Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q2 2023 Earnings Presentation
49 slides from Wyndham Hotels & Resorts's earnings presentation, Jul 27, 2023
Slide 1: Wyndham Hotels & Resorts Q2 2023
ed June 2023
Slide 2: Introduction to Wyndham Hotels & Resorts
2 Introduction to Wyndham Hotels & Resorts Largest Leading brands hotel franchisor in the resilient by hotels select-service worldwide segment ~9,100 24 Hotels Brands ~852,000 95+ Current Rooms Countries | Data is approximated as of June 30, 2023 Asset-light business model generating significant fre
Slide 3: Since Spin, WH Transformed into a More Simplified Pure Play Franchising Business
Since Spin, WH Transformed into a More Simplified Pure Play Franchising Business with Significant Growth Momentum nillions) At Spin-Off Today © Franchised business 92% 99%+ Exited managed business and owned Managed business 8% <1%° properties to become a pure-play franchising Owned hotels 2 Oo busin
Slide 4: Microtel Inn & Suites by Wyndham
Microtel Inn & Suites by Wyndham. Macedon, New York, USA Opened May 2023 4
Slide 5: Second Quarter 2023 Performance Recap
Second Quarter 2023 Performance Recap +14% +8% Global RevPAR vs. 2019; U.S. RevPAR vs. 2019; +7% vs. 2022 © (1%) vs. 2022 +4% +8% +10% Net room New deals Global pipeline growth YOY ©) signed YOY © growth YOY $158M $158M Noles) ELITE ys YTD free cash flow ©; Comparable growth of +52% conversion rate
Slide 6: Second Quarter 2023 Adjusted EBITDA Grows 8%
Second Quarter 2023 Adjusted EBITDA Grows 8% on a Comparable Basis ADJUSTED EBITDA © Cor parable Bass Comparable Basi = Growth _ Cin millions) $13 sas as pceecceeeeenetan ee ($3) 2022 CPLG/ Operational Marketing Fund 2023 Owned Growth Variability WYNDHAM
Slide 7: WH Select-Service Brands RevPAR Outpacing Higher-End Chainscales
WH Select-Service Brands RevPAR Outpacing Higher-End Chainscales by 300 Basis Points U.S. REVPAR VS. 2019 9% 6 Lower chainscales normalizing at Gv 6% levels that remain above higher-end chainscales Ql 2023 Q2 2023 Mi WH Select-Service Brands STR Upscale + WYNDHAM 7 | Note: WH Select-Service includes
Slide 8: Net Room Growth Tracking in Line with Expectations
Net Room Growth Tracking in Line with Expectations NET ROOM GROWTH PACING AHEAD RETENTION CONTINUES OF HISTORICAL PERFORMANCE TO IMPROVE . DOMESTIC % of FY NRG Rolling 12 Months MIDSCALE+ SYSTEM Achieved through Q2 YOY GROWTH 36% 94.9% eis 28% 27% INTERNATIONAL DIRECT SYSTEM YOY GROWTH 2019 2022 202
Slide 9: Franchisee Financing Remains Generally Available
Franchisee Financing Remains Generally Available Vast majority of our franchisees borrow from community banks, which are primarily relationship-driven and more active lenders across entire economic cycle = ~70% of our new construction starts are YOY growth in FDIC-insured community bank lending fina
Slide 10: Expanding Globally in Key Markets
10 Quinta InneSuites by| Wyndham chester, NH, USA Hawthorn Suites by Wyndham Kingswood, TX, USA Opened May 2023 WOpened-June 2023" Ramada Hotel & Suites by Wyndham Ayia Napa, Cyprus Opened June 2023 RS Coral Costa Mujeres, a Registry Collection Hotel ‘Cancun, Mexico Opened June 2023 port Hotel, Ista
Slide 11: Pipeline Grows Sequentially for 12th Consecutive Quarter
n Pipeline Grows Sequentially for 12° Consecutive Quarter TOTAL PIPELINE @ 6/30/23 ~228K ~1,850 Global rooms. Global hotels 12h consecutive quarter of sequential growth YOY Growth Global +10% U.S. +22% Sequential Growth Global +1% U.S. +20 bps Covers ~60 countries, including 10 without pre-existing
Slide 12: Asset-Light, Franchised Model Generates Strong Free Cash Flow
