Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wyndham Hotels & Resorts Inc (WH, Financial) reported strong earnings with a 7% growth in adjusted EBITDA and a 10% increase in EPS.
- The company achieved a 4% growth in its system and increased both US and international royalty rates.
- Wyndham Hotels & Resorts Inc (WH) opened over 17,000 rooms in Q3, bringing the year-to-date total to more than 48,000 rooms globally, marking a 13% increase compared to the previous year.
- The company improved its global franchisee retention rate by 40 basis points year over year.
- Wyndham Hotels & Resorts Inc (WH) saw a 32% year-over-year increase in new accounts for its Wyndham Rewards earner business card, contributing to ancillary fee growth.
Negative Points
- Domestic RevPAR declined by 80 basis points in the quarter compared to the prior year.
- The company faced higher interest expenses, which partially offset the benefits from adjusted EBITDA growth.
- Wyndham Hotels & Resorts Inc (WH) noted that occupancy is still 10% behind where it was in 2019, indicating a recovery lag.
- The company is experiencing challenges in the economy segment, which continues to normalize.
- There is uncertainty regarding the duration and impact of relief efforts from recent hurricanes, which could affect future performance.
Q & A Highlights
Q: How confident are you that next year's room growth rate could exceed what you end up doing this year, and how is the net rooms growth composition different than what we've seen the last couple of years?
A: Geoffrey Ballotti, President and CEO, expressed strong confidence in net room growth for next year, highlighting a record pipeline of 250,000 rooms, with 85% in midscale and above or extended stay segments. He noted strong domestic growth, with new construction pipeline at an all-time high, and emphasized the success of new brands like Echo Suites.
Q: What is the outlook for U.S. economy and mid-scale RevPAR performance in the fourth quarter?
A: Michele Allen, CFO, explained that the U.S. RevPAR is expected to benefit from easier comparisons in the fourth quarter, with a favorable holiday calendar and infrastructure momentum. She noted that the economy segment, which was down significantly last year, is expected to perform better this year.
Q: Are there any investments needed for project Echo to ramp from here?
A: Michele Allen, CFO, stated that $100 million of capital has been earmarked for Echo, with deployment ramping over 2025 and 2026 as more properties open. The necessary operating and sales teams are already in place, and no additional investment is expected to impact EBITDA.
Q: Can you provide more details on the market share gains and the sustainability of these gains?
A: Wyndham Hotels representatives highlighted strong market share gains in oil and infrastructure states, with significant growth in Texas and North Dakota. They emphasized the early stages of infrastructure spending, with only a fraction of the $1.2 trillion bill allocated, suggesting a long-term driver for franchisees.
Q: How do you view the impact of new brands in the Premium Economy segment on your economy segment performance?
A: Wyndham Hotels representatives indicated that new brand launches have not slowed their development pipeline, particularly in midscale and above segments. They view the impact of reflagging a small number of hotels as part of normal termination activity and not a significant threat.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
