Hotel Conglomerates

News of Cendant’s breakup into four separate units brings back memories of the mid-eighties which saw the formation of Allegis Corporation. The man behind that (failed) idea was Dick Ferris who as CEO of United spearheaded the acquisition of what was to have been a vertically integrated conglomerate. The group included stalwart names such as Hertz, Hilton International, Westin Hotels and, of course, United Airlines. But Ferris fell on the proverbial conquering sword barely a year into its existence when a combination of high labor costs, lack of anticipated synergies stemming from any of the units and general economic malaise resulted in his ouster.

The story of the man leading the charge for Cendant , Henry Silverman, could not be more different. Not only is he firmly in control of the reins but virtually every company (ebookers.com being the notable exception) within the erstwhile conglomerate remains superbly healthy. Silverman’s motivation for the break-up is largely due to the traditional undervaluation Wall Street accords conglomerates. Despite being one of the most profitable and evidently well-run public companies in the US, the stock languished for years. Following the demerger, the four businesses are to be floated in IPOs in the near term with Silverman slated to lead the real estate franchise that is expected to be given the synthetic name, Realogy for about a year. The stocks of some of the soon to be public companies surely look like a good bet for the long run such as the, as yet, unnamed travel unit and the hotel group, Wyndham Worldwide.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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