Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q4 2023 Earnings Presentation
47 slides from Wyndham Hotels & Resorts's earnings presentation, Feb 15, 2024
Slide 1: Wyndham Hotels & Resorts
——_WYNDHAM HOTELS & RESORTS. Hawthorn Suites b' La Quint in & Suites by Wyndhal Mount LauréMoorestown, NJ— —Opened Nove: 2023
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Asset-light Leading brands : Primarily pote ees cor in the resilient business model leisure-focused, worldwide select-service significant tree cash “drive to” portfolio segment flow of hotels ~9,200 24 ~240,000 ~/0% Hotels Brands Rooms in the Leisure Guest Mi
Slide 3: \Gn
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Slide 4: Wyndham Performance Stronger Than Ever
Wyndham Performance Stronger Than Ever 2023 Highlights All-Time Highs 12 $659M j (a) +3.5% consecutive quarters Meigen ESTE of growth 9 -66,000 +3% YOY $339M Free Cash Flow 9 +30bps 95.6% vyov 14 ~240,000 consecutive quarters of growth $515M Capital Returned 106M+ es to Shareholders WY!
Slide 5: Full-Year 2023 Recap
Full-Year 20235 Recap +3.5% Net room growth YOY +8% New deals signed YOY) +16% Global RevPAR vs. 2019; +5% vs, 202206) +6% Adjusted EBITDA comparable growth vs, 2022) ~51% conversion Free cash flow +10% Global pipeline growth YOY +9% U.S. RevPAR vs. 2019; (1%) vs. 2022 $515M of capital to shareholde
Slide 6: WH Select-Service Brands Consistently Perform Stronger
WH Select-Service Brands Consistently Perform Stronger than Higher Chainscales and Well Above 2019 Levels WH ECONOMY BRANDS OUTPERFORM INDUSTRY U.S. Economy RevPAR as % of 2022 97.5% 96.9% FY 2023 STR Economy Brands ME WH Economy WH SELECT-SERVICE BRANDS OUTPACE HIGHER-END CHAINSCALE RECOVERY U.S. R
Slide 7: System Growth Drivers Continue to Accelerate
System Growth Drivers Continue to Accelerate ORGANIC NRG CLIMBS TO HIGHEST LEVEL IN HISTORY RETENTION RATE CONTINUES TO IMPROVE (includes ALL termination activity) DOMESTIC 95.6% MIDSCALE+ SYSTEM 3.5% 0” YOY GROWTH 3.2% 95.3% 95.1% 5 INTERNATIONAL 1.8% DIRECT SYSTEM YOY GROWTH 2021 2022° 2023 2021 2
Slide 8: Pipeline Grows for 14th Consecutive Quarter to Record High
Pipeline Grows for 14th Consecutive Quarter to Record High TOTAL PIPELINE @ 12/31/23 ~240K ~1,950 Global rooms. Global hotels 14‘ consecutive quarter of sequential growth YOY Growth Global +10% U.S. +8% Sequential Growth Global +130 bps U.S. +140 bps Covers ~60 countries, including 8 without pre-exi
Slide 9: ECHO Suites Extended Stay by Wyndham
ECHO Suites Extended Stay by Wyndham Poised for Significant Long-Term Growth ECHOSUITES EXTENDED STAY BY WYNDHAM
Slide 10: Expanding Globally in Key Markets
f al a P .-.|) ole : nd a i; La Quinta Inn & Suites by Wyndhameuma p ae alaysi vad P Y d, = —_ =¥uma-Arizona;USAee) NE) Dece b re es = Opened December 2023 Expanding Globally in Key Markets WYNDHAM HOTELS & RESORTS \dham Berlin : am Foshan Nanhai “* Niagara’ FallsjOntario,. =a Platz . ch “Fc China i
Slide 11: Adjusted EBITDA Grew 6%
Adjusted EBITDA Grew 6% Adjusted EBITDA +6% Comparable Basis Growth Cin millions) $38 $650 ($18) 2022 CPLG/ Operational Marketing Fund 2023 Owned Growth Variability WYNDHAM n | HOTELS @ RESORTS
Slide 12: Asset-Light, Franchised Model Generated Strong Free Cash Flow
Asset-Light, Franchised Model Generated Strong Free Cash Flow Cin millions) Cin millions) = ~ 100% > — 51% of FCF corverted) OO (Conversion Rate from }——— t ‘Adjusted EBITDA $659 ee re) Adjusted NI | $341 $339 7 - 2023 Interest Cash Development CapEx Working 2023 2023 Adjusted 2023 Free Adjusted Exp
Slide 13: 2023: Breaking Records & Building Momentum
2023: Breaking Records & Building Momentum 2023 GOALS & KEY OBJECTIVES Grow direct franchise system Drive Net Room Growth Continue investment in brands Expand portfolio reach across adjacent segments and geographies Optimize franchisee top-line and market share Increase Owners’ Profitability Infrast
Slide 14: Continued Significant Investment & Focus on ESG
Continued Significant Investment & Focus on ESG WORLD'S MosT S|ETHICAL ta|COMPANIES” ETHISPHERE SCTIME HONOREE VETS Indexes aakt ASTAR EMPLOYER = 2023 A CULTURE OF DIVERSITY, EQUITY & INCLUSION Recognized for the 3 time as one of the World's Most Ethical Companies® by Ethisphere VETS Indexes 4-Star
Slide 15: Wyndham Grand Barbados Sam Lords Castle
Wyndham Grand Barbados Sam Lords castle Me usive Resort Bridgetown, Barbados « Opened October 2023 * Oe -.
