Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q3 2023 Earnings Presentation
33 slides from Wyndham Hotels & Resorts's earnings presentation, Oct 26, 2023
Slide 1: Wyndham Hotels & Resorts Rejects Choice Hotels' Unsolicited Offer
Wyndham Hotelss& Resorts Rejects Choice Hotels’ Unsolicited Offer October 26, 2023 WYNDHAM HOTELS & RESORTS Wyndham Grand Residences Costa del Sol Mijas Costa, Spain
Slide 2: Wyndham Hotels & Resorts Overview
Wyndham Hotels & Resorts Overview Largest hotel franchisor worldwide@ ~9,100 Hotels ~858,000 Current Rooms Leading brands in the resilient select-service segment 24 Brands 95+ Countries Asset-light business model generating significant free cash flow ~237,000 Rooms in the Pipeline ~105M Loyalty Memb
Slide 3: Wyndham Has Built the Foundation for Long-Term, Sustainable Growth
Wyndham Has Built the Foundation for Long-Term, Sustainable Growth Evolution Since Spi ctions = Simplified, asset-light franchising business model with strong Adj. EBITDA margin and high free cash flow conversion = Maintained a strong balance sheet and consistently returned capital to shareholders =
Slide 4: Wyndham's standalone plan provides a more compelling risk-adjusted return
Wyndham’s standalone plan provides a more compelling risk-adjusted return compared to Choice’s unsolicited offer Choice’s Slower-Growing Business and Post-Transaction, Higher Leverage Negatively Affects Equity Consideration
Slide 5: Regulatory Uncertainty and Timeline Present Asymmetrical Risk for Shareholders
—eUncertainyRegulatory Timeline and “Outcome Presents Vastly Asymmetrical Risk for wy Shareholders | Lee | Weicome to Chester East ——" —= Super r 8 by Wyndham Chester East © ~ Chester, England eae WYNDHAM HOTELS & RESORTS:
Slide 6: Regulatory Clearance Timeline is Protracted and Outcome is Uncertain
©) Transaction Risks Impact Long-Term Value Regulatory Clearance Timeline is Protracted and Outcome is Uncertain Subject matter experts on both sides have acknowledged the combination would be subject to FTC second round review, which typically takes 12 to 18 months Combination Between Direct Indust
Slide 7: Franchisees Are Concerned About Losing Wyndham's Owner-First Philosophy
Slide 8: Prolonged Transaction Process Poses Business Disruption Risk
©) Transaction Risks Impact Long-Term Value Prolonged Transaction Process Poses Business Disruption Risk Wyndham's Board believes there is potential for irreparable damage to our business and erosion of shareholder value Risks to Wyndham Shareholders During 12-to-18 month Regulatory Review Period =
Slide 9: Potential Risks to Wyndham Shareholders are Meaningful
O) Transaction Risks Impact Long-Term Value Potential Risks to Wyndham Shareholders are Meaningful Wyndham’s ability to execute on its growth pillars may be hindered, negatively impacting both standalone and pro forma valuation New Business Development ECHO Suites Franchisee Retention Industry’s Fas
Slide 10: WYNDHAM
WYNDHAM HOTELS & RESORTS
Slide 11: Choice's Proposal Exploits Timing
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects } Choice’s Proposal Exploits Timing Choice’s offer is an opportunistic attempt to take advantage of point-in-time stock price fluctuations resulting in a favorable exchange ratio to Choice Most Favorable Exchange Ratio in Two Years
Slide 12: Analysts Believe Wyndham is Undervalued with Significant Upside
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects } Industry Research Analysts Overwhelmingly Believe Wyndham is Undervalued and has Significant Upside Wyndham stock was trading at a 25% discount to its average price target vs. Choice’s 3% discount; 12 of 13 covering analysts rate
Slide 13: Wyndham's Proven Track Record of Delivering Results
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects } Wyndham’s Proven Track Record of Delivering Results Wyndham Has Outpaced Choice in Organic Room Growth 42%) 40,200 49,200 YoY i @® YoY Organic Growth 14.200 Wyndham outpaced =—<€— | Choice by «CHOICE (18,200) ~84,200 rooms @® YoY
Slide 14: Wyndham Continues Strong Track Record of Growth
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects Wyndham Continues Strong Track Record of Growth Net Room Growth Pacing Ahead of Historical Performance Year-to-Date Multiple Levers to Drive Net Room Growth % OF FY NRG DOMESTIC ORGANIC NET _ ACHIEVED THROUGH MIDSCALE+ SYSTEM ROOM G
Slide 15: Wyndham Poised to Accelerate Growth
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects } Wyndham Poised to Accelerate Growth... 2024 Adjusted EBITDA Outlook® Incremental Growth Opportunities in the Medium-term $690 - $700M v Platform investment to capitalize on $1.5T U.S. infrastructure bill 7 - 8% Organic Growth $654
Slide 16: Capital Deployment Will Further Enhance Growth
2) Choice’s Offer Undervalues Wyndham’s Standalone Growth Prospects } ... And Capital Deployment Will Further Enhance Growth apital Alloca ~$700-$750M < 2024 capital allocation capacity (at target leverage range) of $700 - $750 million equates to $8.50 4 Opportunity to deploy nearly $2B in capital t
Slide 17: Choice's Slower-Growing Business and Post-Transaction, Higher Leverage
3 Choice’s Slower-Growing Business and Post-Transaction, Higher Leverage Negatively Affects. Equity Consideration Wyndham Garden Redwood Valley Redwood Valley, California, USA WYNDHAM HOTELS # RESORTS
Slide 18: Wyndham Shareholders Exposed to Slower-Growth Choice Business
G) Equity Consideration Risk D & ia oO Q ie) Wyndham Shareholders Exposed to Slower-Growth Choice Business intel |___Choice | Number of rooms Q2 '23 TTM RevPAR (US) 2023E RevPAR growth (company guidance) Q2 '23 YoY organic global net room growth Q2 '21- Q2 ‘23 organic global net room growth CAGR® 20
Slide 19: Choice's Future Growth is Challenged Given a Declining Pipeline
G) Equity Consideration Risk Choice's Future Growth is also Challenged Given a Declining Pipeline Choice’s Pipeline for RevPAR Accretive Brands® Choice’s Global and U.S. Pipeline (by Number of Rooms) (by Number of Rooms) (12%) f (38%) 106,890 | f 69,148 (4%) -—— 44,677 (13%) J ~ YE 2019 YE 2021 YE 2
Slide 20: Can Choice Maintain its Multiple Despite Lower Growth?
