Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q1 2024 Earnings Presentation
44 slides from Wyndham Hotels & Resorts's earnings presentation, Apr 25, 2024
Slide 1: Investor Presentation
Investor Presentation April 24, 2024 WaterWalk by Wyndham Boise, Idaho, USA Opened March 2024
Slide 2: Introduction to Wyndham Hotels & Resorts
Introduction to Wyndham Hotels & Resorts Asset-light Leading brands Primarily Largest business model in the resilient leisure-focused, hotel franchisor generating select-service “drive to” portfolio worldwide(a) significant free cash segment of hotels flow ~9,200 25 ~243,000 ~70% Hotels Brands Rooms
Slide 3: Q1 2024 Performance Recap
Q1 2024 Performance Recap Wyndham Jomtien Pattaya Pattaya, Thailand 3 Opened January 2024
Slide 4: First Quarter 2024 Performance Recap
First Quarter 2024 Performance Recap +1% +4% Global RevPAR Net room vs. 2023(a) growth YOY +8% +8% New deals Global pipeline signed YOY growth YOY $141M $102M $89M Adjusted Adjusted Capital returned to EBITDA(b) free cash flow(c) shareholders 4
Slide 5: Global RevPAR Poised to Accelerate
Global RevPAR Poised to Accelerate… U.S. REVPAR COMPARISONS POSITIVE MOMENTUM INTERNATIONALLY SIGNIFICANTLY IMPROVE BEYOND Q1 FOLLOWING COVID RECOVERY U.S. RevPAR Growth International RevPAR Growth Year-over-Year Year-over-Year 28% Toughest 4% comparison 25% (1%) (1%) 9% 5% (4%) 2% (5%) Q1’23 Q2’23
Slide 6: System Growth Off to Strongest Start Ever
…System Growth Off to Strongest Start Ever… NET ROOM GROWTH PACING AHEAD RETENTION CONTINUES OF HISTORICAL PERFORMANCE TO IMPROVE DOMESTIC % of FY NRG Rolling 12 Months MIDSCALE+ SYSTEM Achieved through Q1 YOY GROWTH 15% 95.6% 95.3% +3% 10% 10% 8% INTERNATIONAL DIRECT SYSTEM YOY GROWTH +11% 2022 202
Slide 7: Pipeline Expanding to Another All-Time High
…Pipeline Expanding to Another All-Time High TOTAL PIPELINE @ 3/31/2024 GLOBAL COMPOSITION SEGMENT MIX +4% Pipeline as a YoY midscale+ ~243K ~1,980 % of current 17% 22% pipeline growth portfolio: Global rooms Global hotels 42% 28% 14% 58% 69% ECHO Suites International 78% Economy Economy Brands 15th
Slide 8: First ECHO Suites Nearing Opening Dates
First ECHO Suites Nearing Opening Dates Plano North, TX Spartanburg, SC Richmond, VA Houston/Katy, TX Indianapolis, IN Plano Gateway, TX 8
Slide 9: Expanding Globally in Key Markets
Legacy Hotel, Trademark Collection by Wyndham Monterrey Ambassador Centro Ramada Resort by Wyndham Sapanca Days Inn Staten Island Wyndham, Green Bay, Wisconsin, USA Nuevo Leon, Mexico Thermal, Sakarya, Turkey Staten Island, New York, USA Opened January 2024 Opened March 2024 Opened March 2024 Opened
Slide 10: Asset-Light, Franchised Model Generates Strong Free Cash Flow
Asset-Light, Franchised Model Generates Strong Free Cash Flow (in millions) ~70% Conversion Rate from Adjusted EBITDA $141 ($28) $102 $98 ($9) ($2) ($4) Q1 Interest Capital Working Adjusted Transaction Q1 Adjusted Expense, Expenditures Capital Free Cash Related Free Cash EBITDA(a) Net Flow(b) Costs(
Slide 11: Continued Significant Investment & Focus on ESG
Continued Significant Investment & Focus on ESG 13M+ Environment – 2 out of 10 Social – 1 out of 10 Governance – 2 out of 10 A CULTURE OF LEADERSHIP IN PROTECTING SUPPORTING OUR DIVERSITY, EQUITY & INCLUSION SUSTAINABILITY HUMAN RIGHTS COMMUNITIES Recognized for the 4th time as one of Global brand s
Slide 12: 2024 Focus
2024 Focus CLEAR INTENT & PRIORITIES TO MAXIMIZE STANDALONE GROWTH PROSPECTS Wyndham Dalian Jinpu Dalian, China 12 Opened January 2024
Slide 13: 2024 Key Priorities
2024 Key Priorities Grow direct franchise system 3-4% in 2024, Optimize franchisees’ top-line and including continued improvement of market share through continued digital retention rate and investment in our brands innovation and best practices Continue momentum of ECHO Suites brand Capitalize on g
Slide 14: System Projected to Increase 3 to 4%
System Projected to Increase 3 to 4% Continued momentum in openings and improvements in retention rate expected to accelerate net room growth GLOBAL ADDITIONS GLOBAL RETENTION RATE 2023 66,000 2023 95.6% 2024 ~8% Gross Openings 2024 Retention Rate >95.6% 14
Slide 15: RevPAR Growth Expectation Remains 2 to 3%
