PARSIPPANY, New Jersey—Wyndham Hotels & Resorts announced results for the three months that ended September 30, 2022. Highlights include:
- Global RevPAR grew 12 percent compared to third quarter 2021 in constant currency.
- U.S. RevPAR grew 2 percent compared to third quarter 2021 and represents 110 percent of 2019 levels.
- System-wide rooms grew 4 percent year-over-year, including 1 percent of growth in the United States and 9 percent of growth internationally.
- Development pipeline grew 10 percent year-over-year to 212,000 rooms and U.S. development signings increased 82 percent, including 48 new construction projects for the company’s new extended-stay brand, bringing the total number to 120 since launch in March.
- The Hotel Franchising segment revenues grew 9 percent year-over-year.
- Diluted earnings per share of $1.13 and adjusted diluted earnings per share of $1.21; net income of $101 million; and adjusted net income of $108 million.
- Adjusted EBITDA of $191 million.
- Year-to-date net cash provided by operating activities of $349 million and free cash flow of $321 million.
- Returned $161 million to shareholders through $132 million of share repurchases and a quarterly cash dividend of $0.32 per share.
“With our brands delivering record U.S. RevPAR and our global development teams driving net unit growth towards the top end of our initial guidance, we are raising our full-year 2022 outlook. Despite the broader macroeconomic climate, we are confident in the continued resiliency of our franchise model as we continue to invest in the business and generate substantial shareholder returns,” said Geoffrey A. Ballotti, president and CEO. “This quarter, we grew our development pipeline by 10 percent, surpassed our full-year development goal for our new extended-stay brand, and completed the acquisition of our 23rd brand—Vienna House. We remain committed to a disciplined capital allocation strategy that will deliver outstanding value to our shareholders, guests, franchisees, and team members in any environment.”
Fee-related and other revenues were $375 million compared to $377 million in third quarter 2021, which included $34 million from the company’s select-service management business and owned hotels—both of which were exited in the first half of this year. On a comparable basis, fee-related and other revenues increased 9 percent year-over-year reflecting global constant currency RevPAR growth of 12 percent and higher license fees.
The company generated net income of $101 million, or $1.13 per diluted share, compared to $103 million, or $1.09 per diluted share, in third quarter 2021. The decline in net income was primarily due to the exit of the company’s select-service management business and owned hotels, partially offset by higher adjusted EBITDA in the company’s hotel franchising segment. Adjusted EBITDA was $191 million compared to $194 million in third quarter 2021, which included a $10 million contribution from the company’s select-service management business and owned hotels—both of which were exited in the first half of this year. On a comparable basis, adjusted EBITDA increased 4 percent year-over-year reflecting higher fee-related and other revenues, partially offset by a 600 basis point unfavorable timing impact from the marketing fund.
The company’s global system grew 4 percent, reflecting 1 percent growth in the United States and 9 percent growth internationally. As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the United States and the direct franchising business in China, which grew 6 percent and 8 percent, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand.
Third quarter global RevPAR grew by 12 percent in constant currency compared to 2021 as the United States grew 2 percent and international grew 46 percent. Global RevPAR was 111 percent of 2019 levels in constant currency, with the United States at 110 percent and international at 117 percent. The increases compared to both 2021 and 2019 were driven primarily by stronger pricing power.
Hotel Franchising revenues increased 9 percent year-over-year to $367 million primarily due to the global RevPAR increase and higher license fees. Hotel Franchising adjusted EBITDA of $201 million increased by 4 percent reflecting the growth in revenues, partially offset by an unfavorable timing impact from the marketing fund, excluding which Hotel Franchising adjusted EBITDA would have increased 12 perent.
Hotel Management revenues decreased 68 percent year-over-year to $40 million, including a $54 million decrease in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost reimbursements, Hotel Management revenues decreased $32 million, or 80 percent, and adjusted EBITDA decreased $9 million, reflecting the exit of the company’s select-service management business and owned hotels.
During the third quarter 2022, the company’s marketing fund revenues exceeded expenses by $12 million; while in third quarter 2021, the company’s marketing fund revenues exceeded expenses by $19 million.
Development
The company awarded 214 new contracts this quarter compared to 151 in the third quarter 2021. On September 30, 2022, the company’s global development pipeline consisted of over 1,600 hotels and over 212,000 rooms, of which approximately 76 percent is in the midscale and above segments (61 percent in the United States). The pipeline grew 10 percent year-over-year—24 percent in the United States and 2 percent internationally. Approximately 60 percent of the company’s development pipeline is international and 80 percent is new construction, of which approximately 36 percent has broken ground. The pipeline includes 120 new contracts awarded for the company’s new extended-stay brand since its launch in March 2022.
Acquisition of Vienna House
On September 8, 2022, the company completed the acquisition of the Vienna House brand, adding an upscale and midscale portfolio of over 40 hotels and more than 6,400 rooms to the company’s existing footprint in the EMEA region. The purchase price was $44 million.
Cash and Liquidity
The company generated year-to-date net cash provided by operating activities of $349 million and free cash flow of $321 million. The company ended the quarter with a cash balance of $286 million and approximately $1.0 billion in total liquidity.
Share Repurchases and Dividends
During the third quarter, the company repurchased approximately 2.0 million shares of its common stock for $132 million. In October 2022, the company’s Board of Directors increased the company’s share repurchase authorization by $400 million. The company paid common stock dividends of $29 million, or $0.32 per share.