(Z) Esty consideration Fs Can Choice Maintain its Multiple Despite Lower Growth? Reported, 15% Reported, 9% Choice 1H 2023 ; Organic, 192 Growth Organic, (2%) { MM Excl. Radi Reported, (12%) XCI. Radisson 177 As Reported Net Room Growth” Adj. EBITDA Growth” Pipeline Growth® Choice’s last quarter of
Slide 21: Excessive Leverage with Long Deleveraging Period
G) Equity Consideration Risk Excessive Leverage with Long Deleveraging Period During Which... Choice would need to raise ~$6 billion total debt, including ~$4 billion incremental debt, in a historically high interest rate environment Net Debt / LTM EBITDA Multiples@ 6.4x Peer Average Fy oan) g C 2.5
Slide 22: Choice Could No Longer Rely on its Balance Sheet to Fund Growth
G) Equity Consideration Risk ... Choice Could No Longer Rely on its Balance Sheet to Fund Growth Significant capital deployment drove both Choice’s organic and inorganic growth historically; Organic growth turned negative when capital deployment was curtailed 2017A - 2019A 2020A - Yan 2023A Choice h
Slide 23: Hawthorn by Wyndham Dali Erhai Park
Hawthorn by Wyndham Dali Erhai Park Yunnan, China .
Slide 24: Choice's Mischaracterization of Their Unsolicited Proposal
Choice’s M Choice Fiction ischaracterization of Their Unsolicited Proposal Parties were in Advanced Negotiations o Alignment on NDA and Information Requests e———_ Clear Path to Completion x Broadly Supported by Franchisees er $1B Pro Forma Free Cash Flow in 2024 NS NNN KS NN NEN SN With every approa
Slide 25: What is the True Value of the Offer?
What is the True Value of the Offer? Choice’s offer lacks protections for our shareholders and is subject to an extended regulatory timeline, market volatility impacting Choice’s equity, and business and execution risks to Transaction Timing Offer lacks protections and compensation for an extended r
Slide 26: Proposal Inadequately Addresses Our Board's Key Concerns
26 Proposal Inadequately Addresses Our Board’s Key Concerns Choice’s offer has NOT satisfactorily solved for the following concerns: 9 Necessary protections and value for Wyndham shareholders to compensate for a prolonged and uncertain regulatory process 9 Appropriate value and premium for our busin
Slide 27: Appendix
_WYNDHAM | HOTELS & RESORTS Appendix
Slide 28: 2024 Planning - Revenue Sensitivities
APPENDIX 2024 Planning - Revenue Sensitivities Adjusted EBITDA Sensitivities cin millions) U.S. royalties and franchise fees ~$3.4 Margin of -85% on gross $4.9 million per point impact; assumes cost mitigation of -15% International royalties and franchise fees ~$0.8 . . Funds expected to break-even
Slide 29: Long-Term Growth Opportunity
29 APPENDIX Long-Term Growth Opportunity Impact on Adj. EBITDA Rooms growth 3-5% RevPAR growth 2-3% Scale/ancillary 0-1% Growth initiatives ~2% Long-term Adj. EBITDA growth potential before deployment of 710% excess free cash and leverage capacity ° WYNDHAM “HOTELS a RESORTS
Slide 30: Footnotes
30 APPENDIX Footnotes Page 2 Data is approximated as of September 30, 2023, (a) Largest hotel franchisor by number of hotels. Page 3 Note: Market data as of 10/20/23 Source: Capital |Q, Company Filings. (a) Wyndham spin-off date as of 05/31/2018. (b) Represents FY 2022 margin. Calculation excludes t
Slide 31: Adjusted EBITDA Reconciliation
Nine Months Ended Year Ended Nine Months Ended Year Ended Year Ended Year Ended Year Ended September 30, 2023 December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2019 December 31, 2018 December 31, 2017 Net income $ 240 $ 355 $ 299 $ 244 $ 157 $ 162 $ 230 Provision for income taxes 8
Slide 32: Adjusted Net Income and Margin Reconciliation
Nine Months Ended Year Ended Year Ended September 30, 2023 December 31, 2022 December 31, 2021 Net income $ 240 $ 355 $ 244 Adjustments: Gain on asset sale - (35) - Acquisition-related amortization expense 20 31 38 Transaction-related 5 - - Early extinguishment of debt 3 2 18 Impairments, net - - 6
Slide 33: Definitions & Disclaimer
33 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
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