Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q3 2024 Earnings Presentation
39 slides from Wyndham Hotels & Resorts's earnings presentation, Oct 24, 2024
Slide 1: Q3 2024 Earnings Presentation
Presentation: ii October 23, 2024. | TE rE y Treake “Be fe 12 . ie, — Lal sii l ~ | The Mining Exchange, a Registry Collection Hotel ~— Colorado Springs, Colorado, USA = Opened August 2024
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Asset-light Leading brands F Primarily hotel ness hicor in the resilient Pusiness model leisure-focused, worldwide select-service significant tree cash “drive to” portfolio segment flow of hotels ~9,200 ~8935,000 ~248,000 95+ Hotels Current Rooms Rooms in the
Slide 3: a ee
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Slide 4: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk NUMBER OF HOTELS WORLDWIDE 7,500 / IHG CHOICE | See footnotes in Appendix. 8,300 Hilton 2100 9,200 4) Marriott, _WYNDHAM — PERCENT OF FRANCHISED HOTELS Wyner i >99% Asset-light requiring average capital expenditure spend of less th
Slide 5: Highly-Resilient Business Model Outperforming Peers
Highly-Resilient Business Model Outperforming Peers and Delivering Significant Shareholder Return History of WH outperformance in economic downturns RevPAR Growth Global Sept. 11) Financial Crisis COVID-190 =) 6hOU [ (19%) (12%) 95%) a (33%) mWH Select-Service ™STR Upscale+ 58%) WH business operates
Slide 6: Long-term Growth Opportunity: Adjusted EBITDA Algorithm
Cin millions) Long-term Growth Opportunity Adjusted EBITDA Algorithm 710% CAGR | $35-$55 $795-$865 $25-$35 | $85-$125 . =_o 2023 Comparable Business Infrastructure Ancillary 2026E Basis Adjusted Drivers Capture Growth Adjusted EBITDA® t EBITDA Annual Assumptions: + System growth of 3-5% + RevPAR of
Slide 7: Capital Deployment Will Further Enhance Growth
Capital Deployment Will Further Enhance Growth ~$2 billion 2024E-2026E Cash Available for Enhancing Shareholder Value from Free Cash Flow & Leverage Capacity ~$300 million Development Advances ~$400 million Dividends ~$1.3 billion Share Repurchases/ M&A Mid-teens Adjusted EPS CAGR 2023-2026E WYNDHAM
Slide 8: Long-term Growth Opportunity: System Growth Acceleration
Long-term Growth Opportunity: System Growth Acceleration History of strong gross openings... Room Openings as a % of Beginning System 8% 8% 8% 7% 2019 2021 2022 2023 and continued steady improvement in retention 96.0% 95.6% 95.2% 94.8% 94.4% 94.0% rates... Retention Rate COVID-19 2018 2019 2020 2021
Slide 9: Long-term Growth: RevPAR Performance Over Time
Long-term Growth: RevPAR Performance Over Time Over multiple lodging cycles, U.S. select-service RevPAR grows 2-3% $80 U.S. Select-Service RevPAR Growth Year-over-Year 2.6% CAGR $70 $60 J $50 COVID-19 $40 $30 Global Sept. 11 Financial $20 Crisis $10 $0 2PBESBSBSSBBSELSEPRPSESASSRAR ome) S 9 9S sgsss
Slide 10: Long-term Growth Opportunity: Growing our Royalty Rate
Long-term Growth Opportunity: Growing our Royalty Rate Proven track record of expanding royalty rates with significant runway for continued improvement Domestic Royalty Rate International Royalty Rate ~4.75% 46% ~ 9 4.5% aes 2.4% 2.0% 2019 2023 2026E 2019 2023 2026E Global rate increases ~5 bps, yie
Slide 11: Long-term Growth Opportunity: Infrastructure Bill
n Long-term Growth Opportunity: Infrastructure Bill Strong overlap of WH footprint and infrastructure spend markets... ... WH well-positioned for future growth opportunity = In 2019, the federal government spent $71 billion on infrastructure; the 2021 Infrastructure Act & 2022 CHIPS Act provide a to
Slide 12: Long-term Growth Opportunity: Ancillary Fee Streams
12 Long-term Growth Opportunity: Ancillary Fee Streams Multiple opportunities propel ancillary fee growth to an ~8% CAGR 2023 Actual 2026E Revenue Revenue of $260 of ~$320 million million . Expected Margin of margi argin of y 75% ¥ “75% Adjusted Adjusted EBITDA EBITDA contribution contribution of $1
Slide 13: Performance
ormance
Slide 14: Third Quarter 2024 Performance Recap
