Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q2 2022 Earnings Presentation
39 slides from Wyndham Hotels & Resorts's earnings presentation, Jul 27, 2022
Slide 1: Wyndham Hotels & Resorts Earnings Presentation
WYNDHAM - HOTELS & RESORTS re sentation
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Largest Leading brands Asset-light Primarily hotel franchisor in the resilient business model leisure-focused by hotels select-service with significant cash “drive to” portfolio worldwide segment generation capabilities of hotels ~9,000 ~819,000 ~208,000 95+
Slide 3: Clear Intent & Priorities to Drive Shareholder Value
Se “CLEAR I INTENT & P fe) ~~ DRIVE SHAREHOLDER VALUE) Wyndham Fort. Smitt 3 Fort Smith, A\ S
Slide 4: Second Quarter 2022 Performance Recap
Second Quarter 2022 Performance Recap +3% +9% Global RevPAR vs. 2019; U.S. RevPAR vs. 2019; +23% vs. 2021 +15% vs. 2021 +3% +21% +9% Net room growth YOY; New deals Global pipeline growth YOY; +2% U.S., +4% international signed YOY (©) 417% US., +6% Midscalet+ +5% international $175M +11% $224M Adjus
Slide 5: RevPAR Recovery Fueled by ADR Growth
RevPAR Recovery Fueled by ADR Growth with Substantial Occupancy Opportunity m ADR Q2 % OF 2019 LEVELS ™ Occupancy — — —RevPAR Global US International WYNDHAM HOTELS a RESORTS 5 | HOTELS:
Slide 6: Net Room Growth Tracking in Line with Expectations
Net Room Growth Tracking in Line with Expectations ROOM ADDITIONS ON TRACK TO RETURN TO 2019 LEVELS First Half Results 2022 TT 25,800 2021 J 17,400 2019 27,800 Remainder of Year Actual/Forecast 2022 TTT 38100 2] TT 5,700 2019 35,700 6 | Note: 2022 reflects the midpoint of our full-year 2-4% NRG outl
Slide 7: Pipeline Climbs to a Record 208K Rooms
Pipeline Climbs to a Record 208K Rooms with Faster Growth in Higher Revenue Generating Segments TOTAL PIPELINE @ 6/30/22 208K 1,600 Global rooms. Global hotels 8th consecutive quarter of sequential growth +920bps vs. Q2’21 (YOY) +190bps vs. Q1’22 (sequential) Q Covers 60 countries, including 10 with
Slide 8: Asset-Light, Franchised Model Generates Strong Free Cash Flow
Asset-Light, Franchised Model Generates Strong Free Cash Flow Cin millions) __— y 67% | Conversion Rate $334 ($45) | | go £=«<— us “8 as —= $18. 1) ($13) YTD ‘22 Cash Taxes Interest Capital Development Other Working YTD 22 Adjusted Expense, Net “) Expenditures Advance Notes Capital Free Cash EBITDA
Slide 9: Notable Q2-22 Additions
= = ( . Origin Austin, a Wyndham Hotel radernarksCollection by Wyndham TRS Yucatah, Austin, TX, USA Haléng Bay, Vietnam Riviera Mays Notable Q2-22 Additions BY vid | HOTELS & RESORTS _,Microtel by Wyndham Ramada by Wyndham Xishugpghane City Center, China Gangtok, India
Slide 10: Clear Intent & Priorities to Drive Shareholder Value
CLEAR INTENT & PRIORITIES TO DRIVE SHAREHOLDER VALUE ] te aS WR ® # a r ; The Americus Hotel, Trademark Collection by Wyndham. 10 Allentown, Pennsylvania, USA ie |
Slide 11: 2022 Key Priorities
Slide 12: Core Business Projected to Grow 7-11% vs. 2019
Core Business Projected to Grow 7-11% vs. 2019 ADJUSTED EBITDA CONTRIBUTION @ 8-12% growth vs. 2021 7-11% growth vs. 2019 $621 $611-631 : $500-520} $590 1 $467 $465 ' ' + $113 : ' -$86 i f $70 $28 $25 $14 $12 $12 $6 $18 -s10 = = s _ ' 2019 2021 2022E ' 2019 2021 2022E 2019 2021 2022 2019 2021 2022 2
Slide 13: System Projected to Increase to 4%
