Posted on: Tuesday, December 11, 2001

Cendant searching for further investments

By Robert Burgess
Bloomberg News Service

NEW YORK — Cendant Corp., parent company of Honolulu-based Cheap Tickets and owner of franchises Howard Johnson and Days Inn hotels, is looking to buy a high-end hotel chain and more time-share resorts to take advantage of falling values for those businesses, company executives said.

The drop in travel since the September attacks caused the worst decline in hotel demand in 34 years. Hotel companies are amending the terms of their bank loans to cope with the decline, and some may be sold. Six Continents Plc, the owner of the Inter-Continental and Holiday Inn chains, may buy Starwood Hotels & Resorts Worldwide Inc., owner of the Sheraton and Westin chains, the Sunday Telegraph and Reuters said this month.

"We're trying to figure out how to be a player in that business," said Henry Silverman, chairman and chief executive, at the company's annual investor conference in New York. "We would not mind being an owner of an upscale business as a franchisee."

New York-based Cendant has stayed away from the higher end of the hotel market because opportunities to franchise these properties — mainly in urban markets — are limited, said Steven Holmes, head of Cendant's hospitality division.

"It makes perfect sense," said Jay Leupp, an analyst at Robertson Stephens Inc. "The upscale part of the market has been hit hardest since Sept. 11 and they can probably pick up something fairly cheap."

Cendant has spent $4.75 billion on acquisitions in the past year, including travel reservation service Galileo International Inc. for $2.34 billion, discount airline ticket and hotel reservation seller Cheap Tickets and time-share resort operator Fairfield Communities Inc.

The company, which bought Fairfield for $690 million in April, wants to expand that business further to seize an opportunity to sell time-share resorts to an aging population, Silverman said.

"We believe the time-share companies are primed to be rolled up," he said. "No one else besides us is a buyer of the business."