Wyndham & Planet Hollywood Team Up - Analyst Blog

Wyndham Worldwide Corporation (WYN) subsidiary Wyndham Hotel Group announced recently that it has entered into a license agreement with Planet Hollywood Resorts International LLC.

As per the agreement, Wyndham will franchise the Planet Hollywood Hotels brand and provide management services globally. However, Wyndham will have no right on brand’s trademarks and intellectual property; the rights will be retained to Planet Hollywood only. The Planet Hollywood brand was founded in 1989 and it is renowned as an entertainment-based brand.

Management anticipates that the recent addition of this brand to its portfolio will enable it to broaden its customer base.

We remain positive on the deal as it is in sync with Wyndham’s strategy to acquire brands and expand through its franchise model, given that it reduces the company’s capital intensity. Going forward, we expect Wyndham to benefit from its repositioning as a more fee-for-service based business.

In March 2010, Wyndham Hotel Group signed four franchise agreements in India with Ramada brand, bringing the total number of hotels that the company has opened or under development in India to 14.

Wyndham’s primary competitors in the hotel industry include Starwood Hotels & Resorts Worldwide Inc. (HOT) and Home Inns & Hotels Management Inc. (HMIN).

Wyndham currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.

Wyndham is a noted hospitality company engaged in offering individual consumers and business customers a diverse array of hospitality products and services across various accommodation alternatives and price ranges through its portfolio of global brands. Wyndham Hotel Group encompasses approximately 7,200 hotels and 607,000 hotel rooms worldwide.

The company operates in the lodging, vacation exchange and rentals, and vacation ownership segments of the hospitality industry. The company has built a significant presence in most of the premier markets in the U.S. and throughout the rest of the world as well.