3 System Projected to Increase 2 to 4% Continued momentum in openings and improvements in retention rate expected to drive net room growth back to pre-pandemic growth rate GLOBAL ADDITIONS GLOBAL RETENTION RATE 2019 2019 2021 2021 2022 2022 r 7 \ j 90% * n10% +30bps’ +SObps Expectation Expectation v
Slide 14: WH Unveils Developer-Driven Economy Extended-Stay Brand
Slide 15: Simplified Business Structure Allows for Greater Focus
Simplified Business Structure Allows for Greater Focus on Highly Profitable Direct Franchising Business EXIT SELECT-SERVICE SALE OF MANAGEMENT BUSINESS OWNED ASSETS * Completed the exit of CPLG management business and * Completed sale of Wyndham Grand Bonnet Creek received proceeds of $84 million fr
Slide 16: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders MAINTAIN STRONG BALANCE SHEET ~$11 billion of liquidity $750 million revolver extended to April 2027 Total leverage at 2.5x @ Significant room under all debt covenants No near-term debt maturities = Term Loan A $1,500 = Term Loan B INVEST IN BUSINES
Slide 17: Disciplined Approach to M&A
7 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 KY N\ NN AN
Slide 18: Continued Significant Investment & Focus on ESG
Continued Significant Investment & Focus on ESG Diversityine ‘COMPANIES FOR DIVERSITY NOTEWORTHY Forbes EZ] THE BEST EMPLOYERS ror DIVERSITY AMERICA'S EMPLOYERS A CULTURE OF DIVERSITY, EQUITY & INCLUSION Perfect score of 100 on Human Rights Campaign 2022 Corporate Equality Index for 4th consecutive
Slide 19: WH Investment Thesis
Slide 20: Ail:
Ail: ys Inn by Wyndhi z WYNDHAM llhead City, Arizona, USA HOTELS & RESORTS:
Slide 21: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
REASON 1 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk NUMBER OF HOTELS WORLDWIDE PERCENT OF FRANCHISED HOTELS 2,120 Choice [A 100% 7,594 6,983 . Hilton a ee% 6,028 HG [NNN 24% Marriott {iii 73% Limited exposure to operating costs and capital requirements Cesc leNt requiring l
Slide 22: Leisure Guests Power Our Business
22 REASON 2 Leisure Guests Power Our Business 70% LEISURE FOCUS reisure Tevel a 70 % “Everyday” % ——— Business Travel 27% All Other 1% Corporate Infrastructure ~21% Transient 2% Group Business | 1% WYNDHAM | All data as of December 31, 2021 HOTELS a ResoRTS
Slide 23: "Drive to" Destinations Not Reliant on Air Travel
23 REASON 3 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. HOTELS IN “DRIVE TO” LOCATIONS Suburban 35% Interstate 87% Small Metro Airport Urban Resorts All data based on STR census December 2021. 96% OF U.S. GUESTS ORIGINATE DOMESTICALLY US. 96% Europe |) 1% Ca
Slide 24: U.S. System Well Positioned Along Highways and Byways
U.S. System Well Positioned Along Highways and Byways and in Drive-to Destinations WYNDHAM 24 | All data as of December 31, 2021
Slide 25: Leader in the Attractive Select-Service Space
REASON 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 1% 4% costs 6,000 Higher operating margins 4000 Lower construction costs and manageable debt
Slide 26: WH Select-Service Portfolio Less Volatile During Crisis
WH Select-Service Portfolio Less Volatile During Crisis WH Select-Service Brands More Resilient Through Economic Downturns RevPAR Growth Global Financial Sept 1@ Crisis ©) COVID-19 © i GE®) (15%) (14%) U (19%) (33%) (58%) ™WH Select-Service ™STR Upscale+ WH Select-Service Outperformance: +300 BPS +5
Slide 27: Multiple Levers to Drive Net Room Growth
REASON 5 Multiple Levers to Drive Net Room Growth Strategic Evolution of Business and Innovation Prioritize Investment in the Business Owner-First NET ROOM Approach GROWTH Longer- Aga term + ROl-focused approach to property-improvement-plans and other conversion requirements + Strong value propositi
