Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q1 2020 Earnings Presentation
27 slides from Wyndham Hotels & Resorts's earnings presentation, May 5, 2020
Slide 1: Investor Presentation
Investor Presentation May 4, 2020
Slide 2: Resilient Business Model
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Maximizing Cash Flow Clear focus and priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 2
Slide 3: Uniquely Positioned to Outperform
Uniquely Positioned to Outperform 1 2 3 4 5 Primarily Predominately Select-Service Ability to Reignite Low Risk Leisure-Focused “Drive to” Leader the Conversion Business Locations Engine Model 3
Slide 4: Leisure Guests Power our Business; Expected to Recover First
REASON #1 Leisure Guests Power our Business; Expected to Recover First Nearly 70% Leisure Focus Leisure 69% Corporate Transient 30% Business 1% Minimal Exposure to Group Business 4
Slide 5: "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% Urban 5% Latin America 1% Resorts 3% Asia P
Slide 6: 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 1% 6,000 4% Less labor-intensive and lower operating costs Higher operating margins 4,000 44% 99% 15% 72% Lower construction c
Slide 7: Proven Track Record of Growing During a Recession by Igniting the Conversion Engine
REASON #4 Proven Track Record of Growing During a Recession by Igniting the Conversion Engine Global Organic System Growth Conversion Activity as a Last Recession Percent of Total Room Openings 3% 568,000 86% 83% 563,200 72% 67% 550,600 2007 2008 2009 2007-2009 2010-2012 2013-2015 2016-2019 7 System
Slide 8: 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 World-class Distribution Hotels in U.S. Platform and Industry- 16,000 Leading Loyalty Program 12,000 Pro
Slide 9: 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 9,280 Wyndham 96% Choice 100% 7,153 7,349 Hilton 87% 5,903 6,110 IHG 83% Marriott 71% Limited exposure to operating costs and capital requirements associated with
Slide 10: Resilient Business Model
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Maximizing Cash Flow Clear focus and priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 10
Slide 11: Our Hotels are Open for Business
Our Hotels are Open for Business Nearly 100% of Hotels in U.S. Remain Open 100% 80% 98% OPEN 60% 93% FOR 40% 20% BUSINESS 0% U.S. Global Open Hotels Total Hotels 11 Data as of June 29, 2020.
Slide 12: Adverse Impact on RevPAR Muted by Economy/Midscale Positioning
Adverse Impact on RevPAR Muted by Economy/Midscale Positioning Weekly WH U.S. RevPAR Change Weekly WH U.S. Occupancy Levels Economy / Midscale 35% segments 31% 27% 28% 26% 25% 23% 19% (50%) Higher-end (59%) segments (64%) 9% (65%) (65%) 6% 6% 6% 7% (68%) 5% (71%) March 21st March 21st March 28th Apr
Slide 13: Wyndham Franchisees Positioned to Persevere
Wyndham Franchisees Positioned to Persevere Less impacted than higher chainscales Leisure demand expected to recover faster than corporate and group business Strong Breakeven at lower levels of occupancy Retention Wyndham providing multiple fee and operational concessions Rates Most qualif
Slide 14: Our Owners are at the Center of Everything We Do, Driving Industry-Leading Retention Rates
Our Owners are at the Center of Everything We Do, Driving Industry-Leading Retention Rates Our Approach Our Approach Retention Rates Economy Midscale 95% 96% 96% 93% Industry Wyndham Industry Wyndham 14 Retention rates for full-year 2019. Industry based on STR data.
Slide 15: Highly Flexible Business Model Provides Significant Cash Preservation Opportunities
Highly Flexible Business Model Provides Significant Cash Preservation Opportunities 65% Variable Spend Identified Savings of $255 Million ($millions) Realignment of the business ~$80 Fixed Spend Advertising ~$90 35% Transaction-related ~$30 2019 Total Spend (a) 65% Non-essential discretionary spend
Slide 16: Resilient Business Model
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Maximizing Cash Flow Clear focus and priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 16
Slide 17: Strong Balance Sheet and Substantial Cash Reserves
Strong Balance Sheet and Substantial Cash Reserves Balance Sheet Debt Maturities $2,000 • Cash on hand at March 31, 2020 $749M $1,500 • Major maturities due prior to 2023 None $1,000 • First lien leverage ratio of 5.0X June 30, 2021 $500 waived until: $0 • Financial and operating liabilities Limited
Slide 18: Ample Liquidity Under All Scenarios
Ample Liquidity Under All Scenarios Minimum Cash on Hand Fixed Charge Coverage at December 31, 2021 ($millions) Minimum Monthly Inflows: Franchise and management fees $0 Hypothetical RevPAR Change (10%) >$1,100 License fee revenue 6 (2021 v. 2019) Credit card income 3 Minimum Monthly Outflows: (20%)
Slide 19: Resilient Business Model
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Maximizing Cash Flow Clear focus and priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 19
Slide 20: Wyndham's Business Model is Capital Efficient and Generates Substantial Cash Flow
Wyndham’s Business Model is Capital Efficient and Generates Substantial Cash Flow Capital Spend as a Percentage of Revenue is Favorable versus Competition and Closest Peer 60% Conversion Yield ~60% $613 Conversion 30% CHH ($59) 20% ($100) $360 ($50) ($17) Peers ($27) 10% Wyndham 0% 2019 Cash taxes I
Slide 21: Disciplined Capital Allocation Has Generated Strong Shareholder Returns
Disciplined Capital Allocation Has Generated Strong Shareholder Returns 2018 – 2019 Capital Allocation 2020 – 2021 Priorities Maintain strong liquidity Capital Spend 18% Invest in the business for future growth 52% 27% Dividends Share Reduce leverage Repurchase 3% Debt Reduction Shareholder
Slide 22: Resilient Business Model
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Maximizing Cash Flow Clear focus and priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 22
Slide 23: The Wyndham Family of Brands
The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. Economy Midscale Upper Midscale Upscale Upper Upscale Select-service 23
Slide 24: RevPAR Sensitivities in Global Downturn of Large Magnitude
APPENDIX RevPAR Sensitivities in Global Downturn of Large Magnitude RevPAR Sensitivity vs. 2019 (for every point/100bps change) ($millions) U.S.-based franchise and management fees $4.0 Typically offset by variable International franchise and management fees 1.5 expense reductions but will impact Ad
Slide 25: Illustrative – April Cash Burn
APPENDIX Illustrative – April Cash Burn Cash Inflows Cash Outflows ($millions) ($millions) Franchise and management fees $32 Expenses $45 License fee revenue 6 Interest 9 Credit card income 3 Capital expenditures 3 Total $41 Total $57 ($16) ~70% RevPAR decline million 47 months of liquidity cash bur
Slide 26: Non-GAAP Reconciliations and Definitions
APPENDIX Non-GAAP Reconciliations and Definitions 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’ understandin
Slide 27: Disclaimer
APPENDIX Disclaimer This presentation and the information contained herein are solely for informational purposes. This presentation does not constitute a recommendation regarding the securities of Wyndham Hotels & Resorts. This presentation or any related oral presentation does not constitute any of
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