition bid for Wyndham Hotels & Resorts, which The Wall Street Journal reported sources saying was a possibility on Tuesday.
"Somebody's just thinking out loud," wrote David Katz at Jefferies' equity research in a report.
Spokespeople for both hotel companies said they wouldn't comment on "rumors." A merger could create the largest hotel franchisor in the U.S. with brands including Comfort, Days Inn, and Super 8.
The share price of Choice Hotels dropped nearly 5 percent on Tuesday after the report. Poor investor response to the potential deal was matched by wariness and skepticism from research analysts at investment banks.
Katz estimated that a deal would require Choice Hotels to pay a 30 pe