12 Asset-Light, Franchised Model Generates Strong Free Cash Flow 300% ~ —~ 53% of FCF converted ) —__—__—— ~(Conwensitan Rate ‘ean }——— to Adjusted NI-7 “Adjusted EBITDA“ $155 . YTD Interest Cash Development CapEx Working YTD Free YTD Adjusted YTD Free Cash Adjusted Expense, Taxes Advance Capital Ca
Slide 13: 2023 Focus
Slide 14: 2023 Key Priorities
Slide 15: System Projected to Increase to 4%
15 2022 2023 System Projected to Increase 2 to 4% Continued momentum in openings and improvements in retention rate expected to drive net room growth GLOBAL ADDITIONS 70,400 ~7-9% YOY Growth 2022 2023 GLOBAL RETENTION RATE 95.3% Retention Rate >95.3%
Slide 16: RevPAR Projected to Grow 4% to 6%
RevPAR Projected to Grow 4% to 6% Accelerated RevPAR recovery due to select-service focus REVPAR FULLY 2023 REVPAR GROWTH ... WHICH REPRESENTS RECOVERED IN 2022 PROJECTED AT 4-6%... 6-8% GROWTH VS. 2019 02%), $40.92 $41.88 $4188 ~$44 $4092 ~$44 2019 2022 2022 2023E 2019 2023E Global RevPAR Global Re
Slide 17: WH Select-Service Portfolio Less Volatile During Periods of Economic Decline
v7 WH Select-Service Portfolio Less Volatile During Periods of Economic Decline Select-service hotels historically outperform full-service hotels in economic downturns RevPAR Growth Global a ne Financial Crisis COVID-19 © =)6 OUD (15%) ol (19%) (33%) MWH Select-Service ™STR Upscale+ (58%) WH Select-
Slide 18: 2023 Adjusted EBITDA Projected to Grow ~6%
2025 Adjusted EBITDA Projected to Grow ~6% on a Comparable Basis © ADJUSTED EBITDA “> Cin millions) ~6% Comparable Basis Growth | $32-$42 a $054-$664 2022 CPLG/ Operational Marketing Fund 2023 Owned Growth Variability (a) Comparable basis represents year-over-year growth excluding the results of the
Slide 19: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders RETURN EXCESS CAPITAL MAINTAIN STRONG BALANCE SHEET $800+ million of liquidity Total leverage at 3.2x Weighted average maturity of 6 years Only ~20% of debt is variable-rate Significant room under all debt covenants = Other $2,000 Unsecured Notes .
Slide 20: Infrastructure Category Represents Large Growth Opportunity
Infrastructure Category Represents Large Growth Opportunity in Coming Years INCREMENTAL U.S. INFRASTRUCTURE WH WELL-POSITIONED & CHIPS ACTS SPEND FOR FUTURE OPPORTUNITY Cin billions) Roads, bridges, mejor projects [ans $110 = In 2019, the federal government spent $71 Weter TT so; billion on infrastr
Slide 21: Disciplined Approach to M&A
a Disciplined Approach to M&A Strong strategic fit Significant growth potential in existing and adjacent markets Asset-light and a preference for franchise Accretive to earnings and net room growth in the near-term Manageable impact on net leverage KY N\ NN AN
Slide 22: Long-Term EPS Growth Opportunity
Long-Term EPS Growth Opportunity Impact on EPS Rooms growth 3-5% RevPAR growth 2-3% Scale/ancillary 0-1% Cash flow deployment 3-5% g-term EPS growth potential 8-14% Cash flow deployment assumes all free cash flow after dividends and required debt repayments is deployed to either acquire businesses o
Slide 23: Continued Significant Investment & Focus on ESG
Continued Significant Investment & Focus on ESG SIETHICAL, |COMPANIES ETHISPHERE S-TIME HONOREE PLACES TO WORK 2022 for LGBTQ+ Equality A CULTURE OF DIVERSITY, EQUITY & INCLUSION Perfect score of 100 on Human Rights Campaign 2022 Corporate Equality Index for 4th consecutive year ~55% of global corpo
Slide 24: Established
ished
Slide 25: WH Investment Thesis
Slide 26: Days Inn by Wyndham
anne Days Inn by Wyndham ; : WYNDHAM Bullhead City, Arizona, USA HOTELS @ RESORTS
Slide 27: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
