PARSIPPANY, New Jersey—Wyndham Hotels & Resorts announced results for the three months and year that ended December 31, 2022. The report includes:
- Global RevPAR grew 15 percent compared to the fourth quarter of 2021 in constant currency, a 300 basis point improvement sequentially, representing 116 percent of 2019 levels; full-year global RevPAR grew 20 percent year-over-year in constant currency.
- U.S. RevPAR grew 5 percent compared to the fourth quarter of 2021, a 300 basis point improvement sequentially, representing 115 percent of 2019 levels; full-year U.S. RevPAR grew 12 percent.
- System-wide rooms grew 4 percent year-over-year, including 1 percent in the United States and 9 percent internationally.
- Development pipeline grew 12 percent year-over-year, including 170 new construction projects added for the Company’s ECHO Suites Extended Stay by Wyndham brand since launch in March.
- Hotel Franchising segment revenues grew 12 percent compared to the fourth quarter of 2021 and 16 percent for the full year.
- Diluted earnings per share of $0.63 and net income of $56 million for the quarter; full-year diluted earnings per share of $3.91 and net income of $355 million.
- Adjusted diluted earnings per share of $0.72 and adjusted net income of $64 million for the quarter; full-year adjusted diluted earnings per share of $3.96 and adjusted net income of $360 million.
- Adjusted EBITDA of $126 million for the quarter and $650 million for the full year, which exceeded our full-year outlook of $636 million to $644 million.
- Net cash provided by operating activities of $399 million and free cash flow of $360 million for the full year.
- Returned $561 million to shareholders for the full year through $445 million of share repurchases and quarterly cash dividends of $0.32 per share.
- The Board of Directors recently authorized a 9 percent increase in the quarterly cash dividend to $0.35 per share beginning with the dividend expected to be declared in the first quarter of 2023.
“We are incredibly proud of our team’s ability to close out 2022 with RevPAR and adjusted EBITDA results that exceeded our outlook. Our development pipeline increased sequentially for the 10th consecutive quarter reflecting robust developer interest in our brands for both conversion and new construction opportunities despite the broader macro-economic climate,” said Geoffrey A. Ballotti, president and CEO. “Given the continued occupancy recovery across the globe and infrastructure business growth in 2023, we are enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees, and team members.”
Fourth Quarter 2022 Operating Results
Fee-related and other revenues were $310 million compared to $314 million in the fourth quarter of 2021, which included $38 million from the company’s select-service management business and owned hotels—both of which were exited in the first half of 2022. On a comparable basis, fee-related and other revenues increased 12 percent year-over-year primarily reflecting global RevPAR growth and higher license fees.
The company generated a net income of $56 million, or $0.63 per diluted share, compared to $48 million, or $0.52 per diluted share, in the fourth quarter of 2021. The increase in net income was primarily due to higher adjusted EBITDA in the company’s hotel franchising segment, partially offset by the impact of the exit of the company’s select-service management business and owned hotels. Adjusted EBITDA was $126 million compared to $131 million in the fourth quarter of 2021, which included a $12 million contribution from the company’s select-service management business and owned hotels—both of which were exited in the first half of 2022. On a comparable basis, adjusted EBITDA increased 6 percent year-over-year reflecting higher fee-related and other revenues, partially offset by an unfavorable timing impact from the marketing fund and the inflationary impact on expenses, both of which were anticipated.
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 in September 2022. The company also achieved its goal of a retention rate above 95 percent for the full-year 2022.
Fourth quarter global RevPAR grew by 15 percent in constant currency compared to 2021 reflecting 5 percent growth in the United States and 46 percent internationally. Global RevPAR was 116 percent of 2019 levels in constant currency, with the United States at 115 percent and international at 123 percent. The increases compared to both 2021 and 2019 were driven primarily by stronger pricing power.