Slide 16: 2024 Key Priorities
Slide 17: System Projected to Increase to 4%
2023 2024 7 System Projected to Increase 3 to 4% Continued momentum in openings and improvements in retention rate expected to accelerate net room growth GLOBAL ADDITIONS 66,000 ~8% Gross Openings 2023 2024 GLOBAL RETENTION RATE 95.6% Retention Rate >95.6%
Slide 18: RevPAR Expected to Grow 2 to 3%
18 5% 4% 3% 2% 1% (0%) (1%) GROWTH EXPECTED TO ACCELERATE RevPAR Expected to Grow 2 to 3% Consistent with Industry Expectations THROUGHOUT THE YEAR HI STR 2024E vs. 2023 (0.9%) Ql Q2 Q3 Q4 FY QUARTERLY GROWTH RATES NORMALIZE VS. PRE-COVID STR 2024E vs. 2019) 18.0% 14.8% 13.4% Ueiehis 12.1% Ql Q2 Q3
Slide 19: Wyndham Poised to Accelerate Growth in 2024
Wyndham Poised to Accelerate Growth in 2024... 2024 Adjusted EBITDA Outlook® 2024 Building Blocks Cin millions) 68% = 3-4% Net Room Growth Conpssbe Basis ) —_Growth — * ~8% gross openings, including higher FeePAR room ty openings from pipeline $40-$50 $690-$700 * ~96% retention, reflecting 20-30 bps
Slide 20: Capital Deployment Will Further Enhance Growth
.., Capital Deployment Will Further Enhance Growth Cin millions) OO ~60% Conversion Rate $690-$700 | 5 (-$125) ma ($120-$125) | RR cso) “$415 MRR ($n-$120) Miil____ ¢375) 3385 me ($70) | FY24E Cash Interest Capex FY24E Incremental Available Dividends Development _ Costs Mandatory Excess Adjusted Tax
Slide 21: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders MAINTAIN STRONG BALANCE SHEET $648 million of liquidity Total leverage at 3.2x, lower end of 3-4x target range Weighted average maturity of 5.5 years Only ~25% of debt is variable-rate Significant room under all debt covenants $2,000 $1,500 $1,000 $
Slide 22: Disciplined Approach to M&A
22 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 NN NAN
Slide 23: Business Overview
Slide 24: WH Investment Thesis
Slide 25: Resilient Business Model & Core Strengths
Slide 26: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
26 PILLAR 1 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk NUMBER OF HOTELS WORLDWIDE PERCENT OF FRANCHISED HOTELS 8,785 9,178 Wyden i >99% Choice I >299 7,527 7,530 6,363 Hiton A ee HG a ea. Marriott [IN 725 _Asset-light requiring average capital expenditure spend of less than
Slide 27: Leisure Guests Power Our Business
27 PILLAR 2 Leisure Guests Power Our Business, Infrastructure-Related Spend Further Supports Growth ~70% LEISURE FOCUS; ~20% INFRASTRUCTURE eo 7: Infrastructure PF 22% Logisti case, [sx Corporate 9, Transient | Group Business <1% Represents percentage of U.S. gross room revenues for full-year 2023.
Slide 28: 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 $30,000- $58,000- $94,000 - <$30,000 "s8'000 94.000 _—*153,000 WH guest average t household @ income of $95K is ~30% higher than U.S. median >$1
Slide 29: Infrastructure Category Represents Large Growth Opportunity
29 Infrastructure Category Represents Large Growth Opportunity in Coming Years STRONG OVERLAP OF WH FOOTPRINT AND INFRASTRUCTURE SPEND MARKETS WH WELL-POSITIONED FOR FUTURE OPPORTUNITY In 2019, the federal government spent $71 billion on infrastructure; the 2021 Infrastructure Act & 2022 CHIPS Act p
Slide 30: Drive-to Destinations Not Reliant on Air Travel
30 PILLAR 3 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. HOTELS IN “DRIVE TO” LOCATIONS Suburban 33% Interstate 87% Small Metro Airport Urban Resorts All data based on STR census December 2023. 96% OF U.S. GUESTS ORIGINATE DOMESTICALLY US. 96% Europe |) 1% Ca
Slide 31: U.S. System Well-Positioned Along Highways and Byways
U.S. System Well-Positioned Along Highways and Byways and in Drive-to Destinations =m ae AU Se . re a - ser | 5 oat "4 WYNDHAM 31 | All data as of December 31, 2023.