Third Quarter 2024 Performance Recap +1% +4% Global RevPAR Net room vs. 2023 growth YOY +10% +5% New U.S. Global pipeline deals signed YOY growth YOY $208M $267M $377M Adjusted YTD adjusted YTD capital returned EBITDA‘ free cash flow to shareholders WYNDHAM nore ry
Slide 15: System Growth In Line with Expectations
15 System Growth In Line with Expectations Net room growth pacing ahead ... While global retention of historical performance... rate continues to improve . DOMESTIC % of FY NRG Rolling 12 Months MIDSCALE+ SYSTEM Achieved through Q3 YOY GROWTH fey anaes 95.7% 68% 56% 53% INTERNATIONAL DIRECT SYSTEM Y
Slide 16: Pipeline Expanded to Another All-Time High
16 Pipeline Expanded to Another All-Time High TOTAL PIPELINE @ 9/30/2024 ~248K ~2,100 Global rooms. Global hotels 176 consecutive quarter of sequential growth YOY Growth afi Global +5% U.S. +7% Sequential Growth Global +130 bps U.S. +290 bps Covers ~60 countries, including 11 without pre-existing WH
Slide 17: ECHO Suites Development Momentum Continues
ECHOSUITES Development Momentum Continues EXTENDED STAY BY WYNDHAM Open for Business Under Construction and Coming Soon — “SECHOSUTES. Spartanburg, SC i > Richmond,| Vi z Noshvilia Gallatin, TN WYNDHAM
Slide 18: Expanding Globally in Key Markets
Mulbs Beinn Hotel Days Inn by Wyndham Istanbul Arnavutkoy Esplendor by Wyndham San Luis Potosi Wyndham Grand XineHang Downtown Vicksburg, Mississippi Istanbul, Turkey San Luis Potosi, Mexico Shaoxing, China Opened August 2024 Opened August 2024 Opened September 2024 Opened August 2024 Expanding Glob
Slide 19: Infrastructure Green Shoots Driving RevPAR Outperformance
19 Infrastructure Green Shoots Driving RevPAR Outperformance Weekdays and oil/gas markets, on a normalized basis, are outperforming Year-Over-Year Normalized U.S. RevPAR Growth® 2.5% (0.3%) (11%) (1.2%) (2.7%) 3.7% (4.2%) ‘ > (4.9%) Ql 2024 Q2 2024 Q3 2024 BAI! Other Markets m= Weekdays Oil/Gas Mark
Slide 20: Global RevPAR Poised to Accelerate with Favorable Fourth Quarter Comparisons
20 Global RevPAR Poised to Accelerate with Favorable Fourth Quarter Comparisons U.S. RevPAR Growth International RevPAR Growth Year-over-Year Year-over-Year 4% 28% | 25% | = = - (1%) (1%) | i il |Z ss /-_ | Ge COVID recovery ar23 Q2'23 Q323 | | aaa | ar23 Q2'23 a323 | aa2s WYNDHAM HOTELS a RESORTS —
Slide 21: Executing on Royalty Rate Growth Strategy
a Executing on Royalty Rate Growth Strategy U.S. RATE GROWTH INTERNATIONAL RATE GROWTH Q3 YTD ’24 v. Q3 YTD ‘23 Q3 YTD ’24 v. Q3 YTD ‘23 Annual Adjusted EBITDA sensitivity: Annual Adjusted EBITDA sensitivity: 1 bps = $0.7M 1 bps = $0.3M WYNDHAM “HOTELS a RESORTS
Slide 22: Asset-Light, Franchised Model Generates Strong Free Cash Flow
22 Asset-Light, Franchised Model Generates Strong Free Cash Flow Cin millions) 51% a Conversion Rate Genn). [ \\ “Adjusted EBITDA® / $527 oO [ M8220 ($47) Q3 YTD Interest Cash Capital Working Adjusted Adjusting Q3 YTD Adjusted Expense, Taxes Expenditures Capital Free Cash Items Free Cash EBITDA® Net
Slide 23: 2024 Key Priorities
Slide 24: Wyndham on Track to Deliver 2024 Commitments
24 Wyndham on Track to Deliver 2024 Commitments 2024 Adjusted EBITDA Outlook Enhancing Shareholder Value Cin millions) i 68% — ~ Adjusted Free Cash Flow (Cane GENS) Conversion ~60% $40-50 $690-$700 Additional Leverage Capacity $659 Dividends ($9) ~$125 million >$450 million available for business in
Slide 25: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders MAINTAIN STRONG BALANCE SHEET $750 million of liquidity RETURN EXCESS CAPITAL TO SHAREHOLDERS Targeting mid-30s dividend payout ratio INVEST IN BUSINESS Strategic deployment of capital to accelerate growth in higher RevPAR, midscale+ hotels Total le
Slide 26: Thank you / closing image
ij Gove “La Vie Do'r 4 tel & Resort, Trademark Collection by Wynd Hwaseong-si, South Korea Opened Augu: i} i UOC es i Poo yy yy _WYNDHAM ©
Slide 27: 2024 Planning - Revenue Sensitivities
27 APPENDIX 2024 Planning - Revenue Sensitivities djusted EBITDA Sensitivities Cin millions) U.S. royalties and franchise fees ~$3.4 International royalties and franchise fees ~$0.8 Marketing, reservation and loyalty fees == 1 point change in license fees ~$1.0 — 1 point change in other revenue ~$1.
