Skift Travel News Blog

Skift editors were struck by this chart of Wyndham’s stock price as of Friday. Investors continue to behave as if it would be a good thing for the world’s largest hotel franchisor to merge with another player. Sustained investor pressure on that score might prompt Wyndham’s management to change strategy at some point.

Shares spiked on Wednesday after the Wall Street Journal floated a rumor that Choice Hotels wanted to buy Wyndham. Analysts quickly cast doubts that any deal would materialize.

Yet Wyndham’s shares remained elevated even when analysts like those at Baird poured cold water on this rumor. Many investors seem to dare to hope that a merger or takeover by some player will happen.

So why would investors cheer an offer for Wyndham?

Baird Equity Research held meetings with Wyndham’s management team after the announcement.

“The company continues to believe the stock is trading at a ‘significant and unwarranted discount,'” wrote the Baird analysts, who agree with management’s view.

To be clear, Baird analysts like Wyndham’s management and neither call for nor predict a merger. But in a flash report, Baird analysts suggested some reasons about why Wyndham’s stock had “underperformed” before the merger rumors.

“The list of potential reasons (among others) includes: growing competition in the lower-end chain scales; recent banking/financing uncertainties that might disproportionately impact Wyndham’s development pipeline; and Wyndham’s typical customer, which has an average household income of $91K, potentially being more impacted from a disposable income perspective due to continued inflationary pressures.”

—Michael Bellisario and Jo Choy of Baird.

Wyndham’s management had retorts to every concern. They said they saw no signs of fundamental slowing in leisure travel demand or in hotel development deal flow, signings, and ability to meet announced targets. Only about two dozen deals in its pipeline appear to face any risk of headwinds because of trouble getting financing because of recent banking and interest rate turmoil.

And yet, the market continues to value Wyndham more when they believe it’s in play. That partly reflect’s an investor mentality. Analyst David Katz at Jeffries estimated this week that any takeover bid might come with a price premium of as much as 30 percent of Wyndham’s stock prices. Some investors, possibly naive, are looking for a quick gain.

Yet Wyndham has weaker earnings growth forecasts for 2024 when compared with Choice Hotels, its competitor with the most overlap in hotel profile.

To paraphrase Baird’s Michael Bellisario and Jo Choy, risks to Wyndham include:

• the sustainability of brand equity and customer loyalty when facing the larger loyalty and co-branded credit card machines of players like Marriott International
• the endurance of its popularity among developers especially as larger groups like Hilton and Hyatt increasingly develop brands in the premium economy sector that Wyndham has heavy exposure to
• exposure to a more price-conscious traveler during macroeconomic headwinds in the context of rivalry from other hotel brand companies

Wyndham’s management capably managed its way through the pandemic and have consistently met their announced targets while avoiding unpleasant surprises. Yet Wyndham’s trades at a noticeable discount to the sum of its parts, according to a few investment banks that cover the stock.

It appears that some investors believe Wyndham would be stronger as part of a larger group that could have more scale efficiencies, such as in a larger loyalty program, an ability to negotiate deeper discounts on things like furniture supplies and commissions for distribution, and back-office synergies.

If investors continue to signal with their pricing behavior frustration with Wyndham for a year or longer, pressure will only grow on Wyndham’s management to adjust their business strategy in response or possibly entertain merger talks.

Lufthansa finally has a deal. For ITA Airways that is, and according to reports.

The Frankfurt-based carrier will initially buy 40 percent of the state-owned Italian airline for $343-354 million (€320-330 million), according to a report by Italian daily Corriere Della Sera. Lufthansa would invest a further $537 million to raise its stake in ITA to up to 95 percent at a later date. A final agreement could be signed as soon as Thursday.

The deal is the culmination of years of effort by Lufthansa to buy its way into the Italian market. The German carrier bid for a stake in ITA’s predecessor Alitalia as early as 2008, only to be out maneuvered by Air France-KLM. In the latest round of dealmaking, Lufthansa was counted out last year when a Certares-led consortium of Air France-KLM and Delta Air Lines was selected as the preferred bidder. But that deal fell through and Lufthansa was back in the running by December; the group made an official offer in January. Air France-KLM has, meanwhile, shifted its interest to acquiring TAP Air Portugal.

