Choice Hotels International, Inc. · NYSE:CHH
Choice Hotels International — Merger or Acquisition (December 2023)
35 slides from Choice Hotels International's merger presentation, Dec 12, 2023
Slide 1: Choice and Wyndham Create a Premier Hospitality Company Serving the Value Conscious Traveler
Exhibit 99.1 CHOICE AND WYNDHAM CREATE A PREMIER HOSPITALITY COMPANY SERVING THE VALUE CONSCIOUS TRAVELER December 12, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Information set forth herein includes “forward-looking statements”. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward- looking terminology, such as “expect,” “estimate,” “believe,” “anticipate,” “should,” “will,” “
Slide 3: Non-GAAP Financial Measurements and Other Definitions
Non-GAAP Financial Measurements and Other Definitions Choice evaluates its operations utilizing, among others, the others, to evaluate companies because it excludes certain and media advertising. Franchised and managed property performance metric adjusted EBITDA, which is a non-GAAP items that can v
Slide 4: Additional Information
Additional Information This communication relates to a proposal that Choice has made for a business combination transaction with Wyndham and the exchange offer which Choice, through WH Acquisition Corp., its wholly owned subsidiary, has made to Wyndham stockholders. The exchange offer is being made
Slide 5: Highly Compelling Proposed Transaction with Clear Path to Completion
Highly Compelling Proposed Transaction with Clear Path to Completion • Combination is a win for all stakeholders of both respective companies: franchisees, guests, shareholders, and associates • Stakeholder sentiment overwhelmingly positive, acknowledging benefits STRONG STRATEGIC 1 • Combined compa
Slide 6: Choice Is Committed to Completing the Proposed Transaction
SINCE MAKING ITS OFFER PUBLIC ON OCTOBER 17, CHOICE HAS: Choice Is Committed to Completing the Enhanced its offer to the Wyndham Board by offering protections of attractive reverse Proposed termination fee, ticking fee, and strong commitment to take necessary steps to obtain regulatory approvals Tra
Slide 7: Proposed Transaction Provides Compelling Value to Shareholders
Proposed Transaction Provides Compelling Value to Shareholders and Choice Has Demonstrated a Willingness to Address Wyndham’s Concerns… ATTRACTIVE VALUATION… …WITH STRONG REGULATORY COMMITMENT In the exchange offer, Choice has included $2B+ $49.50 value creation from cost synergy realization in cash
Slide 8: So Why Is this Extraordinary Step Required?
…So Why Is this Extraordinary Step Required? • Over the last eight months, Choice has made numerous overtures to Wyndham regarding a potential acquisition, but never received consistent or sincere engagement from Wyndham • During this time frame, Choice has submitted a total of 4 separate proposals,
Slide 9: Setting the Record Straight on Choice
Setting the Record Straight on Choice Domestic Number of Rooms Adj. EBITDA Growth 1 • RevPAR growth of 12% (in thousands) (in $ millions) • 6% sequential global pipeline growth 2 (99,000+ global rooms) +10% +44% 493 538 • Superior reported royalty rates 450 374 3 (~50bps higher than WH) Historical G
Slide 10: Strong Strategic Rationale
Strong Strategic Rationale CHOICE
Slide 11: Proposed Transaction Creates a Global Lodging Platform Generating Value for Franchisees
Proposed Transaction Creates a Global Lodging Platform that will Generate Significant Value to Franchisees Builds a true ecosystem, with a focus on delivering even better services to our franchisees • Unlocks untapped future partnership opportunities as the combined company builds a true ecosystem d
Slide 12: Combination Addresses Key Franchisee Concerns
