Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q4 2020 Earnings Presentation
34 slides from Wyndham Hotels & Resorts's earnings presentation, Feb 11, 2021
Slide 1: Investor Presentation
Investor Presentation February 10, 2021
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Leading economy and Asset-light Primarily Largest midscale brands business model with leisure-focused hotel franchisor by in attractive significant cash “drive to” portfolio hotels worldwide select-service space generation capabilities of hotels 8,900+ 796,00
Slide 3: Resilient Business Model Poised for Growth
Resilient Business Model Poised for Growth 2020 Performance Recap 1 Clear focus 2021 Focus 2 and priorities to drive shareholder value Strong Financial Profile 3 Business Model and Core Strengths 4 3
Slide 4: 2020 Performance Recap
2020 Performance Recap $327M $100M +13pts Adjusted EBITDA (a) Adjusted free RevPAR outperformed the cash flow (b) total industry (c) >500 $1.2B+ ~ 90% New contracts signed Liquidity including Franchisee collection rate revolver capacity Data as of December 31, 2020. Reconciliations of non-GAAP finan
Slide 5: Year-over-Year Occupancy Declines Continue to Narrow
Year-over-Year Occupancy Declines Continue to Narrow Monthly WH U.S. Occupancy 67% 67% 63% 58% 58% 58% 58% 57% Prior Year 51% 50% 44% 50% 49% 49% 44% 44% (33 points) 47% 46% 44% 45% (6 points) 39% 39% Current Year 38% 35% 33% 25% Jan’20 Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan’21 5
Slide 6: Year-over-Year ADR Declines Have Stabilized Since the Fall
Year-over-Year ADR Declines Have Stabilized Since the Fall Monthly WH U.S. Average Daily Rate $88.37 $87.40 Prior Year $86.09 $83.60 $83.63 $83.03 $82.24 $81.13 $79.18 (16%) $74.52 $78.25 $76.55 $80.21 $74.11 (23%) $75.41 $75.42 $74.97 $74.11 $72.47 (12%) $70.94 $68.84 $69.33 Current Year $68.20 $65
Slide 7: Select-Service Continues to Outperform Higher-end Chainscales
Select-Service Continues to Outperform Higher-end Chainscales, WH Continues to Benefit from Economy/Midscale Positioning Monthly U.S. RevPAR Change (1%) (0%) 2% 1% (21%) WH (24%) (27%) (29%) (28%) Select-Service (31%) (41%) (35%) Brands (a) (41%) Economy/Midscale (53%) Advantage STR (65%) Higher-end
Slide 8: Highly Flexible Business Model Provided Significant Cost Savings
Highly Flexible Business Model Provided Significant Cost Savings Even While Continuing to Invest for the Future . . . TARGETED 2020 2020 SAVINGS INVESTMENT SPEND $33 million CapEx primarily for consumer and business $255 million traveler digital transformation, including a new data platform, booking
Slide 9: . . . and Generated Positive Cash Flow
. . . and Generated Positive Cash Flow ($millions) +$100 million Adjusted Free Cash Flow (a) $469 $493 $327 ($1) ($112) ($50) ($65) $94 ($103) ($66) Beginning Cash Adjusted Interest Capital Working Dividends / Special-Item Net Debt Other Ending Cash @ @ January 1, EBITDA (b) Expense, net Expenditure
Slide 10: Strong Conversion Momentum Following Global Lockdowns
Strong Conversion Momentum Following Global Lockdowns 2020 Openings - Conversions 2020 Contracts Awarded – Conversions (Rooms) (Hotels) U.S. U.S. International 12,700 International 176 +63% +69% 7,800 104 First Half Second Half First Half Second Half 10
Slide 11: Diversified Pipeline Provides Runway for Growth
Diversified Pipeline Provides Runway for Growth Total Pipeline @ 12/31/20 Composition Geographical Mix ~185K ~1,400 25% New Construction U.S. Global rooms Global hotels Conversion International 36% +20bps +120bps 75% 34% of N/C in 64% the ground Global U.S. sequential sequential growth growth Pipeli
Slide 12: Strategic Termination Plan Completed, Deletions Expected to Normalize Going Forward
Strategic Termination Plan Completed, Deletions Expected to Normalize Going Forward 2020 Unusual Termination Events YTD Q3 Q4 Full Year Proactive Strategic Deletions Master-related SVC guarantee management contract 15,200 1,300 1,200 1,600 16,400 2,900 95% Global retention rate All other 1,700 400 2
Slide 13: Resilient Business Model Poised for Growth
Resilient Business Model Poised for Growth 2020 Performance Recap 1 Clear focus 2021 Focus 2 and priorities to drive shareholder value Strong Financial Profile 3 Business Model and Core Strengths 4 13
Slide 14: 2021 Focus
2021 Focus Net Room Growth Franchisee Support Guest Experience • Deliver 1-2% net room growth • NextGen property level • Best-in-class digital eco-system, in 2021 and return to 2-4% technology and revenue mobile app evolution, suite of upon recovery post COVID-19 management systems Wyndham Business
Slide 15: Resilient Business Model Poised for Growth
Resilient Business Model Poised for Growth 2020 Performance Recap 1 Clear focus 2021 Focus 2 and priorities to drive shareholder value Strong Financial Profile 3 Business Model and Core Strengths 4 15
Slide 16: Strong Balance Sheet and Substantial Cash Reserves
Strong Balance Sheet and Substantial Cash Reserves Balance Sheet Debt Maturities • Total liquidity at December 31, 2020 $1,228 million $2,000 • Major maturities due prior to 2023 None $1,500 • First lien leverage ratio of 5.0x $1,000 June 30, 2021 testing waived until: $500 • First lien net leverage
Slide 17: Strong Financial Profile Enables Investment and Innovation
