STAMFORD, CT—The lodging sector could be next to see a king-sized deal, as media reports say Hyatt Hotels Corp. and Starwood Hotels & Resorts Worldwide are in advanced talks about a merger. Additionally, the Wall Street Journal reported that at least three Chinese firms are vying to acquire Starwood, which announced this past April that it had launched a strategic review process including a possible sale.

Regardless of whether a sale of the company occurs anytime soon, though, the hoteliers' shareholders will see a payday in the near term. Starwood announced Wednesday that it would sell its timeshare business, Vistana Signature Experiences, to Interval Leisure Group for $1.5 billion.

The spin-off is taking the form of a Reverse Morris Trust transaction in which a wholly owned subsidiary of ILG will acquire and merge into Vistana. It's expected to close in the second quarter of 2016. ILG's management team, including chairman and CEO Craig Nash, will retain their current positions in the merged company.

Citing sources said to be familiar with the transaction, CNBC reported Wednesday that Hyatt and Starwood have been discussing a possible cash-and-stock transaction for the past few weeks. A deal could be announced within the next week or two, according to CNBC.

The scenario reported by CNBC would have Hyatt acquiring its larger competitor, with the combined company led by Hyatt management. The result would be “a sprawling owner of upscale lodging properties the world over,” according to CNBC.

The possible sale to Hyatt, also reported by Bloomberg Business, follows Tuesday's WSJ report that HNA Group Co., hotelier Jin Jiang International (Holdings) Co. and sovereign wealth fund China Investment Corp. each have presented separate proposals to the Chinese government for approval to proceed with an offer for Starwood. In what could be the largest Chinese takeover of a US company to date, the Chinese government may end up approving only one of the three companies to make a Starwood bid, sources told the WSJ. The idea is to prevent a bidding war among the three companies.