Hotel franchising revenues increased 12 percent year-over-year to $303 million primarily due to the global RevPAR increase and higher license fees. Hotel Franchising adjusted EBITDA of $138 million increased by 8 percent reflecting the growth in revenues, partially offset by the expected unfavorable timing impact from the marketing fund, excluding which hotel franchising adjusted EBITDA would have increased by 13 percent.
Hotel management revenues decreased 75 percent year-over-year to $31 million, including a $54 million decrease in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost reimbursements, hotel management revenues decreased $37 million, or 84 percent, and adjusted EBITDA decreased $15 million, or 79 percent, reflecting the exit of the company’s select-service management business and owned hotels.
Full-Year 2022 Operating Results
Fee-related and other revenues were $1,354 million compared to $1,245 million in full-year 2021. The company’s select-service management business and owned hotels—both of which were exited in the first half of 2022—contributed $50 million and $125 million during 2022 and 2021, respectively. On a comparable basis, fee-related and other revenues increased 16 percent year-over-year primarily reflecting global RevPAR growth and higher license fees.
The company generated a net income of $355 million, or $3.91 per diluted share, compared to $244 million, or $2.60 per diluted share, in full-year 2021. The increase in net income was primarily due to higher adjusted EBITDA in the company’s hotel franchising segment and lower net interest expense, partially offset by the impact from the exit of the company’s select-service management business and owned hotels. Adjusted EBITDA was $650 million compared to $590 million in full-year 2021. The company’s select-service management business and owned hotels—both of which were exited in the first half of 2022—contributed $18 million and $37 million during 2022 and 2021, respectively. On a comparable basis, adjusted EBITDA increased 14 percent year-over-year reflecting higher fee-related and other revenues, partially offset by the inflationary impact on expenses.
During the full year of 2020, the company’s marketing fund expenses exceeded revenues by $49 million in order to support its owners during COVID. During the full-year 2022, the company’s marketing fund revenues exceeded expenses by $20 million; while in the full-year 2021, the company’s marketing fund revenues exceeded expenses by $18 million. As such, the company has now recovered $38 million of the $49 million of support provided during 2020.
Development
The company awarded 882 new contracts this year, a 35 percent increase compared to the 655 contracts awarded during 2021.
On December 31, 2022, the company’s global development pipeline consisted of over 1,700 hotels and approximately 219,000 rooms, of which approximately 73 percent are in the midscale and above segments (56 percent in the United States). The pipeline grew 12 percent year-over-year, including 34 percent growth in the United States. Approximately 60 percent of the company’s development pipeline is international and over 80 percent is new construction, of which approximately 36 percent has broken ground. The pipeline includes 170 new contracts awarded for the company’s ECHO Suites Extended Stay by Wyndham brand since its launch in March 2022. In line with development expectations, the first three ECHO Suites hotels broke ground in 2022 and are anticipated to open in the second half of 2023.
Cash and Liquidity
The company generated $399 million of net cash provided by operating activities and free cash flow of $360 million in the full-year 2022.
The company ended the quarter with a cash balance of $161 million and approximately $900 million in total liquidity. The company’s net debt leverage ratio was 2.9 times on December 31, 2022, just below the company’s 3 to 4 times stated target range.
Share Repurchases and Dividends
During the fourth quarter of 2022, the company repurchased approximately 1.9 million shares of its common stock for $133 million. For the full-year 2022, the company repurchased approximately 6.2 million shares of its common stock for $445 million. Since the company’s spin-off in June 2018, it has repurchased 15 percent of its outstanding common stock.
The company paid common stock dividends of $28 million, or $0.32 per share, in the fourth quarter of 2022 for a total of $116 million, or $1.28 per share, for the full-year 2022.
For the full-year 2022, the company returned $561 million to shareholders through share repurchases and quarterly cash dividends. The company’s Board of Directors authorized a 9 percent increase in the quarterly cash dividend to $0.35 per share, beginning with the dividend expected to be declared in the first quarter of 2023.
