Do not disturb
Pillow fight in the hotel industry
Good morning, lobby loungers. This is your Stock Market Rundown for January 17th, 2024. Thanks for joining me once again. Let’s dig in:
TODAY’S TOP STORY: ROOM KEY ROULETTE
Every time you stay at an AirBNB, there’s a different list of chores. I’m already paying a cleaning fee, so why do I have to put my bedsheets in the laundry basket? Add to that the risk of a hidden camera in a floor lamp, and I really prefer to stay at a Days Inn, or Howard Johnson, or even a Super 8.
As it happens, all those brands are owned by the same company: Wyndham Hotels. Based in New Jersey, they’re the world’s largest hotel franchisor, with 9,300 locations. And they’re currently embroiled in a boardroom spat that could shake up the US discount hotel industry.
A few months ago, Wyndham’s biggest competitor, Choice Hotels, made a bid to acquire Wyndham for $8 billion. But Wyndham rejected the offer, mocking the lowball price as “underwhelming”. They’re worried any merger would burden the balance sheet with too much debt—scary stuff if recession hits.
Choice isn’t giving up their king-sized dreams that easily. Now they’re playing hardball, accusing Wyndham’s board of a “disinformation campaign”. And, they’ve gone hostile, nominating a competing slate of directors.
Look, discount hotels aren’t the Ritz. The closest you’re getting to room service is Doritos from the vending machine down the hall. But economies of scale are what profit margins are built on. And if Choice and Wyndham merged, they’d control close to a million hotel rooms.
Something to think about the next time you find yourself at an Econo Lodge in the suburbs, enjoying a “continental breakfast” of croissants that resemble hockey pucks and coffee that tastes like engine degreaser.
SO WHAT ELSE IS GOING ON?
The music industry continues to struggle: Universal Music Group is rumored to be cutting hundreds of employees. Maybe they can get a job as one of Madonna’s backup dancers on her international tour of seniors’ centers.
Soon Georgia will be exporting more than peaches, peanuts, and vidalia onions. Microsoft just announced a major deal with a South Korean company to manufacture 12 gigawatts of solar panels at a Georgia-based factory.
Top execs at US airlines must be doing a victory lap around the boardroom. Only 1% of US flights got canceled in 2023, and eight in ten flights arrived on time. Next, they can work on getting eight-year-olds sitting behind me to stop kicking the back of my seat.
The IRS is warning that a potential US government shutdown could disrupt tax filing season. Is it just me or does the US government have more shutdown scares than Elton John has farewell tours?
That’s it for today, my friends; see you bright and early tomorrow morning. Yours in capitalism, The Axe