PARSIPPANY, New Jersey—Wyndham Hotels & Resorts announced results for the three months ended March 31, 2023. The results include:
- Global RevPAR grew 12 percent compared to the first quarter of 2022 in constant currency.
- U.S. RevPAR grew 4 percent compared to the first quarter of 2022.
- 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 11 percent year-over-year to 226,000 rooms, and signings increased 7 percent, excluding ECHO Suites Extended Stay by Wyndham.
- Awarded 35 new construction projects for ECHO Suites Extended Stay by Wyndham, bringing the total number to 205 since launch in March 2022.
- Returned $87 million to shareholders through $56 million of share repurchases and a quarterly cash dividend of $0.35 per share.
- Company raises full-year 2023 outlook.
“Our impressive first quarter results demonstrate continued momentum with global RevPAR growth of 12 percent, net room growth of 4 percent, and the 11th consecutive quarter of sequential growth in our development pipeline,” said Geoffrey A. Ballotti, president and CEO. “We outperformed our adjusted EBITDA expectations, leading us to raise our full-year outlook as a result. With our seasonally strongest summer season on the horizon and no signs of slowdown in our middle-income guests’ desire to spend on travel, we’re enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees, and team members.”
First Quarter Financial Results
The comparability of the company’s first-quarter results is impacted by the sale of its owned hotels and the exit of its select-service management business, both of which occurred in 2022, as well as quarterly timing variances from its marketing funds.
- Fee-related and other revenues were $308 million compared to $316 million in the first quarter of 2022, which included $38 million from the company’s select-service management business and owned hotels. On a comparable basis, fee-related and other revenues increased 11 percent year-over-year primarily reflecting global RevPAR growth of 9 percent, higher franchise fees, and incremental license fees.
- The company generated a net income of $67 million, or $0.77 per diluted share, compared to $106 million, or $1.14 per diluted share, in the first quarter of 2022. The decline in net income was primarily due to the sale of the company’s owned hotels and the exit of its select-service management business, partially offset by higher adjusted EBITDA in the Company’s hotel franchising segment.
- Adjusted EBITDA was $147 million compared to $159 million in the first quarter of 2022, which included a $15 million contribution from the company’s select-service management business and owned hotels. On a comparable basis—which excludes the marketing fund variability—adjusted EBITDA increased 10 percent year-over-year reflecting higher fee-related and other revenues.
- During the first quarter of 2023, the company’s marketing fund expenses exceeded revenues by $4 million; while in the first quarter of 2022, the company’s marketing fund revenues exceeded expenses by $7 million.
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 4 percent and 10 percent, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand. The company remains solidly on track to achieve its net room growth outlook of 2 to 4 percent for the full year 2023, including an increase in its retention rate compared to 2022.
First quarter global RevPAR grew by 12 percent in constant currency compared to 2022 as the United States grew 4 percent and international grew 37 percent. Approximately two-thirds of this increase is driven by stronger pricing power, while the remainder is driven by higher occupancy levels.
- On March 31, 2023, the company’s global development pipeline consisted of approximately 1,800 hotels and 226,000 rooms, representing an 11 percent year-over-year increase, including 28 percent growth in the United States.
- Approximately 72 percent of the company’s pipeline is in the midscale and above segments.
- Approximately 57 percent of the company’s development pipeline is international and 80% is new construction, of which approximately 35 percent has broken ground.
- During the first quarter of 2023, the company awarded 123 new contracts for its legacy brands, an increase of 7 percent year-over-year, and 35 new contracts for its ECHO Suites Extended Stay by Wyndham brand, bringing the total number of contracts awarded for the brand to 205 since its launch. The pipeline includes over 25,000 rooms associated with the company’s ECHO brand.
Cash and Liquidity
The company generated net cash provided by operating activities of $93 million and free cash flow of $84 million in the first quarter of 2023. The company ended the quarter with a cash balance of $150 million and approximately $890 million in total liquidity.
Share Repurchases and Dividends
During the first quarter, the company repurchased approximately 790,200 shares of its common stock for $56 million. The company paid common stock dividends of $31 million, or $0.35 per share.