Choice Hotels International went public Tuesday with a $7.8B stock-and-cash proposal to take over Wyndham Hotels & Resorts, seeking to create a U.S. budget hotel goliath.

Hours later, Wyndham publicly rejected the offer, citing regulatory and execution concerns.

Choice has been seeking to buy Wyndham since May, The Wall Street Journal reported, but those talks had happened in private until Tuesday morning when Choice wrote a “bear hug” letter.

The offer of $90 per share, with $49.50 in cash and 0.324 shares of Choice's common stock for each Wyndham share, was a 30% premium over Wyndham’s last closing price, per Reuters. When including debt that Choice would assume, the total value of the offer reached $9.8B.

In a press release issued just before noon Tuesday, Wyndham announced its board of directors rejected the offer, claiming it undervalues the target's future growth potential while assessing Choice's stock as "fully valued."

"The proposed transaction involves significant business and execution risks, including an extended regulatory timeline and uncertainty of outcome, potential franchisee churn, and excessive leverage levels at the pro forma combined company," the company's press release says.

Choice isn't willing to address the concerns, even though they have been raised in talks over the last few months, Wyndham executives told the WSJ.

Were the two to join forces, it would result in a sprawling economy hotel brand empire. Choice owns 22 brands and brand extensions that make up 7,467 properties, including flags like Quality Inn, MainStay Suites, Comfort Inn, Econo Lodge and Clarion. Wyndham has 24 brands, including Super 8, La Quinta, Ramada and Days Inn, across about 9,100 properties.

Wyndham has doubled down on the extended-stay sector this year, and in July, it signed a deal with a developer to add 60 new hotels to its fast-growing Echo Suites Extended Stay by Wyndham brand. Those kinds of hotels have seen significant activity and have performed better than standard hotel offerings throughout the pandemic.

On the whole, the hospitality sector has rebounded more quickly than expected from the depths of the crisis. Corporate travel returned earlier this year as the country went into its second year of so-called revenge travel. However, more U.S. travelers headed abroad this year for vacations than in 2022 and 2021, causing CBRE to lower its projections for U.S. hotel performance this year.