REASON 1 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk NUMBER OF HOTELS WORLDWIDE PERCENT OF FRANCHISED HOTELS 8,590 Choice IIT +099 7.295 7,472 aaa7 Hiton a sex HG a ea. Marriott [TTT 73: _Asset-light requiring average capital expenditure spend of less than 5% of fee-related
Slide 28: Leisure Guests Power Our Business, Followed by Infrastructure Related Spend
REASON 2 Leisure Guests Power Our Business, Followed by Infrastructure Related Spend STRONG OVERLAP OF WH FOOTPRINT ~70% LEISURE FOCUS; 20% INFRASTRUCTURE AND INFRASTRUCTURE SPEND MARKETS oo 755 Infrastructure | 20% Logisti oases, fl sx Corporate 9, Transient | 2% Group Business | <1% Represents per
Slide 29: Our Domestic Guests are Middle-Class and Getting Younger
Our Domestic Guests are Middle-Class and Getting Younger U.S. Household Income First Second Third Fourth Fifth Quintile Quintile Quintile Quintile Quintile $28,000- $55,000- $90,000 - <$28,000 "55000 90,000 ~—«-149,000 WH guest average t household @ income of $91K is ~30% higher than U.S. median >$1
Slide 30: WH Guest Income Growth Has Outpaced CPI
30 WH Guest Income Growth Has Outpaced CPI, Supporting Strong Discretionary Spend on Travel = Our U.S. guests’ wage growth exceeded inflation, cumulatively outpaced average CPI growth by 50 basis points since Q1 2019. = Strong wage growth expected to support continued discretionary spending towards
Slide 31: "Drive to" Destinations Not Reliant on Air Travel or International Travelers
3 REASON 3 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. HOTELS IN “DRIVE TO” LOCATIONS Suburban 34% Interstate 87% Small Metro Airport Urban Resorts All data based on STR census December 2022. 96% OF U.S. GUESTS ORIGINATE DOMESTICALLY US. 96% Europe |) 1% Can
Slide 32: U.S. System Well-Positioned Along Highways and Byways
U.S. System Well-Positioned Along Highways and Byways and in Drive-to Destinations WYNDHAM
Slide 33: Leader in the Attractive Select-Service Space
REASON 4 Leader in the Attractive Select-Service Space PERCENT OF U.S. HOTELS IN ADVANTAGEOUS FEATURES OF SELECT SERVICE VS. FULL SERVICE SELECT-SERVICE HOTELS Hotels 5 Less labor-intensive and lower operating 1% * costs 6,000 Higher operating margins 4000 Lower construction costs and manageable deb
Slide 34: Organic Net Room Growth
ORGANIC NET ROOM GROWTH Longer- Ages term 34 | REASON 5
Slide 35: Compelling Value Proposition for Franchisees
Compelling Value Proposition for Franchisees'.>. Wyndham’s industry-leading central reservation systems deliver $7 out of every $10 to U.S. franchisees Trusted brands with segment-leading consumer awareness and market share Industry’s #1 hotel loyalty program with >103 million enrolled members Globa
Slide 36: New Construction Continues to Deliver Strong Returns
.. Phat Continues to Deliver Strong Returns Cost per room Loan-to-value Franchisee Investment RevPAR Revenues Operating expenses Brand fees Interest expense @ 7% Hotel EBTDA full year oA ~$75,000 -70% $1,575,000 $55.00 $1,405,000 $773,000 $119,000 $257,000 ~$256,000 Cash-on-Cash Return of >16% _WYND
Slide 37: Significant Growth in ECHO Suites Extended Stay Brand
37 SIGNIFICANT GROWTH IN ECHO LIMITED PENETRATION IN SUITES EXTENDED STAY BRAND EXTENDED STAY MARKET Cinithousands) U.S. Select-Service Hotels 50 25 _ o! Extended-Stay Total* branded hotels in the economy, midscale and upper midscale is December 2022
Slide 38: Significant Opportunities in Conversion Market and International Direct-Franchising
38 (in thousands) Significant Opportunities in Conversion Market and International Direct-Franchising LARGE SELECT-SERVICE CONVERSION MARKET STRONG INTERNATIONAL PIPELINE EXPANSION (in thousands) Global Hotels WH International Rooms Pipeline 100 150 420% > 125 75 100 50 75 50 25 25 0+ 0+ Wyndham Add
