Choice Hotels International is seeking to buy Wyndham Hotels & Resorts in a deal that would create one of the biggest budget hotel owners in the United States, The Wall Street Journal reported Tuesday.
Shares of Wyndham Hotels were up about 10% in afternoon trade, while Choice Hotels fell about 2.2%.
News of the potential deal comes at a time when a turbulent economy threatens to sap consumer spending on travel and drive up demand for affordable hotels such as Choice and Wyndham.
Wyndham had a market value of $5.7 billion as of Monday's close and operates a hotel portfolio of 24 brands that are primarily located in secondary and tertiary cities, according to its annual filing.
Choice Hotels franchises more than 7,000 hotels and caters to customers in the mid-scale to upscale range.
The companies are not in serious talks and it is not clear whether Wyndham wants to do a deal, the report said, citing people familiar with the matter.
If Wyndham does not opt for a deal, Choice Hotels could take an offer directly to Wyndham's shareholders, the report added.
Choice and Wyndham did not immediately respond to Reuters requests for comment.
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