Slide 28: Compelling Value Proposition for Franchisees
Compelling Value Proposition for Franchisees!.y. Wyndham’s industry-leading central reservation systems deliver $7 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 95 million enrolled members Gl
Slide 29: Project ECHO 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 $53.00 Revenues $1,354,000 Operating expenses $745,000 Brand fees $115,000 Interest expense $184,000 Hotel EBTDA $310,000 Cash-on-Cash Return of ~20% Data is not brand specif
Slide 30: Strong and Experienced Leadership Team
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 Senior Vic
Slide 31: The Wyndham Family of Brands
31 ECONOMY az MICROTEL BY WYNDHAM ein ME dloward Johnson BY WYNDHAM The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. MIDSCALE RAMADA BY WYNOHAM RAMADA encore n0z. WINGATE’ ‘BY WYNDHAM xr. HAWTHORN’ SUITES BY WYNDHAM 4x AmericInn BY WYNDHAM ~— BAYMONT “BY WYNDHA
Slide 32: Appendix
Appendix Ramada by Wyndham | | ; 32 Adiyaman, Turkey
Slide 33: Quarterly Financial Impact of Select-Service Management Business and Owned Assets
APPENDIX Quarterly Financial Impact of Select-Service Management Business and Owned Assets ourth Quarte! Full Year Fee-related and other revenues 2022 $ 38 $ 12 $ - $ - $ 50 2021 19 33) 34 38 125 2020 34 7 15 15 71 2019 36 34 12 34 n7 Cost reimbursements 2022 $ 29 $ - $ - $ - $ 29 2021 50 58 58 49 2
Slide 34: Annual Financial Impact of Select-Service Management Business and Owned Assets
34 APPENDIX Annual Financial Impact of Select-Service Management Business and Owned Assets 2019 2021 2022 Adjusted Adjusted Adjusted Cin millions) Revenue EBITDA ¢ Revenue EBITDA Revenue EBITDA © CPLG contribution © (41) (21) (24) a) Termination fees from CPLG © (7) (7) (19) o> © (5) Owned assets (4
Slide 35: 2023 Planning - Revenue Sensitivities
APPENDIX 20235 Planning - Revenue Sensitivities Adjusted EBITDA Sensitivities Cin millions) U.S. royalties and franchise fees GES Margin of ~85% on gross $4.7 million per point impact; assumes cost mitigation of -15% International royalties and franchise fees ~$0.6 . . Funds expected to break-even u
Slide 36: Net Income to Adjusted EBITDA Reconciliation
Three Months Ended Six Months Ended Three Months Ended June 30, 2022 June 30, 2022 June 30, 2021 Net income $ 92 $ 198 $ 68 Provision for income taxes 31 66 25 Depreciation and amortization 17 40 24 Interest expense, net 20 39 22 Early extinguishment of debt 2 2 18 Stock-based compensation expense 9
Slide 37: Free Cash Flow Reconciliation
Three Months Ended Six Months Ended June June 30, 2022 30, 2022 Cash Flow: Net cash provided by operating activities $ 107 $ 242 Net cash provided by/(used in) investing activities 52 244 Net cash used in financing activities (174) (256) Effect of changes in exchange rates on cash, cash equivalents
Slide 38: Hotel Franchising Segment Margin
Three Months Ended Three Months Ended June 30, 2022 June 30, 2021 Hotel Franchising segment revenues $ 335 $ 283 Hotel Franchising segment adjusted EBITDA 185 166 Segment margin 55% 59% Effect of license fees (4%) (3%) Effect of marketing, reservation and loyalty funds 34% 29% Franchising margin 85%
Slide 39: Definitions & Disclaimer
39 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, transaction- related items
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