Slide 39: en age
S a en age v 4 Ens aoe 8: 7 Ei S a ‘ 2 ¥ 3 & | 5 5 Phu Quo
Slide 40: Strong and Experienced Leadership Team
40 APPENDIX Strong and Experienced Leadership Team + Served as President and Chief Executive Officer of + Served as Executive Vice President and Treasurer of Wyndham Hotel Group (2014 - 2018) Wyndham Hotels & Resorts (2018 - 2019) + Served as Chief Executive Officer of Wyndham Destination + Served a
Slide 41: The Wyndham Family of Brands
41 ECONOMY alr MICROTEL BY WYNDHAM = a Howard Johnson’ BY WYNDHAM ECHOSUITES Vienna House brand acquisition also included Vienna House APPENDIX The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. MIDSCALE UPPER MIDSCALE UPSCALE UPPER UPSCALE Ra MADA tsQUINTA. EA W
Slide 42: WH Franchise Business Operates at High Margins
APPENDIX WH Franchise Business Operates at High Margins ($ in millions) FY 2022 Comparable Comparable Fee-Related Adjusted and Other EBITDA Revenues ( Margin Contribution @ Royalties $462 x 85% = $393 Marketing, reservation & loyalty fees $544 x n/a = $20 License fees $90 x 100% = $90 Other revenues
Slide 43: Annual Financial Impact of Select-Service Management Business and Owned Assets
APPENDIX Annual Financial Impact of Select-Service Management Business and Owned Assets 2019 2021 2022 Adjusted Adjusted Adjusted Cin millions) Revenue EBITDA Revenue EBITDA Revenue EBITDA @ CPLG contribution “© (41) (21) $ (24), ¢ (6) $ (3) $ qd) Termination fees from CPLG © (7) (7) (19) (19) (5) (
Slide 44: Quarterly Financial Impact of Select-Service Management Business and Owned Assets
44 APPENDIX Quarterly Financial Impact of Select-Service Management Business and Owned Assets First Quarter Second Quarter hird rter Full Year Fee-related and other revenues 2022 $ 38 $ 12 $ - $ - $$ 50 2021 19 33 34 38 125 2020 34 7 15 15 n 2019 36 34 12 34 n7 Cost reimbursements 2022 $ 29 $ - $ -
Slide 45: 2023 Planning - Revenue Sensitivities
APPENDIX 20235 Planning - Revenue Sensitivities Adjusted EBITDA Sensitivities Cin millions) U.S. royalties and franchise fees GES Margin of ~85% on gross $4.7 million per point impact; assumes cost mitigation of -15% International royalties and franchise fees ~$0.6 . . Funds expected to break-even u
Slide 46: Adjusted EBITDA Reconciliation
Three Months Ended Three Months Ended Six Months Ended Year Ended Year Ended Year Ended Year Ended June 30, 2023 June 30, 2022 June 30, 2022 December 31, 2022 December 31, 2019 December 31, 2018 December 31, 2017 Net income $ 70 $ 92 $ 137 $ 355 $ 157 $ 162 $ 230 Provision for income taxes 26 31 50
Slide 47: Cash Flow and Free Cash Flow Reconciliation
Six Months Ended Year Ended December Year Ended December June 30, 2023 31, 2019 31, 2018 Cash Flow: Net cash provided by operating activities $ 176 $ 100 $ 231 Net cash used in investing activities (19) (53) (1,728) Net cash used in financing activities (254) (320) 1,808 Effect of changes in exchang
Slide 48: Adjusted Net Income and EBITDA Margin Reconciliation
Six Months Ended June 30, 2023 Net income $ 137 Adjustments: Acquisition-related amortization expense 14 Transaction-related 4 Early extinguishment of debt 3 Foreign currency impact of highly inflationary countries 3 Total adjustments before tax 24 Income tax provision 6 Total adjustments after tax
Slide 49: Definitions & Disclaimer
49 APPENDIX Definitions & Disclaimer Definitions: Adjusted EBITDA: Represents net income excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, t
Wyndham Hotels & Resorts — Q2 2023 Earnings Presentation on 6ix