HPT Terminates Wyndham Operations at 15 Hotels

A spokesperson for Wyndham, confirms for GlobeSt.com that Wyndham is no longer managing those 15 hotels. She says, that under the terms of Wyndham' existing agreement with Hospitality Properties, it was not economically viable for it to continue operating those facilities.

"We couldn't continue operating in a deficit," she says. "That is why the rent wasn't paid." The termination of the lease will not affect the Summerfield Suites name currently branding the 15 properties. A statement from Wyndham notes that the termination results from "a strategic business decision on the part of the subsidiary due to the extraordinarily high cost of the lease structured at the peak of the hotel market."

Hospitality has two leases with Wyndham subsidiaries: one lease includes 15 Summerfield by Wyndham hotels located in eight states; the second lease includes 12 Wyndham hotels located in eight states. On April 1, Hospitality Properties executives said that Wyndham failed to pay rent due under these leases. The monthly rents are approximately $2.1 million per month for 15 Summerfield hotels and $1.5 million a month for the 12 Wyndham hotels.

The next day, Hospitality exercised its rights to retain certain collateral security it held for the Wyndham lease obligations, including security deposits of $33 million--which were not escrowed--and capital replacement reserves totaling about $7 million--which were previously escrowed.

The 15 Summerfield hotels are now being operated by Candlewood Hotel Co. A release emphasizes that while Candlewood leases other hotels from Hospitality Properties, those leases are not affected by these developments.

Fred J. Kleisner, chairman and CEO of Wyndham International Inc., says, "We hope to reach a mutually beneficial agreement with HPT that allows the properties to continue operating under the Summerfield Suites by Wyndham and Wyndham Hotels & Resorts brand names, while relieving them of the deficit-operating leases."

Hospitality Properties officials say that its company and Wyndham are currently negotiating concerning continuation of the Summerfield brand affiliation for these 15 hotels at least for a transitional period. The new management contract between Hospitality Properties and Candlewood is terminable upon 30 days notice. Hospitality Properties adds that it has not yet decided whether the best long-term affiliation for these hotels is with the Summerfield brand and Candlewood management or with an alterative brand or manager.

Negotiations are currently underway regarding the lease for the 12 Wyndham hotels. The two companies have discussed terms for Wyndham's continued occupancy of these hotels, but no agreement has been achieved. Hospitality Properties says that it has begun discussions with a stand-by manager for these hotels. The company says that it has not yet decided whether to retain the Wyndham brand or to re-brand these 12 hotels.