RevPAR Growth Expectation Remains 2 to 3% Improving U.S. RevPAR trends and strong international momentum expected to drive rest-of-year RevPAR growth of 3 to 4% 2024 RevPAR Growth vs. 2023 Recent Trends U.S. RevPAR improved >200 basis +3 to 4% points from February to March +2 to 3% Month-to-date
Slide 16: Wyndham on Track for 7% Growth in 2024
Wyndham on Track for 7% Growth in 2024 . . . 2024 Adjusted EBITDA Outlook(a) 2024 Building Blocks (in millions) 6-8% 3-4% Net Room Growth Comparable Basis Growth(b) • ~8% gross openings, including higher FeePAR room openings from pipeline $40-$50 $690-$700 • ~96% retention, reflecting 20-30 bps re
Slide 17: Capital Deployment Will Further Enhance Growth
. . . Capital Deployment Will Further Enhance Growth (in millions) ~60% Conversion Rate $690-$700 $330 ~$745 (~$125) ($120-$125) (~$90) ~$415 (~$50) ~$410 ($118-$120) (~$40) (~$70) FY24E Cash Interest CapEx FY24E Incremental Available Dividends Development Costs Mandatory Excess Adjusted Taxes Costs
Slide 18: Maximizing Capital Allocation For All Stakeholders
Maximizing Capital Allocation For All Stakeholders MAINTAIN STRONG RETURN EXCESS CAPITAL BALANCE SHEET INVEST IN BUSINESS TO SHAREHOLDERS $583 million of liquidity Strategic deployment of capital to accelerate Target mid-30s dividend payout ratio growth in higher RevPAR, midscale+ hotels Total lever
Slide 19: Disciplined Approach to M&A
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 19
Slide 20: Business Overview
Business Overview Wyndham Alltra Samaná All Inclusive Resort Samaná, Dominican Republic 20 Opened March 2024
Slide 21: WH Investment Thesis
WH Investment Thesis Highly resilient, asset-light, fee-based franchise business model generating high margins and prodigious free cash flow Wyndham São Paulo Ibirapuera Convention Plaza Hotel São Paulo, Brazil 21 Opened January 2024
Slide 22: Resilient Business Model & Core Strengths
Resilient Business Model & Core Strengths 1 2 3 4 5 LOW RISK PRIMARILY LEISURE PREDOMINATELY SELECT-SERVICE POWERFUL BUSINESS & INFRASTRUCTURE “DRIVE TO” LEADER GROWTH ENGINE MODEL BUSINESS-FOCUSED LOCATIONS La Quinta Inn & Suites by Wyndham Wenatchee, Washington, USA 22 Opened March 2024
Slide 23: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
PILLAR 1 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk NUMBER OF HOTELS WORLDWIDE PERCENT OF FRANCHISED HOTELS 9,200 Wyndham >99% 8,900 Choice >99% 7,500 7,600 6,400 Hilton 89% IHG 84% Marriott 76% Asset-light requiring average capital expenditure spend of less than 5% of fee-
Slide 24: Leisure Guests Power Our Business, Infrastructure-Related Spend Further Supports Growth
PILLAR 2 Leisure Guests Power Our Business, Infrastructure-Related Spend Further Supports Growth ~70% LEISURE FOCUS; ~20% INFRASTRUCTURE Leisure Travel 71% Infrastructure 22% Logistics/ Other 5% Corporate Transient 2% Group Business <1% Represents percentage of U.S. gross room revenues for full-year
Slide 25: Our Domestic Guests are Middle-Class and Getting Younger
Our Domestic Guests are Middle-Class and Getting Younger GEN X/Y/Z GUESTS U.S. Household Income AS % OF TOTAL First Second Third Fourth Fifth Quintile Quintile Quintile Quintile Quintile 63% $30,000 - $58,000 - $94,000 - <$30,000 >$153,000 58,000 94,000 153,000 58% WH guest average household income
Slide 26: Infrastructure Category Represents Large Growth Opportunity
Infrastructure Category Represents Large Growth Opportunity in Coming Years STRONG OVERLAP OF WH FOOTPRINT WH WELL-POSITIONED AND INFRASTRUCTURE SPEND MARKETS FOR FUTURE OPPORTUNITY In 2019, the federal government spent $71 billion on infrastructure; the 2021 Infrastructure Act & 2022 CHIPS Act pr
Slide 27: "Drive to" Destinations Not Reliant on Air Travel or International Travelers
PILLAR 3 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. HOTELS 96% OF U.S. GUESTS IN “DRIVE TO” LOCATIONS ORIGINATE DOMESTICALLY Suburban 33% U.S. 96% Interstate 25% 87% Europe 1% Small Metro 29% Canada 1% Airport 5% Latin America 1% Urban 5% Resorts 3% Asia Pa
Slide 28: U.S. System Well-Positioned Along Highways and Byways
U.S. System Well-Positioned Along Highways and Byways and in Drive-to Destinations 28 All data as of December 31, 2023.
