Wyndham Case

COMPANY OVERVIEW

Wyndham International was founded in 1981 by builder Trammel Crow, president of the Trammel Crow Company (TCC), to manage and franchise the Wyndham brand, which opened its first hotel the following year in Dallas, Texas. In 1997 Wyndham was acquired by Patriot American Hospitality, Inc., which was structured as a paired-share real estate investment trust (REIT) allowing it certain tax breaks so long as they received a certain percentage of income from rent moneys. The partnership between Patriot American Hospitality and Wyndham, named Wyndham International upon the acquisition, allowed Patriot American to operate its hotels through Wyndham while both received tax breaks not enjoyed by other large hotel chains. This partnership resulted in a large growth of Patriot American which, at its height, owned 472 lodging properties. However, in 1999 Congress changed the benefits of REITs, eventually forcing Patriot American to drop its REIT status and convert to a C-corporation. In 1999 Wyndham International Corporation was created and all assets which could not be converted to the Wyndham flag were sold. Resources were then focused on running premiere brand fullservice hotels and resorts. The executive team was restructured at this point, bringing in those with an operations based knowledge of the industry to focus on Wyndham’s new goal of operating its three branded properties: Wyndham Hotels & Resorts, Wyndham Luxury Resorts, and Summerfield Suites by Wyndham. Due to their interesting transition from a REIT to a full service hotel chain, Wyndham owned and operated a large percentage of its properties, something not seen very often in the large lodging industry. The model more frequently seen involves at least three-tiers, the owner of the real-estate itself, the hotel brand such as Marriott or Hilton, and a management company contracted to actually run the hotel. Wyndham’s simple structure holds many advantages over traditional lodging brands, including...