Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q3 2020 Earnings Presentation
31 slides from Wyndham Hotels & Resorts's earnings presentation, Oct 29, 2020
Slide 1: Investor Presentation
Investor Presentation October 28, 2020
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Leading economy and Asset-light Largest hotel Primarily leisure-focused midscale brands in business model with franchisor by hotels “drive to” portfolio of attractive select- significant cash worldwide hotels service space generation capabilities 9,000 804,00
Slide 3: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Third Quarter – Recovery Continues 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Strong Financial Profile 4 Business Model – Continuing to Outperform 3
Slide 4: Wyndham Hotels & Resorts Third Quarter Highlights
Wyndham Hotels & Resorts Third Quarter Highlights $101M $102M +16pts Adjusted EBITDA (a) Adjusted free RevPAR outperformed the cash flow (b) total industry (c) ~2 per day $1.2B+ > 70% Signed 152 new Increased total Collection rate for contracts (+31% vs. Q2) liquidity by ~$570M franchisee fee deferr
Slide 5: RevPAR Steadily Improving, Benefiting From Economy/Midscale Positioning
RevPAR Steadily Improving, Benefiting From Economy/Midscale Positioning Monthly WH U.S. RevPAR Change Monthly WH U.S. Occupancy Change Economy/Midscale segments * (17%) (21%) (25%) (33%) (31%) (27%) (43%) (33%) (37%) (56%) (42%) (43%) (50%) (52%) (55%) (55%) Higher-end (55%) (46%) segments (67%) (86
Slide 6: Year-over-Year Occupancy Declines Narrowing
Year-over-Year Occupancy Declines Narrowing Monthly WH U.S. Occupancy 67% 67% 63% 58% 58% 58% 58% 57% 2019 Occupancy 51% 50% (11 points) 44% 50% 49% 49% 49% MTD 44% (33 points) 46% 44% 45% 2020 Occupancy 39% 33% 25% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6 Note: October month-to-date includ
Slide 7: Third Quarter Results Powered by Leisure and the Everyday Business Traveler
Third Quarter Results Powered by Leisure and the Everyday Business Traveler Business Infrastructure ~30% Logistics Leisure ~70% Corporate Transient Healthcare 7 7
Slide 8: Continued Progress on Strategic Terminations
Continued Progress on Strategic Terminations (est.) (est.) • Strategy better enables our Strategic Terminations Q3’20 Q4’20 2HTotal teams to support more Initial Estimate at June 30, 2020 18,100 1,200 19,300 engaged franchisees and Under negotiation (6,300) 6,300 -- replace with higher quality Retai
Slide 9: Diversified Global Pipeline Provides Runway Long Term Growth
Diversified Global Pipeline Provides Runway Long Term Growth Momentum in Q3 Composition New Deals Signed Scale ~17K 152 36% 64% Rooms Hotels Globally Globally ~185K ~1,400 U.S. International Global rooms Global hotels • Domestic pipeline sequential growth of +3% • International pipeline sequential 5
Slide 10: Resilient Business Model Generates Positive Cash Flow
Resilient Business Model Generates Positive Cash Flow ($millions) +$102 million Adjusted Free Cash Flow (a) $101 $40 ($7) $735 ($10) ($29) ($14) ($10) $664 Beginning Cash Adjusted Interest Capital Working Dividends Special-Item Other Financing Ending Cash @ @ June 30, EBITDA (b) Expense Expenditures
Slide 11: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Third Quarter – Recovery Continues 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Strong Financial Profile 4 Business Model – Continuing to Outperform 11
Slide 12: Status of Franchisee Health
Status of Franchisee Health WH Franchisees Benefitting From: • Better-performing drive-to leisure and “everyday” business travelers • Lower breakeven occupancy facilitated by efficient and flexible low-cost structure • 90% of U.S. franchisees obtained PPP loans and will qualify for more aid • Many l
Slide 13: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Third Quarter – Recovery Continues 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Strong Financial Profile 4 Business Model – Continuing to Outperform 13
Slide 14: Core Capital Allocation Principles Unchanged
Core Capital Allocation Principles Unchanged 1. Maintain Strong 3. Return Capital to 2. Invest in Business Balance Sheet Shareholders • Over $1.2 billion of liquidity • Supporting franchisees’ health • Expect to continue paying and recovery dividends, increase when • Issued $500 million of prudent 4
Slide 15: Strong Financial Profile Enables Investment and Innovation
Strong Financial Profile Enables Investment and Innovation Investing in revenue-generating capabilities to drive guest engagement and capture market demand • New customer data platform enabling a better understanding of guests’ preferences and leveraging that knowledge to keep them loyal to our bran
Slide 16: Disciplined Capital Allocation Has Generated Strong Shareholder Returns
Disciplined Capital Allocation Has Generated Strong Shareholder Returns 2018 – 2019 Capital Allocation Current Priorities Capital Spend Supporting franchisee health 18% Investing in the business for Debt Reduction 3% future growth Share 52% Increasing the dividend Repurchase 27% Reducing lev
Slide 17: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Third Quarter – Recovery Continues 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Strong Financial Profile 4 Business Model – Continuing to Outperform 17
Slide 18: 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 18
Slide 19: Leisure Guests Power our Business
REASON #1 Leisure Guests Power our Business Nearly 70% Leisure Focus Leisure Travel 69% “Everyday” Business 27% Travel Corporate 3% Transient Group 1% Business 19 All data based on 2019 results.
Slide 20: "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 21: 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% 6,000 4% costs Higher operating margins 4,000 99% Lower construction costs, manage
Slide 22: Proven Track Record of Growing During a Recession
REASON #4 Proven Track Record of Growing During a Recession Global Organic System Growth Conversion Activity as a Last Recession Percent of Total Room Openings 3% 86% 568,000 83% 563,200 72% 67% 550,600 2007 2008 2009 2007-2009 2010-2012 2013-2015 2016-2019 22 System size excludes rooms acquired in
Slide 23: 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 (a) World-class Distribution (in thousands) Global Hotels Platform and Industry- 100 Leading Loyalty Pro
Slide 24: 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 9,048 Wyndham 96% Choice 100% 7,484 7,118 Hilton 88% 6,215 5,918 IHG 83% Marriott 71% Limited exposure to operating costs and capital requirements associated with
Slide 25: Resilient Business Model Driving Performance
IN SUMMARY Resilient Business Model Driving Performance 1 Third Quarter – Recovery Continues 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Strong Financial Profile 4 Business Model – Continuing to Outperform 25
Slide 26: 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 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: RevPAR Sensitivities in Global Downturn of Large Magnitude
APPENDIX RevPAR Sensitivities in Global Downturn of Large Magnitude RevPAR Sensitivity vs. 2019 (for every point/100bps change) ($millions) 2020 Full Year U.S.-based franchise and management fees $3.6 Typically offset by variable expense International franchise and management fees 1.5 reductions but
Slide 29: ESG Highlights
APPENDIX ESG Highlights A CULTURE OF LEADERSHIP IN PROTECTING SUPPORTING OUR DIVERSITY & INCLUSION SUSTAINABILITY HUMAN RIGHTS COMMUNITIES • Pledged CEO Action for • Certifying hotels with • Reinforcing policies and • Helping over 2,800 Diversity and InclusionTM Wyndham Green Certification training
Slide 30: 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 31: Definitions and Disclaimer
APPENDIX Definitions and Disclaimer Definitions: Adjusted EBITDA: Represents net income excluding interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-r
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