Dec 12 Reuters Budget hotel operator Choice Hotels International on Tuesday launched a hostile bid for peer Wyndham Hotels Resorts and prepared for a board battle to bring the target to the negotiating table.

Choice went public with its cashandstock offer for Wyndham in October, then valued at about 8 billion, in an attempt to combine two of the biggest U.S. budget hotel operators. The offer is now worth about 7.2 billion, tracking a decline in Choice39;s stock.

There is potential for additional value to be unlocked if Wyndham were to return to the negotiating table and provide due diligence, Choice Hotels CEO Patrick Pacious said in a statement.

Wyndham on Tuesday said its board would evaluate the offer even as it reiterated that the offer undervalues its business and carries regulatory risks. It has also highlighted a combined company39;s likely high debt level, as well as the slower growth prospects of Choice39;s business.

Choice taking this next step largely as expected sends an incrementally stronger message, but doesn39;t materially alter the likelihood of a transaction, Barclays analyst Brandt Montour wrote in a note.

Wyndham39;s shares were up 1.2 at 80.13 in morning trade as Choice announced ownership of less than 1.7 of Wyndham stock. Reuters in November reported that Choice was preparing to challenge Wyndham39;s board.

The bid comes when domestic travel is under pressure from sticky inflation, likely fueling demand for budget hotels from travelers…