Wyndham Worldwide Corporation's
) vacation rental business recently took over the Smoky Mountain
Property Management business. The financial terms of the deal were
not disclosed. The deal affirms management's intent to solidify its
presence in the domestic rental business.
The Eastern Tennessee-based Smoky Mountain Property Management
Group is known for its rental offerings at more than 400 upscale
cabins and condominiums across the mountain destinations of
Gatlinburg, Pigeon Forge, and Sevierville. Names like the Legacy
Mountain Resort, Majestic Mountain Vacations, Sherwood Forest
Resort, Sugar Maple Cabins, The Preserve Resort and Gatlinburg
Cabins Online are some of the names in its portfolio.
The property is adjacent to the main entrance of the Great Smoky
Mountains National Park, one of America's busiest national parks
which caters to around nine million visitors annually. Hence, the
property's compelling geographic location made it a lucrative
The deal is in sync with Wyndham's strategy to grow through
geographical diversification in the domestic arena. Wyndham
Vacation Rentals, a segment of the company providing mainly rental
accommodations, currently offers more than 95,000 properties
including over 7,000 units in North America. The destinations which
so far included eminent ski, beach, golf and tennis resorts, will
now have high-end cabins in one of the most preferred mountain
Wyndham is a dominant player in the vacation rental business and
seeks further inorganic growth. This fee-for-service business
reduces the capital requirement, resulting in a higher free cash
flow. Wyndham believes that these acquisitions will facilitate its
expansion in around $10 billion U.S. serviced vacation rental
market. Apart from the U.S., the U.K. remains another bright spot
for Wyndham's vacation properties.
As a result, Parsippany, NJ-based Wyndham has been on an
acquisition spree over the last several quarters in its rental
segment. In August 2011, the company acquired The Resort Company
LLC., which has rental offerings across several mountain
destinations in Colorado. In February 2010, it acquired a European
vacation rental business, Hoseasons Holdings Ltd.
In September 2010, Wyndham purchased ResortQuest, a vacation
rental firm in the U.S. On December 1, 2010, Wyndham bought James
Villa Holidays, a vacation rental specialist in the U.K. The
company has acquired about 30 European rental brands since
We view the recent deal as strategically positive, given that it
will expand the company's vacation rental business in the domestic
market where its market share is comparatively low. Going forward,
we expect Wyndham to benefit from its repositioning as a more
fee-for-service based business.
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WYNDHAM WORLDWD (WYN): Free Stock Analysis
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Wyndham which competes with the likes of
Marriott International Inc.
), currently carries a Zacks #3 Rank that translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.