Slide 29: 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% 6,000 1% costs Higher operating margins 99% 42% 4,000 95% 14% 71% Lower construction cost
Slide 30: WH Select-Service Portfolio Less Volatile During Periods of Economic Decline
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 Sept 11(a) Financial Crisis(b) COVID-19(c) (12%) (15%) (14%) (19%) (33%) WH Select-Service STR Upscale+ (58%) WH S
Slide 31: Multiple Levers to Drive Net Room Growth
PILLAR 5 Multiple Levers to Drive Net Room Growth ORGANIC NET ROOM GROWTH Longer- 2024 term Proven Value Proposition New Extended-Stay Product (ECHO Suites) 3-5% Continued Improvement in Retention Rates 3-4% International Direct-Franchise Signings Large Addressable Conversion Market 31
Slide 32: Compelling Value Proposition for Franchisees
Compelling Value Proposition for Franchisees . . . Wyndham’s industry-leading central Continuous guest-facing digital reservation systems deliver nearly $8 out of innovation enhances guest experience every $10 to U.S. franchisees World’s largest hotel franchisor Trusted brands with segment-leading l
Slide 33: That Continues to Deliver Strong Returns
. . .That 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% 33
Slide 34: Significant Opportunities in Conversion Market and International Direct-Franchising
Significant Opportunities in Conversion Market and International Direct-Franchising LARGE SELECT-SERVICE STRONG INTERNATIONAL CONVERSION MARKET DIRECT-FRANCHISING EXPANSION (in thousands) (in thousands) Global Hotels International DF Rooms Pipeline 100 150 +30% 125 75 >10X 100 50 75 50 25 25 0 0 Wyn
Slide 35: Appendix
Appendix Origin Baton Rouge, a Wyndham Hotel Baton Rouge, Louisiana, USA 35 Opened January 2024
Slide 36: Long-Term Growth Opportunity
APPENDIX Long-Term Growth Opportunity Adjusted EBITDA Algorithm (in millions) 7-10% CAGR $35-$55 $795-$865 $25-$35 $85-$125 $650 2023 Business Infrastructure Ancillary 2026E Comparable-Basis Drivers Capture Growth Adjusted Adjusted EBITDA Annual Assumptions: EBITDA(a) • RevPAR of 2-3% ~8% CAGR inclu
Slide 37: 2024 Planning – Revenue Sensitivities
APPENDIX 2024 Planning – Revenue Sensitivities Adjusted EBITDA Sensitivities (in millions) Driver Based vs. 2023 1 Point 1 Basis Point (RevPAR & NRG) (Royalty Rate) U.S. royalties and franchise fees ~$3.4 ~$0.7 Margin of ~85% on gross revenues International royalties and franchise fees ~$0.8 ~$0.3 F
Slide 38: Strong and Experienced Leadership Team
APPENDIX Strong and Experienced Leadership Team • Served as President and Chief Executive Officer of • Served as Executive Vice President and Treasurer of Wyndham Hotel Group (2014 – 2018) Wyndham Hotels & Resorts (2018 – 2019) • Served as Chief Executive Officer of Wyndham Destination • Served as S
Slide 39: The Wyndham Family of Brands
APPENDIX The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. 39 Vienna House brand acquisition also included Vienna House Easy midscale brand.
Slide 40: WH Business Operates at High Margins
APPENDIX WH Business Operates at High Margins ($ in millions) FY 2023 Fee-Related Adjusted and Other EBITDA Revenues(a) Margin Contribution(a) Royalties and franchise fees $532 X 85% = $452 License fees $97 X 100% = $97 Other revenues (a) $177 X 57% = $101 Total ex. Marketing, reservation & loyalty
Slide 41: Footnotes
APPENDIX Footnotes Page 2 Page 30 Data is approximated as of March 31, 2024. WH Select-Service includes all WH economy, midscale and upper midscale brands; STR Upscale includes STR upscale, upper upscale and luxury segments. (a) Largest hotel franchisor by number of hotels. (a) STR 2002 vs 2000 (b)
Slide 42: 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 43: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations The following table reconciles certain non-GAAP financial measures. We define free cash flow to be net cash provided by operating activities excluding development advances, less capital expenditures. We believe free cash flow to be a useful operating performance mea
Slide 44: 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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