Combination Addresses Key Franchisee Concerns: Operating Costs, Reliance on OTAs, and Continual Investment in Our Proprietary Technology… FRANCHISEE OPERATING COST UNDER PRESSURE PROVEN PATH TO FURTHER IMPROVE PROFITABILITY THROUGH COMBINATION 82% of hotels are experiencing Case Study 1 staffing sho
Slide 13: Creating a Leading Platform for Value Conscious Travelers
...By Creating a Leading Platform for Value Conscious Travelers… Annual ~$150M in run rate cost driven synergies with significant incremental opportunities to grow revenue through expanded partnership ecosystem UNTAPPED FUTURE CHOICE + WYNDHAM EXISTING PLATFORM BUSINESS DAY 1 PARTNERSHIPS Cruise Lea
Slide 14: Rewards Program Well Positioned to Compete with Marriott and Hilton
…And a Rewards Program Well Positioned to Compete with Marriott and Hilton GUESTS CHOOSE THE PLATFORM THAT REWARDS MEMBERS Rewards members; millions The combined rewards #1 and #2 Ranked Hotel program would drive more 192 Rewards Programs for direct bookings to our 2023-2024 by U.S. News franchisees
Slide 15: Combined Company Better Positioned to Compete and Create Long-term Value
The Combined Company Would Be Even Better Positioned to Compete and Create Long-term Value 16,360 1,430,000+ ~$25B $1.4B Hotels Globally Rooms Globally Gross Rooms Revenue Annual EBITDA Upper Upscale to $1.2B ~100% 97% Marketing & Economy Franchised Select Service Reservations Spend Top 3 ~150M ~300
Slide 16: Compelling Financial Proposal
Compelling Financial Proposal
Slide 17: Choice Has a Strong Track Record of Delivering Growth
Choice has a Strong Track Record of Delivering Growth with Clear Signs of Continued Momentum… STRONG GROWTH MOMENTUM CONTINUES FOCUSED REVENUE INTENSE STRATEGY Dedicated to attracting and retaining higher revenue-generating hotels vs. Growth YoY — 16% 10% -35% 67% 19% 12% maximizing number of units
Slide 18: Choice's Shares Trading at Attractive Levels
…and Choice’s Shares Are Currently Trading at Attractive Levels Making Stock Consideration Highly Compelling for Wyndham Shareholders 3 “PRE-RELEASE” ANALYST PRICE TARGETS WELL ABOVE SHARE PRICE ATTRACTIVE VALUATION RELATIVE TO HISTORICAL AVERAGES NTM Adj. EBITDA Multiple “Pre-Release” Date 16.1x 15
Slide 19: Compelling Value for Wyndham Shareholders While Eliminating Execution Risk
The Proposed Transaction Provides Wyndham Shareholders with Compelling Value, While Eliminating Stand-Alone Execution Risk 2 DE-RISKS EXECUTION OF WYNDHAM’S GROWTH STORY… …OFFERING A FORWARD MULTIPLE WYNDHAM HAS NEVER ACHIEVED $ / Share NTM Adj. EBITDA Multiple Assumes perfect execution on the Choic
Slide 20: Wyndham Shareholders Would Realize Day-One Value and Participate in Future Value Creation
With Meaningful Stock Consideration, Wyndham Shareholders Would Realize Substantial Day-One Value and Participate in Future Value Creation IMMEDIATE VALUE CREATION FOR WYNDHAM SHAREHOLDERS $ / Share Participation in upside of approximately $150M of This total does not Wyndham annual run-rate synergi
Slide 21: Significant Cash Flow to Support Growth Capex and Debt Repayment
Combination of Choice and Wyndham is Expected to Generate Significant Cash Flow Available to Support Growth Capex and Facilitate Rapid Debt Repayment 1 ROBUST EBITDA GENERATION TO SUPPORT CASH FLOW 2024 Adj. EBITDA | $ in millions ~5.25x ~3.0x ~3-4x ~2 yrs Net Debt to Adj. Year One Interest Long-Ter
Slide 22: Leadership Team with Proven History of Value Creating M&A and Integration
Leadership Team with a Proven History of Value Creating M&A and Integration Outperformance Recent integration of nearly 600 Radisson Americas hotels offers an integration playbook with a proven history of creating value for shareholders Proven Playbook Track record extends Demonstrated EBITDA Enabli
Slide 23: Choice is Committed to the Transaction
Choice is Committed to the Transaction Comfort Inn & Suites, Boise, ID
Slide 24: Our Commitment
OUR COMMITMENT To complete this transaction within the standard one-year timeframe with no material disruption to Choice or Wyndham’s businesses 24