Slide 28: Compelling Value Proposition for Franchisees
APPENDIX Compelling Value Proposition for Franchisees ... Wyndham’s industry-leading central reservation systems deliver nearly $8 out of every $10 to US. franchisees Industry’s #1 hotel loyalty program with approximately 112 million enrolled members On-property technology tools drive operating effi
Slide 29: That Continues to Deliver Strong Returns
APPENDIX ... That Continues to Deliver Strong Returns Cost per room ~$93,000 Loan-to-value ~70% Franchisee Investment $3,500,000 RevPAR $60.00 Revenues $2,716,000 Operating expenses $815,000 Brand fees $231,000 Interest expense @ 7.25% $585,000 Hotel EBTDA ~$1,100,000 Cash-on-Cash Return up to 31%
Slide 30: Leisure Guests Power Our Business
30 APPENDIX Leisure Guests Power Our Business, Infrastructure-Related Spend Further Supports Growth ~70% LEISURE FOCUS; ~20% INFRASTRUCTURE eo 7: Infrastructure PF 22% Logisti cases, [sx Corporate 9, Transient | Group Business <1% Represents percentage of U.S. gross room revenues for full-year 2023.
Slide 31: Our Domestic Guests are Middle-Class and Getting Younger
APPENDIX Our Domestic Guests are Middle-Class and Getting Younger U.S. Household Income First Second Third Fourth Fifth Quintile Quintile Quintile Quintile Quintile $30,000- $58,000- $94,000 - <$30,000 "58000 94.000 __—*153,000 t WH guest average @ household income of $104K 31 | See footnotes in App
Slide 32: U.S. System Well-Positioned Along Highways and Byways
APPENDIX U.S. System Well-Positioned Along Highways and Byways and in Drive-to Destinations A % a : se o Ss een bs WYNDHAM
Slide 33: Sustained Commitment & Prioritization of ESG Initiatives
33 APPENDIX Sustained Commitment & Prioritization of ESG Initiatives ESG Highlights Named one of the NJBIZ Best Places to Work in 2024 in New Jersey and recognized by Newsweek as one of America’s 100 Most Loved Workplaces for the 4' consecutive year Leading up to the Wyndham Championship, civil righ
Slide 34: Strong and Experienced Leadership Team
34 APPENDIX Strong and Experienced Leadership Team | , + Served as Executive Vice President and Treasurer of + Served as President and Chief Executive Officer of ee a ier Wyndham Hotels & Resorts (2018 - 2019) + Served as Chief Executive Officer of Wyndham Destination . wees “ Senior vice President
Slide 35: Wyndham Family of Brands
APPENDIX Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. EXTENDED STAY ECONOMY MIDSCALE UPPER MIDSCALE UPSCALE UPPER UPSCALE ECHOSUITES micROtEL RAMADA WYNDHAM WYNDHAM GRAND ae . HaMnagre chain encore a DAZZLER poLce Nr wiNeatE esplonralot a= WYNDHAM do S07 GARDEN
Slide 36: Footnotes
Page 2 (c) Net cash from operating, investing and financing activities for the nine months ended September 30, 2024 was $156 million, ($40 million) and ($100 Data is approximated as of September 30, 2024. million), respectively. (a) Largest hotel franchisor by number of hotels. Page 16 (a) Expected
Slide 37: Adjusted Net Income Reconciliation
Year Ended Year Ended December 31, 2023 December 31, 2022 Net income $ 289 $ 355 Adjustments: Acquisition-related amortization expense 27 31 Transaction-related 11 - Early extinguishment of debt 3 2 Separation-related expenses 1 1 Gain on asset sale, net - (35) Foreign currency impact of highly infl
Slide 38: Cash Flow and Free Cash Flow Reconciliation
Three Months Ended Nine Months Ended Year Ended Nine Months Ended September 30, 2024 September 30, 2024 December 31, 2023 September 30, 2024 Cash Flow: Net cash provided by operating activities $ 156 Net cash provided by operating activities $ 79 $ 156 $ 376 Divided: Net income 204 Net cash used in
Slide 39: Definitions & Disclaimer
APPENDIX Definitions & Disclaimer Adjusted EBITDA: Represents net income excluding net interest expense, depreciation and amortization, eatly extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, sepatation-related items, transaction-relat
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