WYNDHAM HOTELS & RESORTS
ANNOUNCES AGREEMENT WITH COREPOINT LODGING
PARSIPPANY, N.J., October 23, 2019 — Wyndham Hotels & Resorts (NYSE: WH) today announced that it has entered into an agreement with CorePoint Lodging Inc. (NYSE: CPLG) to collaborate on a number of new technology and operating initiatives, support CorePoint’s efforts to enhance its portfolio and resolve open issues between the two companies.
As part of the agreement, Wyndham will make payments of approximately $20 million to CorePoint, primarily over the next year, and CorePoint will commit to maintain cash operating reserves of approximately $20 million. Wyndham also will commit to developing enhanced automated revenue management, sales and reservations technology. CorePoint agreed to pay Wyndham for the substantiated costs of the implementation of the Sabre SynXis property management system for CorePoint’s properties. The agreement does not change the underlying fee structures set forth in the management and franchise agreements between the parties.
In late July, CorePoint had alleged that Wyndham had failed to meet certain requirements under the hotel management agreements pursuant to which Wyndham currently manages La Quinta-branded hotel properties owned by CorePoint. Wyndham denies the allegations made by CorePoint, and the agreement provides a mutual release of other claims made by both parties under existing agreements and reflects their continuing long-term relationship.
The two companies also agreed to finalize outstanding tax matters related to Wyndham’s May 2018 acquisition of La Quinta Holdings Inc. Pursuant to the acquisition agreement, Wyndham had temporarily retained $240 million of cash purchase price in order to make required payments to tax authorities, with the remainder to be released to CorePoint. As of June 30, 2019, Wyndham had provided $223 million to tax authorities, and Wyndham will release the remaining $17 million to CorePoint in November.
As a result of the agreement with CorePoint, Wyndham will record charges of approximately $26 million ($21 million after-tax) in the third quarter. In particular, Wyndham will record a $6 million expense related to the resolution of the tax matters and a $20 million contra-revenue related to the payments that Wyndham is providing to CorePoint. Wyndham considers these items to be transaction-related, so they will not impact Wyndham’s adjusted EBITDA, adjusted net income or adjusted earnings per share.