CorePoint Lodging Inc. and Wyndham Hotels & Resorts entered into an agreement to collaborate on a number of new initiatives and resolve a management dispute and other issues between them.
Under the agreement, Wyndham will pay about $20 million to CorePoint over the next year, and CorePoint will maintain cash operating reserves of approximately $20 million.
Wyndham agreed to develop enhanced automated revenue management, sales and reservations technology for CorePoint's properties and CorePoint will pay Wyndham for the substantiated costs of the implementation of the Sabre SynXis property management system. The underlying fee structures in the two companies' management and franchise agreements will remain unchanged.
In late July, CorePoint alleged that Wyndham had failed to meet certain requirements under their hotel management agreements covering the CorePoint-owned La Quinta-branded properties. Wyndham denies the claims. The agreement provides mutual release of both parties' other claims under their existing contracts.
Both companies also agreed to finalize outstanding tax matters related to Wyndham's acquisition of La Quinta. CorePoint span out from La Quinta Holdings Inc., which was acquired by Wyndham in May 2018. Wyndham had temporarily retained $240 million of cash purchase price to make required payments to tax authorities, and the remainder will be released to CorePoint. Wyndham said it had provided $223 million to tax authorities as of June 30 and will release $17 million to CorePoint in November.
Wyndham expects to record charges amounting to roughly $26 million, or $21 million after-tax, in the third quarter. The company said this will not impact its adjusted EBITDA, adjusted net income or adjusted EPS.