February 29, 2024

Warren to FTC: Choice Hotels’ Hostile Takeover Attempt of Wyndham Would Raise Prices for Customers, Reduce Competition

Warren Urges FTC to Closely Scrutinize Takeover Attempt Under Antitrust Law

“If the hostile takeover of Wyndham succeeds, Choice would own 46 different hotel brands — creating a monopoly that can hide in plain sight.”

Text of Letter (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass.) sent a letter to Lina Khan, Chair of the Federal Trade Commission (FTC), expressing serious concerns about Choice Hotels’ (Choice) attempted hostile takeover of Wyndham Hotels & Resorts (Wyndham), which would reduce competition and create the largest branded hotel chain in the country, driving up prices for consumers and harming entrepreneur franchisees. Senator Warren urged the FTC to closely scrutinize Choice’s hostile takeover of Wyndham and oppose the deal if it violates antitrust law. 

“The merger of Choice and Wyndham would further consolidate the market and create the largest branded hotel chain in the United States. The increased market dominance would be most acutely felt in the economy and midscale markets. If Choice’s hostile takeover of Wyndham is successful… the combined company would control 57 percent of the national market for economy hotel franchises…. (T)he combined company would amass an even larger share of the national midscale hotel franchise market — a staggering 67 percent,” wrote Senator Warren. 

Choice and Wyndham each boast a large portfolio of popular hotel chains across the United States, and each control close to 500,000 hotel rooms nationwide. Choice owns 22 hotel brands, including Radisson, Comfort, and Quality. Wyndham owns 24 hotel brands, including Ramada, Days Inn, and Super 8. Choice and Wyndham are two of the six companies—along with Marriott, Hilton, InterContinental, and Best Western—that currently control approximately 80 percent of all branded hotel rooms, as a result of years of consolidation in the hotel industry.

Reduced competition in the hotel industry would increase costs for customers and franchisees. Nearly all of Choice and Wyndham hotels operate as franchises, owned and run by entrepreneur franchisees who usually own a few hotels. When there is robust competition in the hotel market, brands must compete against each other for franchisees’ consideration, who may make their decision based on the fees and other costs that brands charge. If Choice’s hostile takeover succeeds, the resulting consolidation would mean less cost competition from brands for franchisees and thinner margins for these franchisees – forcing customers to bear the brunt through higher prices. 

“Choice could disguise their concentration of power behind their new 46-brand portfolio, giving customers the illusion of choice. Customers may assume that each of these brands is competing for their hard-earned dollars by price and quality, when, in reality, they are all owned by the same company. A rate increase within the midscale and economy markets would necessarily lead to disproportionate harm to lower-income and younger customers, many of whom already have limited choices for hotel and travel options that fit their budget,” continued Senator Warren. 

FTC is reportedly already investigating this merger, which is consistent with the agency’s focus on protecting consumers, workers, and franchisees. FTC is currently examining the franchise business model across industries, and also developing a rule to ban employers from imposing noncompete provisions on their workers which would potentially ban franchisors from doing the same to their franchisees. In addition, the Biden administration has launched a whole-of-government effort to fight junk fees, in which FTC has been an active participant. FTC’s proposed rule to ban junk fees stands to significantly benefit hospitality industry customers, who currently may end up spending hundreds of extra dollars per stay on resort fees.

“If Wyndham is acquired by Choice, it will significantly increase concentration in a market that is already highly concentrated. The takeover has the potential to further entrench the largest companies’ dominant positions in the hotel market. I am encouraged by FTC’s examination of the transaction thus far and the Commission’s broader efforts to fight consolidation and protect customers, workers, and franchisees. In line with these efforts, FTC should carefully scrutinize Choice’s attempted takeover of Wyndham and block the takeover if it violates antitrust laws,” concluded Senator Warren. 