Lufthansa Group CEO Carsten Spohr has described the group as the “natural home” for ITA. Italy is Lufthansa’s largest market outside of its home markets, which include Austria (Austrian Airlines), Germany (Lufthansa and Eurowings), and Switzerland (Swiss Air). In May, Spohr said ITA’s Rome hub could be an integral southern gateway to Africa and Latin America for the group.

Lufthansa and the Italian government will need to European Union antitrust sign off before any deal for ITA could close.

Canada’s WestJet completed its purchase of Sunwing and Sunwing Vacations on Monday, part of WestJet’s larger strategic pivot towards leisure travelers.

Sunwing will continue to operate as independent airline for the foreseeable future, but could be integrated into WestJet or its budget subsidiary Swoop in the future. Sunwing Vacations is to become part of the WestJet’s Vacations Business.

“Investing further in leisure and sun flying across Canada is a critical driver for growth,” WestJet CEO Alexis von Hoensbroech said in a statement. “It brings me great pleasure to welcome Sunwing to the group … Together, we will strategically enhance our sun and leisure offerings to bring even more affordable and accessible travel opportunities to Canadians.”

Speaking on the airline’s new strategy with Airline Weekly in April, Von Hoensbroech said: “We have decided that we need to refocus WestJet on those things that made WestJet successful in the first place. And this is everything that is centered around Western Canada, this is everything centered around leisure flying for all of Canada, for East and West, and it’s around being a low-cost brand and low-cost airline.”

Sunwing boosts WestJet’s presence on routes to leisure destinations in the Caribbean and Mexico from Canada’s big eastern cities — Montreal, Ottawa, and Toronto — according to Diio by Cirium schedules. These are markets where WestJet has retrenched during the past year as part of its pivot towards more flying in Western Canada.

In the second quarter, WestJet and Swoop together, and Sunwing each have a 22 percent share of airline seats between Canada and the Caribbean and Mexico, Diio data show. Canada’s largest carrier, Air Canada, has a 24 percent share. The merger will give WestJet a 44 percent share of this lucrative market.

The value of WestJet’s acquisition of Sunwing was not disclosed.

Whether Viva Air will ever fly again is increasingly an open question. Avianca, which wants to merge with the bankrupt budget carrier, said late Wednesday that the conditions laid out by Colombian civil aviation regulators for the deal “make Viva’s recovery impossible.”

“Several conditions that, depending on the case, (i) make Viva’s operation unviable in the medium term, sentencing it to operational and financial failure (e.g. lack of slots), (ii) are impossible to comply with, given the current reality of that company, which has already lost more than half of its aircraft (e.g. the requirement to maintain capacity on exclusive routes despite the lack of aircraft and slots), or (iii) grant unjustified benefits to third parties (e.g. requiring Avianca to pay for Satena’s IOSA certification).”

— Avianca in its response to regulator Aerocivil’s tentative approval of the merger

The Bogotá-based Star Alliance carrier added that the conditions were “unfeasible” for the deal to move forward.

Aerocivil’s conditions include divesting slots at Bogotá’s congested El Dorado airport, reviving the Viva Air brand, honoring the tickets of travelers affected by Viva’s shutdown, and maintaining a codeshare with Colombian regional airline Satena.

Avianca first acquired Viva in mid-2022, and then announced plans to merge with the Colombian discounter — but maintain it as a separate brand — last August. What’s followed is a telenovela of twists and turns including allegations of antitrust violations by Avianca, 11th hour interference from competitors, and mixed messages from Aerocivil.

What happens next is anyone’s guess. Viva closed its doors two months ago at the end of February and, as Avianca, points out, aircraft leasing companies have already begun taking back aircraft. Latam Airlines has begun offering former Viva staff jobs at its own growing Colombian subsidiary. And competitors, including Chilean discounter JetSmart and Copa Airlines-owned Wingo, have outlined plans to expand in the domestic Colombian market.

Aerocivil has said that Avianca, and other “interested parties” — including JetSmart, Latam, and Wingo — have 13 days to respond to its tentative approval. Only then, under the current timeline, could it finalize its approval and the deal close.

Yanolja Cloud has acquired Innsoft, an Oregon-based provider of hotel management software, for $8.3 million.  

Yanolja Cloud is the hotel tech arm of South Korea-based booking platform Yanolja.

The acquisition is part of an effort to expand its hospitality services in North America, the company said Thursday. 

Yanolja Cloud plans to leverage Innsoft’s resources to release a series of hospitality management solutions for the North American market as well as a new self check-in kiosk this year.