Slide 25: Focused on Obtaining Regulatory Approval
Focused on Obtaining Regulatory Approval • Choice strongly believes that the transaction is pro-competitive and will benefit all stakeholders, including Wyndham and Choice’s franchisees, shareholders, associates, and guests • Choice commenced the process to obtain regulatory approval under the Hart-
Slide 26: Franchisees Control Competitive Decision Making and Local Market Pricing
Franchisees Control Competitive Decision Making and Local Market Pricing… Franchisees control pricing, fostering a Decision-making will always competitive landscape by allowing diverse reside with the franchisees pricing strategies, encouraging ingenuity, and enabling franchisees to tailor offerings
Slide 27: Maintain Optionality as the Array of Options Keeps Growing
…and Maintain Optionality as the Array of Options Keeps Growing …HOSTS MANY CURRENT PLAYERS AND CONTINUES TO THE EVER-EXPANDING GLOBAL LODGING MARKET… (1) WELCOME NEW ENTRANTS GLOBAL ROOMS | Rooms in thousands 6,000 (Hilton) (IHG) Project MidX (Sonesta) (Extended Stay America) (Marriott) (Accor) (Hy
Slide 28: Significant Regulatory Protections to Enhance Transaction Certainty
Choice is Willing to Provide Wyndham Shareholders with Significant Regulatory Protections to Enhance Transaction Certainty While Choice fully intends to complete the transaction within 12 months, Choice’s proposal includes: • Monthly ticking fee of $38 million commencing on the first anniversary fro
Slide 29: Choice + Wyndham: Better Together
Choice + Wyndham: Better Together
Slide 30: Choice Franchisees Support Our Proposal
Choice Franchisees Support Our Proposal “I own three Country Inn & “As an owner of Sleep Inn and Comfort brands, “As a multi-unit hotel owner / Suites and one Comfort Inn we rely on Choice for their best-in-class operator, it’s critical that I property. The transition of franchisee tools, support, a
Slide 31: Delivering Value for Every Stakeholder
Delivering Value for Every Stakeholder Franchisees Guests Shareholders Increased More options across stay Immediate value creation investment in the occasions and price and accelerated tools to lower costs points, with an enhanced opportunities for sustained and grow revenue rewards program long-ter
Slide 32: Enhanced Ability to Expand Within a Massive Total Addressable Market
Combined Company Has An Enhanced Ability to Expand Within a Massive Total Addressable Market Choice’s expanded ecosystem and network is better positioned to fulfill long term lodging growth drivers SUPPORTED BY STRONG MACRO AND INDUSTRY TRENDS LARGE TOTAL ADDRESSABLE MARKET… Retirements — 1 in every
Slide 33: Choice Is Already a Leader in the Hospitality Space
Choice is Already a Leader in the Hospitality Space with A Track Record of Delivering Consistent, Double-Digit Earnings Growth PREMIER PLATFORM LEADING BRANDS >625,000 >99,000 ~98% Rooms Globally Rooms in the Voluntary Pipeline Retention Rate ~100% ~63M 1 Franchised Choice Privileges Rewards Members
Slide 34: Combined Company Would Realize Faster Growth and Significant Synergies
Combined Company Would Realize Faster Growth and Significant Synergies 1 COMBINED COMPANY IS PROJECTED TO GROW RAPIDLY … Adjusted EBITDA | $ in millions 2 ~$150 ~$1,430-1,440 Projected long-term growth of ~$690-700 7-10% on an annualized basis Achieve $150mm of run-rate cost synergies within 24 mont
Slide 35: Committed to Completing this Transaction and Creating Value For All Stakeholders
Committed to Completing this Transaction and Creating Value For All Stakeholders COMBINATION IS • Wyndham shareholders to participate in +$2B of value creation expected from $150M run rate synergies A WIN FOR ALL STAKEHOLDERS • Franchisees benefit from increased investment in tools to lower costs an
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