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A hot young activist fund is pushing for change at Wyndham Hotels to save the company money and help the environment

Business Insider | May 6, 2019, 08.23PM IST

Days Inn

Days Inn Facebook

The Days Hotel is part of the Wyndham chain.

  • Impactive Capital co-founder Lauren Taylor Wolfe told attendees at the Sohn Investment Conference that her firm is going to advocate for changes to Wyndham Hotels' energy use to increase the value of the hotel chains' stock.
  • Wyndham, which includes brands like Days Inn and recently bought La Quinta Inns, is protected from new competition like AirBnB because of its low prices, Wolfe said.
  • The fund believes improvements to the hotels' air-conditioning systems and lighting systems will both save the company money and help the environment.

An activist hedge fund with its eyes set on helping the world believes it can push for changes at Wyndham Hotels that will save the company money and protect the environment.

Impactive Capital, a young do-good fund, believes that "low-hanging ESG fruit" like installing motion-sensor lighting systems and modern air-conditioning systems will both improve the bottom line of Wyndham and help the environment, fund cofounder Lauren Taylor Wolfe told attendees at Monday's Sohn Investment Conference.

"There's no hotel we'd rather own than Wyndham," Wolfe said.

See more: Meet the 5 rising stars presenting their investment ideas at the world's highest-profile hedge-fund conference

Wyndham, which owns brands like Days Inn and recently bought La Quinta Inns, is insulated from disruptors like AirBnB because it primarily plays in the economy and mid-scale hotel subsections, Wolfe said. For example, Wolfe said that all rooms of Wyndham available in Boston are cheaper than the average AirBnB.

But its focus on potential savings on energy and water usage is what Impactive believes sets it apart from other activist hedge funds that look for "short-term quick fixes."

The fund is planning to push for a mandatory green program for all the brands owned by Wyndham, which would require hotels and motels to give loyalty points to people that reuse towels and linens.

Wolfe said it would create a "triple benefit" of increasing engagement in a brand's loyalty points, saving money on water usage, and helping the environment.

Impactive Capital has been backed by the California State Teachers' Retirement System, which gave the fund $250 million with a private-equity-like commitment of six years.

Wolfe said in an earlier interview with Business Insider that the strategy Impactive is using requires a longer time horizon as they push companies to diversify their boards, change their emission polices, and promote more underrepresented groups.

See more: The president of Canada Pension Plan Investment Board, one of the world's biggest investors, explains why he's skeptical about private equity's buzzy 'do good' strategy

"This is a conversation that is happening in every boardroom," Wolfe said, referring to ESG. She believes Impactive will be able to grow its boardroom influence by offering long-term ESG solutions and proving that her fund is not planning on selling their investment the moment it goes up.

"We wanted to take a different approach to activism - we have a longer time horizon," she said.

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