Innsoft offers various hotel management software solutions to booking platform companies including Booking.com and Expedia Group. 

Yanolja Cloud said previously that it has big plans for hotel software sales, fueled by Softbank’s $1.7 billion investment in its parent company in 2021. 

The company’s chief strategy officer last year said that it’s the company’s goal to overtake Oracle Hospitality as the global market leader in hotel operational software sales. At that time, the goal was that hoteliers would eventually be able to view Yanolja Cloud as a one-stop-shop for technology to run their operations, including bookings, distribution, and revenue management. 

The potential merger of Avianca and Viva Air took a small step forward Wednesday when the former partially accepted the conditions laid out by the Colombian government for the combination of the country’s largest and third largest airlines.

While Avianca accepted regulator Aerocivil’s passenger protection provisions, including guaranteeing refunds for all travelers affected by Viva’s closure, it asked for “clarifications and minor modifications” to other conditions. The Star Alliance carrier asked that the remaining provisions, which include giving up slots at Bogotá’s congested El Dorado airport and committing to operating certain routes, reflect the “reality of the current market and to the operating conditions currently available to Viva.”

The latter point referred to Viva’s shutdown in February and subsequent repossession of several of its planes aircraft leasing companies. Then in March, budget competitor Ultra Air also shutdown, which upped pressure on the government to bring some budget airline capacity back to the Colombian domestic market, which had fully recovered to 2019 traveler numbers by October.

Avianca and Viva have called for “quick solutions” from Aerocivil in its response.

Competitors JetSmart and Latam Airlines, however, have appealed Aerocivil’s tentative approval of the merger. Both have previously expressed interest in acquiring the assets of Viva, which would give JetSmart its first domestic operation in Colombia and Latam a larger presence.

Latam, Avianca’s main competitor in South America, said Tuesday that it is seeking additional slots at the Bogotá airport from the merger. It added that, since Viva and Ultra shutdown, it has added five aircraft to its Colombian operation and increased the number of seats by 20 percent. Latam is backed by Delta Air Lines and Qatar Airways.

JetSmart, for its part, received a local operating certificate in March to begin domestic flights in Colombia. The Chilean discounter’s owners include U.S. private equity firm Indigo Partners and American Airlines.

The responses this week are the latest in what has turned into something of a soap opera over the future of the Colombian aviation market, which is the third largest in Latin America. Avianca, in the course of its takeover, may have violated local antitrust law after it took economic control of Viva last year and then, reportedly, installed a board to oversee the business that had its interests in mind. The airlines first sought approval to merge in August, a request that Aerocivil denied in November, and then reopened in January.

The Avianca-Viva merger is separate from Avianca’s plan to merge with Brazil’s Gol to create the new Abra Group.

The U.S. Department of Justice is gathering support for its suit to block the $3.8 billion merger of JetBlue Airways and Spirit Airlines. The attorney generals of California, Maryland, New Jersey, and North Carolina signed on to the antitrust regulator’s lawsuit on Friday, the DOJ said in a statement.

Massachusetts, New York, and Washington, D.C., were already parties in the suit that the DOJ filed in the U.S. District Court for the District of Massachusetts on March 7. Principal Deputy Assistant Attorney General Doha Mekki said Friday that the additional state support would help the regulator “protect the benefits of competition in the airline industry on behalf of their residents.”

The merger of JetBlue and Spirit would create the fifth largest U.S. airline by passenger numbers, with a roughly 8 percent share of the domestic market.

Not every state opposes the combination. The attorney general of Florida backed the merger after securing a commitment from JetBlue, which would acquire Spirit, to add flights in the state, including to underserved destinations in Florida, like capital Tallahassee, and to Europe.

An out-of-court settlement between the DOJ and airlines remains a possibility. However, U.S. Attorney General Merrick Garland has said that the combined JetBlue-Spirit “still violates” antitrust law even if the former were to give up what is arguable its strongest bargaining chip, its alliance with American Airlines.

The DOJ’s suit is scheduled to go to trial in a Massachusetts courtroom on October 16.

Via, a pioneer in transit technology, announced Thursday that it has acquired Citymapper, a UK-based premier journey planning app and transit technology company. Terms of the transactions are not disclosed.

Citymapper, which has over 50 million users in over 100 cities, provides technology for local transportation planning using a combination of walking, cycling, public transit, taxis and other available options. The platform selects the best navigation route for users based on preferred transit modes, arrival time, trip duration and cost.

