The Corinthia Group of Companies has signed a groundbreaking hotel management agreement with the Wyndham Hotel Group, the world's largest lodging franchiser.
The agreement will see the pair jointly managing a large number of hotels under the Wyndham and Ramada brands in the EMEA (Europe, the Middle East and Africa) region.
The deal will also see 15 Corinthia hotels located across Europe, Africa and the Mediterranean being re-branded as Ramada Plaza and Wyndham Hotels, while certain Corinthia-branded properties will become affiliated with a new hotel product to be known as the Wyndham Grand Collection.
As part of the agreement, Corinthia Hotels International (CHI) – a Corinthia Group subsidiary – will be supplying hotel management services to the brands' hotels across the EMEA region. And while the exact number of hotels to be managed by CHI remains undisclosed, the number is expected to stretch into the three-digit region.
Contacted by The Malta Independent yesterday, a Corinthia spokesperson explained that while the exact number of hotels to be put under CHI management is still difficult to quantify, the deal will open up "considerable opportunities" for the group.
It was also confirmed that most of the Corinthia's hotel holdings will form part of the deal, including most of those located in Malta. Such hotels will be renamed to reflect the partnership and while the name itself is still to be decided upon and coined, the “Corinthia” label will still be incorporated into the title.
The agreement will see the companies consolidating their support functions, such as sales and marketing, with a view to driving business toward the jointly-managed hotels in the region, where enormous potential could be developed through Wyndham's three-million member RCI Global Vacation Network and Wyndham Vacation Ownership operations.
Although the exact financial terms of the agreement have not been disclosed, the deal is expected to be finalised within the next 60 days after regulatory approvals are received. The Wyndham Group is listed on the New York Stock Exchange, while Corinthia subsidiary International Hotel Investments, which is also involved in the deal, is listed on the Malta Stock Exchange.
In addition to shareholder approvals, the deal will also have to be scrutinised by the European Commission Competition Directorate in terms of concentration between undertakings.
A company announcement posted on the Malta Stock Exchange late Thursday evening outlined the financial dynamics of the deal.
The Wyndham Hotel Group International (WHGI) will be acquiring a 30 per cent shareholding in CHI from the Corinthia Palace Hotel Company Limited (CPHCL). Payment for the 30 per cent stake will be in the form of a cash capital injection into CHI, which will be used to fund further growth. IHI, meanwhile, will purchase CPHCL's remaining CHI stake, in return for 15 million IHI shares, and will effectively increase its CHI shareholding to 70 per cent.
The agreement also provides for CHI to enter into licensing agreements with CPHCL for management services in the EMEA, as well as with WHGI for management services for the Wyndham Grand, Wyndham and Ramada Plaza brands in the EMEA region.
The agreement was signed earlier this week at the Corinthia's headquarters in Malta between Wyndham Hotel Group president and chief executive officer Steven Rudnitsky and Corinthia Group chairman and chief executive Alfred Pisani.
"This relationship will expand our portfolio in the EMEA region and establish our management business, which will become an integral component of our expansion strategy," commented Mr Rudnitsky. "Our goal is to deliver more bookings to existing Corinthia properties by integrating them into our sales, marketing and distribution systems."
Mr Pisani, meanwhile, said his company will explore opportunities to develop Ramada, Wyndham and Wyndham Grand Collection hotels throughout the region. "Our association with Wyndham Hotel Group will expand our profile and provide a much broader base of potential customers through their worldwide distribution system. Our knowledge of the markets and experience in developing and managing upscale hotels in the region will accelerate Wyndham Hotel Group's ability to expand its portfolio."
The American Wyndham Group centres its activities around the lodging business, the franchising of hotels and the provision of property management services to owners of its brands. Through acquisitions of franchising systems over the last 15 years, the group has become the world's largest lodging franchiser in terms of the number of franchised hotels. Today, the group has more than 6,400 franchised and managed hotels representing over 535,000 rooms on six continents.