Senator Warren has led the fight to ensure antitrust laws are enforced across the economy to prevent mergers that will reduce competition, jeopardize fair markets, and harm consumers: 

  • In February 2024, Senator Warren led 12 lawmakers in a letter calling on regulators to block Capital One’s plan to acquire Discover Financial Services to protect consumers and financial stability. 
  • In December 2023, Senators Warren, Mazie Hirono (D-Hawaii), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), and Representatives Summer Lee (D-Pa.) and Alexandria Ocasio-Cortez (D-N.Y.) sent a letter to FTC, asking it to oppose the proposed merger of major grocery store chains Kroger and Albertsons, which would harm consumers, workers, and the grocery industry. 
  • In November 2023, Senator Warren sent a letter to Chair Khan and FTC Commissioners Alvaro Bedoya and Rebecca Slaughter, expressing disappointment with the FTC’s proposed consent order allowing pharmaceutical giant Amgen to move forward with its acquisition of Horizon Therapeutics and urging the FTC to reject the use of behavioral and structural remedies going forward.
  • In October 2023, Senator Warren and Representative Pramila Jayapal (D-Wash.) sent a letter to the DOJ Antitrust Division and FTC, urging them to carefully scrutinize UnitedHealth Group’s pending acquisition of Amedisys. The lawmakers also urged the agencies to scrutinize similar deals, reject behavioral or structural remedies, and oppose any health care acquisition that would threaten competition, increase prices, and reduce quality of care. 
  • In September 2023, Senator Warren (D-Mass.) and Representatives John Garamendi (D-Calif.) and Mark Pocan (D-Wis.), sent a follow up letter to the Department of Defense (DoD) raising concerns about the approval of the of the L3Harris-Aerojet merger, asking DoD about enforcement and oversight mechanisms to maintain competition, and reiterating the need for transparency as DoD assesses the national security risks of proposed mergers and acquisitions. 
  • In September 2023, Senator Warren, Representative Becca Balint (D-Vt.), and a bicameral group of lawmakers, submitted a public comment to the FTC and DOJ in support of the agencies’ proposed merger guidelines.
  • In June 2023, Senator Warren and Representative Katie Porter (D-Calif.) led colleagues in a letter to the Department of Transportation, urging it to resist JetBlue’s misleading tactics to rig the Department’s evaluation of the airline’s application to consolidate with Spirit Airlines and urging it to block the merger. 
  • In June 2023, Senators Warren and Ron Wyden (D-Ore.) sent a letter to the DOJ, raising serious concerns about the deal announced between the PGA Tour and the Saudi Arabian Public Investment Fund (PIF) to consolidate global golf-related business, including LIV Golf (LIV). The senators called on DOJ's Antitrust Division to closely scrutinize the PGA-LIV deal and oppose it if it would reduce competition in violation of antitrust law. 
  • In May 2023, Senator Warren sent a letter to the Federal Communications Commission (FCC), urging the Commission to continue its thorough review of Standard General’s proposed acquisition of Tegna regardless of pressure by supporters of the deal, and to use its statutory authority to block this $5.4 billion deal.
  • In March 2023, Senator Warren sent a letter to the FTC, calling on it to carefully scrutinize CVS Health Corp’s pending acquisition of Oak Street Health, Inc., and oppose any health care acquisition that would threaten competition, increase prices, and reduce the quality of care. 
  • In March 2023, Senator Warren sent a letter to the Surface Transportation Board, urging it to block the proposed merger between Canadian Pacific and Kansas City Southern, which would combine the sixth- and seventh-largest U.S. railroads by revenue. The letter followed the derailment and massive chemical spill in East Palestine, Ohio and highlighted the risks from years of cost-cutting and deregulation of the nations’ railways.
  • In January 2023, Senator Warren sent a letter to the FTC urging it to oppose L3Harris Technologies merging with Aerojet Rocketdyne.
