This blog was originally going to criticize Numis Securities analyst Wyn Ellis for his preposterous buy note issued earlier this week that proposed industry consolidation via a Marriott purchase of InterContinental Hotels Group.

I was going to argue the note (and the subsequent orgy of media coverage that followed) was irresponsible, based on meaningless speculation and had no basis in fact.

And then news broke Thursday that Marriott purchased the Gaylord Hotels brand and the rights to manage Gaylord’s four hotels for $210 million in cash. Gaylord will continue to own its four hotel properties and reorganize as a real-estate investment trust.

Where there’s smoke there’s fire, I guess.

I still maintain my original thesis was correct. Anyone can postulate about what could and might happen, but it doesn’t make it so. There’s a big difference between what’s possible and what’s probable, and analysts and the media need to do a better job discerning between the two.

But let me step off the soap box to address the Gaylord situation.

Big news? Obviously. But a complete surprise? Not necessarily.

Those of you following the situation know there’s been tension among management and a few outspoken shareholders for quite some time. Leading the effort was Gamco Investors’ CEO and Chairman Mario Gabelli, whose company purchased thousands of shares in the months leading up the sale for a 13.5% stake, trailing only TRT Holdings and Columbia Wanger.

Gabelli was urging shareholders to strike down the proposed extension of Gaylord’s poison pill plan, thereby allowing Gamco or another investor to take control in an attempt to unlock value.

Investors thought Gaylord was trading significantly below its true value and wanted action. For its part, Gaylord’s management, led by Chairman and CEO Colin V. Reed, endured an exhaustive investigation of the best way to do that—which turned out to be a sale of the brands and the right to manage Gaylord’s hotels.

Reed said as much in the company’s news release announcing the deal with Marriott: “We are pleased to be announcing today a transaction that we believe allows shareholders the potential to realize maximum long-term value for their shares in Gaylord Entertainment. Our months-long review of various options led us to the conclusion that the REIT structure represents the best pathway to realize the long-term value of our business and to position the Gaylord brand for continued growth.”

I think it’s a good move for both parties. Through the sale, Gaylord was able to unlock that value and turn over management of its assets to an established leader in large, group-oriented hotels. (Marriott, remember, operates the 1,000-room plus Marriott Marquis brand.)

Marriott, for its part, expands its reach into Gaylord’s previously untouched 1,500-plus rooms mega-meetings niche. It gains a reputable brand to boot.

The only wrinkle in the deal is Gaylord’s Aurora, Colorado, project. According to the company’s news release, Gaylord will no longer view large-scale development as a means for growth and will not proceed with the Colorado project in the form previously anticipated.

During the company’s Q1 earnings call, Reed said Gaylord considered creating a smaller-scale version of the brand to expand into new U.S. markets. Perhaps the Aurora project goes this route. Or perhaps the Gaylord REIT, which will focus exclusively on group-oriented hotels in urban and resort markets, raises an entirely different flag on the box. 

Whatever direction the company takes, we’ll be sure to keep you posted.

Now on to the usual goodies …

Stat of the week I
7,798: Rooms Marriott will assume management of as part of its $210-million acquisition of the Gaylord brand. Of Gaylord’s four hotels, the Opryland is the largest with 2,881.

Stat of the week II
10.04%: CMBS delinquency rate in May, according to Trepp LLC. The newest reading marks the first time the delinquency rate has ever surpassed 10%. This is going to continue to be a thorn in the industry’s side for a quite a while, folks.

Quote of the week
“The debtors’ reading of (U.S. bankruptcy law) is hyperliteral and contrary to common sense.”
—U.S. Supreme Court Justice Antonin Scalia in his opinion of Radlax Gateway Hotel LLC, et al. v. Amalgamated Bank, in which the Court upheld the practice of credit bidding.

If you didn’t see it, this is a landmark ruling that will have a big impact on hotel bankruptcy proceedings in the future. At question was the practice of “credit bidding,” which allows banks to purchase their own collateral at bankruptcy auction by using debt. My colleague Shawn A. Turner does a great job explaining the situation in “Supreme Court upholds credit bidding.”

Comment of the week
“Oh no! Say it isn't so. Who would have thought that SM media, including (but not limited to) Facebook would be found, like the emperor, to be wearing no clothes. Not that it matters, of course, because, unlike the emperor's clothes, SM marketing is viewed by marketers as close-to-free and therefore a huge savings from the old-fashioned, Luddite approach! So, even if it doesn't work, it does work. So waht's (sic) the problem?”
—Commenter “Ibernste” responding to a report that major chains are failing to drive conversions on Facebook booking widgets.

Email Patrick Mayock or find him on Twitter.

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