Strong Financial Profile Enables Investment and Innovation Investing across the organization to drive guest and franchisee engagement and grow the system Guest-Focused Investment Franchisee-Focused Investment NRG-Focused Investment Revamped our mobile app with Organization-wide rollout of Increased
Slide 18: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders Maintain Strong Invest in Return Excess Capital Balance Sheet Business to Shareholders • Over $1.2 billion of liquidity • Support franchisees’ health and • Increased first quarter 2021 recovery dividend by 100% • Repaid all revolving credit facility
Slide 19: ESG Efforts Ongoing; Continued Investment and Focus Despite Pandemic
ESG Efforts Ongoing; Continued Investment and Focus Despite Pandemic A CULTURE OF LEADERSHIP IN PROTECTING SUPPORTING OUR DIVERSITY & INCLUSION SUSTAINABILITY HUMAN RIGHTS COMMUNITIES • Pledged CEO Action for • Certifying hotels with • Employee safety devices • Helping over 2,800 Diversity & Inclusi
Slide 20: Resilient Business Model Poised for Growth
Resilient Business Model Poised for Growth 2020 Performance Recap 1 Clear focus 2021 Focus 2 and priorities to drive shareholder value Strong Financial Profile 3 Business Model and Core Strengths 4 20
Slide 21: Leisure Guests Power our Business
REASON #1 Leisure Guests Power our Business Nearly 70% Leisure Focus Leisure Travel 69% “Everyday” 27% All Other Logistics Business ~1% ~5% Travel Corporate Infrastructure 3% ~21% Transient Group 1% Business 21 All data based on 2019 results.
Slide 22: "Drive to" Destinations Not Reliant on Air Travel or International Travelers
REASON #2 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. Hotels in “Drive to” Locations 96% of U.S. Guests Originate Domestically Suburban 35% U.S. 96% Interstate 23% 87% Europe 1% Small Metro 29% Canada 1% Airport 5% Latin America 1% Urban 5% Resorts 3% Asia P
Slide 23: Leader in the Attractive Select-Service Space
REASON #3 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 Less labor-intensive and lower operating 1% costs 6,000 4% Higher operating margins 4,000 Lower construction costs, manageable
Slide 24: Significant Growth Opportunity in Large Conversion Market
REASON #4 Significant Growth Opportunity in Large Conversion Market Strong Value Proposition, Significant Addressable Market in the Especially in Lodging Down-Cycles Economy and Midscale Segments World-class Distribution (in thousands) Global Hotels Platform and Industry- 100 Leading Loyalty Program
Slide 25: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
REASON #5 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk Number of Hotels Worldwide Percent of Franchised Hotels 8,941 Wyndham 97% Choice 100% 7,642 7,147 Hilton 88% 6,478 5,964 IHG 84% Marriott 71% Limited exposure to operating costs and capital requirements associated with
Slide 26: Uniquely Positioned to Outperform
Uniquely Positioned to Outperform 1 2 3 4 5 Primarily Predominately Select-Service Powerful Growth Low Risk Leisure-Focused “Drive to” Leader Engine Business Model Locations 26
Slide 27: Strong Leadership Navigating Through the Storm
Strong Leadership Navigating Through the Storm • Served as President and Chief Executive Officer of Wyndham Hotel Group (2014 – 2018) • Served as Chief Executive Officer of Wyndham Destination Network (2008 – 2014) • Held leadership positions of increasing responsibility at Starwood Hotels and Resor
Slide 28: The Wyndham Family of Brands
The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. Economy Midscale Upper Midscale Upscale Upper Upscale Select-service 28
Slide 29: Cost Savings Reconciliation to $255 Million Target
APPENDIX Cost Savings Reconciliation to $255 Million Target YOY ($millions) 2019 2020 Change Operating expenses per P&L $164 $109 ($55) General and administrative expenses per P&L 130 116 (14) Marketing, reservation and loyalty expenses per P&L 563 419 (144) Addback: Non-cash stock-based compensatio
Slide 30: 2021 RevPAR Sensitivity, Illustrative EBITDA Example and Reconciliation to 2019 Performance
APPENDIX 2021 RevPAR Sensitivity, Illustrative EBITDA Example and Reconciliation to 2019 Performance ($millions) Illustrative Example vs. 2020 ($millions) Reconciliation to 2019 2020 Adjusted EBITDA $327 2020 Adjusted EBITDA (incl. $40m COVID savings) $327 EBITDA impact per point of RevPAR change ~$
Slide 31: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations The following tables reconcile certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors’ understanding of the overall
Slide 32: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations The following tables reconcile certain non-GAAP financial measures. We define free cash flow to be net cash provided by operating activities less property and equipment additions, which we also refer to as capital expenditures, and adjusted free cash flow as free ca
Slide 33: Calculation of Franchising Margin
APPENDIX Calculation of Franchising Margin Consistent with our peers, franchising margin excludes the effects of the marketing, reservation and loyalty funds from Hotel Franchising segment revenues and adjusted EBITDA, as well as license and other fees. Management evaluates the operating results of
Slide 34: Definitions and Disclaimer
APPENDIX Definitions and Disclaimer Definitions: Adjusted EBITDA: Represents net income excluding net interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separati
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