  • In January 2023, Senator Warren sent a letter to the FTC, urging the agency to closely scrutinize two pharmaceutical mergers: Amgen and Horizon Therapeutics, and Indivior and Opiant.
  • In January 2023, Senator Warren sent a letter to the FCC, urging the agency to block hedge fund Standard General’s proposed acquisition of broadcaster Tegna, Inc. 
  • In October 2022, Senators Warren, Sanders  and Representative Jan Schakowsky (D-Ill.) sent a letter to FTC Chair Lina Khan urging the agency to oppose Kroger’s proposed $24.6 billion acquisition of Albertsons, which could increase the companies’ monopoly power and hurt both companies’ workers and consumers. The lawmakers also raised concerns about an unusual $4 billion dividend payout by Albertsons that is part of the deal.
  • In September 2022, Senator Warren and Representatives Mondaire Jones (D-N.Y.), Porter, Pocan, Jayapal, and Jesús “Chuy” García (D-Ill.), sent a letter to the FTC, calling on the agency to oppose Amazon’s proposed $1.65 billion acquisition of iRobot, raising concerns about Amazon’s anticompetitive practices that put consumers and their privacy at risk.
  • In September 2022, Senator Warren sent a letter to Secretary of Transportation Pete Buttigieg, urging the Department of Transportation to use its full statutory authority to address consolidation in the airline industry and expressing serious concerns about the proposed merger between JetBlue and Spirit Airlines.
  • In June 2022, Senators Warren, Sanders, and Cory Booker (D-N.J.), and Representative Porter sent a letter to DOJ expressing skepticism regarding a bid from a private equity firm to acquire the Enfamil infant formula manufacturing arm of Reckitt Benckiser Group and how such a transaction, amid the nation’s ongoing infant formula shortage, could harm competition or prolong this crisis. 
  • In May 2022, Senators Warren and Mike Rounds (R-S.D.) introduced a bipartisan joint resolution that would direct the FTC to report to Congress within one year on the extent of anti-competitive practices and violations of antitrust law in the beef-packing industry, including price-fixing, anti-competitive acquisitions, dominance of supply chains, and monopolization.
  • In March 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and FTC the teeth to reject deals in the first instance without court orders and to break up harmful mergers.
  • In March 2022, Senator Warren and then-Representative Jones, along with Senators Ben Ray Luján (D-N.M.) and Sanders and Representatives Rashida Tlaib (D-Mich.), Porter, Schakowsky, and Ocasio-Cortez ) sent a letter to Jonathan Kanter and Transportation Secretary Pete Buttigieg, expressing concerns about Frontier Airlines’ proposed acquisition of Spirit Airlines. 
  • In February 2022, Senator Warren and then-Representative Jones led their colleagues to slam the proposed merger between Sanderson Farms, the third-largest poultry processor, and Wayne Farms, the sixth-largest poultry processor, and called on the DOJ to thoroughly review the deal and step in to prevent harm to American farmers and consumers. 
  • In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits. 
  • In February 2022, Senator Warren requested the DOJ to take aggressive action against corporations violating antitrust laws to hike prices for consumers. 
  • In January 2022, Senator Warren questioned Federal Reserve nominee Lael Brainard about market concentration and price gouging driving inflation.
  • At a hearing in January 2022, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
  • In December 2021, Senator Warren and Representatives Joaquin Castro (D-Texas), David Cicilline (D-R.I.), Jayapal and 29 other lawmakers sent a letter to the DOJ, calling on it to investigate the proposed $43 billion merger of Discovery and WarnerMedia for violations of antitrust laws.
  • In November 2021, Senator Warren requested the DOJ to investigate the poultry industry's anticompetitive behavior as turkey and chicken prices soared.
  • In June 2021, Senator Warren called on the FTC to engage in a “broad” and “meticulous” review of Amazon's acquisition of Metro-Goldwyn-Mayer Studios consistent with Section 7 of the Clayton Act, expressing concerns that the acquisition has the potential to harm consumers and workers, and reduce innovation.