Via optimizes public mobility systems by leveraging technology to build efficient, equitable, and sustainable transportation networks in over 35 countries. The company raised $110 million in February 2023 with the goal of expanding its digital infrastructure. The acquisition of Citymapper follows the company’s acquisitions of Fleetonomy in 2020 and Remix in 2021.

Citymapper will become integrated with Via’s platform to build an end-to-end technology solution for transit systems. The Citymapper app will continue to be available for its users worldwide. As part of the acquisition, transit agencies and cities will benefit from a full mobility-as-a-service (“MaaS”) solution that enables transit agency riders to plan and book journeys across multiple modes of transit informed by delays, service disruptions, and route closures. 

“We have the utmost respect for the world-class product and user experience that Azmat and his team have built,” said Daniel Ramot, Via co-founder and CEO. “By bringing our teams together, we see an exciting opportunity to deliver Citymapper’s capabilities to cities and transit agencies all over the world, so that they can create the most user-friendly and relevant transit experience for their communities.”

Travelsoft, a company that offers software products focused on travel bookings, has added a third brand to its portfolio.

The Paris-based company said Monday that it acquired Spain-based Travel Compositor, a provider of travel booking engines, for an undisclosed price. 

Travel Compositor said its platforms handle €1 billion ($1.1 billion) worth of bookings annually and generate €11.5 million ($12.3 million) in revenue. The company is established in Southern Europe and is growing in Latin America and Asia.

Following the acquisition, Travelsoft said it will now transact bookings worth €5 billion ($5.3 billion) annually and generate revenue of over €35 million ($37.4 million). With 90 people joining Travelsoft via the acquisition, the company now has more than 200 employees globally. The company said it will also be able to invest over €5 million ($5.3 million) per year in research and development.

Travelsoft products are focused on helping the tourism industry sell travel packages by automating production and booking, handling data for marketing, and increasing conversion rates. The company works with 300 tour operators connected to 600 suppliers in more than 40 countries, mainly in Europe and the Americas.

Travelsoft also owns Germany-based Traffics, which it acquired in 2022, and France-based Orchestra. 

Traffics offers consulting, search, and booking systems for more than 6,000 travel agencies, as well as travel portals, airlines, hotels and travel suppliers. Orchestra said it allows travel professionals to produce, administrate, distribute, and manage travel packages on all distribution channel

Each of the three companies will maintain their names and brands.

“The need for booking platforms is growing and we see many opportunities for consolidation, so watch out for more acquisitions as we build the world’s leading travel SaaS,” said Christian Sabbagh, founder and CEO of Travelsoft, in a statement

Sabbagh remains the majority shareholder of Travelsoft, alongside the two founders of Travel Compositor and the two founders of Traffics. 

Shares in startups MOGU and Top Group Express, owned by Travel Compositor, will also join Travelsoft. 

The investors who participated in Travel Compositor’s only fundraising round in 2016 — including Caixa, Capital Risk, Inspirit (Didac Lee), Hotusa Ventures, and Venture Cap II — are fully exiting company ownership and multiplying their investment by 12 to 15 times, the company said. 

The largest flight attendants union, the Association of Flight Attendants-CWA, is backing the proposed $3.8 billion merger of JetBlue Airways and Spirit Airlines as part of a new agreement with the latter carrier.

“The JetBlue-Spirit merger adds competition to the airline industry that creates more power for workers, along with choice and comfort that benefits consumers,” AFA President Sara Nelson said Tuesday. “We urge regulators to work diligently to ensure the financial merger closing occurs in the near term so that flight attendants, other workers, and consumers can access the benefits of the merger as soon as possible.”

AFA represents the roughly 5,600 flight attendants at Spirit. JetBlue’s more than 4,800 flight attendants are represented by the Transport Workers Union, or TWU.

Labor support for the merger is not a guarantee that the U.S. Department of Justice, which handles antitrust matters, will approve the deal. Reports indicate that the regulator intends to block the JetBlue-Spirit combination, and JetBlue CEO Robin Hayes said Tuesday that the carrier was ready “to go to court” if it had too to get the deal done.

However, labor backing of a merger can make the integration process go more smoothly once the deal closes.

AFA’s support for the merger came as part of a new two-year accord with Spirit. The tentative agreement, which flight attendants still must vote on, also includes pay raises of 10-27 percent upon ratification.