Starwood Hotels and Resorts Worldwide remains atop the headlines and stock exchange advancers on Wednesday with rumors of a potential sale moving from three Chinese companies now to Hyatt Hotels Corp. in advanced discussion to buy the company. At the same time, on earnings day, Starwood announced it is spinning off its timeshare unit, Vistana Signature Experiences, to Miami-based Interval Leisure Group in a transaction valued at US$1.5 billion with Starwood shareholders retaining a 55% stake in the new company.
As the bigger sale rumors continue to heat up, CNBC has reported a deal between Starwood and Hyatt could come as soon as next week. If the deal happens, Hyatt would suddenly have more than 500,000 rooms and start competing in the same league with giants Hilton and Marriott.
But for today, the sale of the timeshare business is front and center with analyst David Loeb of R.W. Baird reacting positively because the now hotel-only, asset light business should be more attractive to any potential acquirer. The deal is expected to close in the second quarter of 2016 with a US$132 million cash distribution made to Starwood before the close. The companies will enter into an 80-year license agreement, which includes an annual base royalty fee of US$30 million plus 2% of vacation ownership interest sales.
Last but not least, Starwood announced third-quarter results on Wednesday that were in line with expectations. Earnings were 74 cents per share on revenue of US$1.43 billion. Systemwide RevPAR for same-store hotels increased 5.4% year-over-year. Systemwide RevPAR for same-store hotels in North America increased 5.3% in constant dollars.