Parsippany, New Jersey-based Wyndham Worldwide Corporation (WYN) announced that it will acquire James Villa Holidays, a vacation rental specialist in the U.K., for $77 million. The purchase will be made through Wyndham’s Exchange and Rentals business unit. The company will buy James Villa from the private equity firm Vespa Capital.
James Villa’s portfolio of 2,300 villas in more than 50 destinations in U.K. will complement Wyndham’s existing network of 85,000 vacation properties in approximately 100 countries, most of which are in Europe. The company has acquired about 30 European rental brands since 2000.
Management believes that the acquisition will strengthen and expand Wyndham’s presence in the Mediterranean villa market, as James Villa has a strong hold in the area. Moreover, the acquisition will help the company improve its customers’ holiday experience as James Villa is the leading specialist villa tour operator in the U.K. It also broadens Wyndham’s scope of vacation rental programs in France, Spain, Portugal, Italy, Greece, Cyprus and Malta.
We view the deal as strategically positive, given that it will expand vacation rental business in the Mediterranean market. Moreover, the deal is also in sync with the company’s strategy to grow organically by acquiring opportunistic fee-for-service based business as it reduces the capital requirement, resulting in a higher free cash flow. Going forward, we expect Wyndham to benefit from its repositioning as a more fee-for-service based business.
In September 2010, Wyndham purchased ResortQuest, a vacation rental firm in the U.S., for $56 million. The acquisition was made through Wyndham’s Exchange and Rentals business unit and expanded the company’s presence in the $10 billion U.S. serviced vacation rental market, in which it previously had an insignificant share.
Wyndham’s primary competitors include Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR).
Wyndham operates in lodging, vacation exchange and rentals, as well as vacation ownership segments of the hospitality industry. The company has built a significant presence in most of the premier U.S. and international markets.
STARWOOD HOTELS (HOT): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
Zacks Investment Research