Slide 32: Leader in the Attractive Select-Service Space
PILLAR 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 Less labor-intensive and lower operating 5% costs 1% 6,000 Higher operating margins 4,000 + Lower construction costs and manageable d
Slide 33: WH Select-Service Portfolio Less Volatile During Economic Decline
33 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 =| 1@ Financial Crisis® COVID-19© =e)6 OUD (15%) (14%) Z (33%) MWH Select-Service =STR Upscale+ (58%) WH Select
Slide 34: Organic Net Room Growth
ORGANIC NET ROOM GROWTH Longer- Zoe term 34 | PILLAR 5
Slide 35: Compelling Value Proposition for Franchisees
5 Compelling Value Proposition for Franchiseesi.. Wyndham’s industry-leading central reservation systems deliver nearly $8 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 over 106 million enrolled m
Slide 36: New Construction Continues to Deliver Strong Returns
.. Phat Continues to Deliver Strong Returns Cost per room ~$75,000 Loan-to-value ~70% Franchisee Investment $1,575,000 RevPAR $55.00 Revenues $1,405,000 Operating expenses $773,000 Brand fees $119,000 Interest expense @ 7.25% $266,000 Hotel EBTDA ~$247,000 Cash-on-Cash Return of ~16%
Slide 37: Significant Opportunities in Conversion Market and International
Significant Opportunities in Conversion Market and International Direct-Franchising LARGE SELECT-SERVICE STRONG INTERNATIONAL CONVERSION MARKET PIPELINE EXPANSION (in thousands) (in thousands) Global Hotels WH International Rooms Pipeline 100 150 125 75 100 50 25 Wyndham Addressable* December 2019 D
Slide 38: Days Inn by Wyndham Hainan Sanya Bay
panies _ Days Inn-by Wyndham Hainan Sanya Bay’ a an Sanya, Hainan, China 22 ; | ie 38 Opened December ates a ‘i ms WYNDHAM Hor: 1s
Slide 39: Long-Term Growth Opportunity
APPENDIX Long-Term Growth Opportunity Adjusted EBITDA Algorithm Cin millions) 7-10% \_CAGR + $35-$55 $795-$865 $25-$35 $5925 2023 Business Infrastructure Ancillary 2026E Comparable Drivers Capture Growth Adjusted Adjusted + t EBITDA EBITDA®@ Annual Assumptions: + RevPAR of 2-3% -8% CAGR includes + N
Slide 40: 2024 Planning - Revenue Sensitivities
40 APPENDIX 2024 Planning - Revenue Sensitivities Adjusted EBITDA Sensitivities Cin millions) U.S. royalties and franchise fees International royalties and franchise fees Marketing, reservation and loyalty fees ~$3.4 1 point change in license fees 1 point change in other revenue ~$0.7 Margin of -85%
Slide 41: Strong and Experienced Leadership Team
a APPENDIX Strong and Experienced Leadership Team + Served as President and Chief Executive Officer of + Served as Executive Vice President and Treasurer of Wyndham Hotel Group (2014 - 2018) Wyndham Hotels & Resorts (2018 - 2019) + Served as Chief Executive Officer of Wyndham Destination + Served as
Slide 42: The Wyndham Family of Brands
42 ECONOMY alr MICROTEL BY WYNDHAM = a Howard Johnson’ BY WYNDHAM ECHOSUITES Vienna House brand acquisition also included Vienna House APPENDIX The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. MIDSCALE UPPER MIDSCALE UPSCALE UPPER UPSCALE Ra MADA tsQUINTA. EA W
Slide 43: WH Business Operates at High Margins
43 APPENDIX WH Business Operates at High Margins ($ in millions) FY 2023 Fee-Related Adjusted and Other EBITDA Revenues@ Margin Contribution Royalties and franchise fees $532 x 85% = $452 License fees $97 x 100% = $97 Other revenues @ $177 x 57% = $101 Total ex. Marketing, reservation & loyalty fees
Slide 44: Footnotes
Page 2 Page 20 Data is approximated as of December 31, 2023. (a) Assumes midpoint of 2024E adjusted EBITDA outlook. (a) Largest hotel franchisor by number of hotels. (b) Assumes midpoint of Wyndham’s target net leverage of 3-4x based on midpoint of 2024E adjusted EBITDA outlook. Page 4 Page 21 Recon
Slide 45: Adjusted EBITDA and Adjusted Net Income Reconciliation
Year Ended Year Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2023 Net income $ 289 $ 355 Net income $ 289 Provision for income taxes 109 121 Adjustments: Depreciation and amortization 76 77 Acquisition-related amortization expense 27 Interest expense, net 102 80 Transaction-rela
Slide 46: Free Cash Flow Reconciliation
Year Ended Year Ended December 31, 2023 December 31, 2023 Cash Flow: $ 376 Net cash provided by operating activities Net cash provided by operating activities $ 376 Less: Property and equipment additions (37) Net cash used in investing activities (66) Free cash flow $ 339 Net cash used in financing
Slide 47: Definitions & Disclaimer
APPENDIX Definitions & Disclaimer 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, transaction- rela
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