WYNDHAM HOTELS & RESORTS reported growth in net rooms and its development pipeline for the third quarter. Global systemwide rooms increased 4 percent year-over-year, with 1 percent growth in the U.S. and 8 percent internationally. Global RevPAR rose 1 percent in constant currency compared to 2023, with a 1 percent decline in the U.S. and 7 percent growth internationally.
The company’s adjusted net income for the third quarter was $110 million, a 1 percent decrease year-over-year but a 3 percent increase on a comparable basis, Wyndham said in a statement.
“Our teams delivered exceptional results, executing our growth strategy and achieving 7 percent growth in comparable adjusted EBITDA, driven by system expansion, higher royalty rates, and increased ancillary revenues,” said Geoff Ballotti, president and CEO. “We awarded 10 percent more franchise contracts domestically, driving 5 percent growth in our development pipeline. Stabilizing RevPAR trends and increasing infrastructure demand are expected to lead to improved results in the coming quarters. We remain focused on delivering value to our guests, franchisees, and shareholders, having returned nearly $380 million year-to-date through dividends and share repurchases.”
Wyndham reported a net income of $86 million for the second quarter ending June 30, with its global pipeline growing 7 percent year-over-year, including a 5 percent increase in the U.S.
Expansion on track
Wyndham opened over 17,000 rooms globally, including nearly 7,000 in the U.S., a 15 percent year-over-year increase, and launched its second ECHO Suites Extended Stay by Wyndham, the statement said. The company awarded 197 development contracts worldwide, including 95 in the U.S., a 10 percent increase from the previous year.
Its development pipeline grew by 1 percent sequentially and 5 percent year-over-year, reaching a record 248,000 rooms. Ancillary revenues rose 8 percent compared to the third quarter of 2023, Wyndham said.
Wyndham’s financial performance showed solid growth, with diluted earnings per share increasing 7 percent to $1.29 and adjusted diluted EPS growing 6 percent to $1.39 (approximately 10 percent on a comparable basis). Adjusted net income was $110 million, down 1 percent year-over-year but up 3 percent on a comparable basis. Adjusted EBITDA increased by 4 percent to $208 million, or 7 percent on a comparable basis. The company returned $126 million to shareholders through share repurchases and dividends of $0.38 per share.
System size and development
Wyndham’s global system grew 4 percent, with 1 percent growth in the U.S. and 8 percent internationally, including 3 percent growth in midscale and above segments in the U.S., and strong growth in EMEA and Latin America, both up 11 percent. The company improved its retention rate and remains on track to meet its 2024 net room growth outlook of 3-4 percent.
As of September 30, the company’s global development pipeline included approximately 2,100 hotels and 248,000 rooms, a 5 percent year-over-year increase, the statement said.
Highlights include:
- 7 percent growth in the U.S. and 3 percent internationally.
- 17th consecutive quarter of sequential pipeline growth.
- 70 percent of the pipeline in midscale and above segments, which grew 6 percent year-over-year.
- 14 percent of the pipeline in ECHO Suites Extended Stay by Wyndham.
- 58 percent of the pipeline is international.
- 79 percent of the pipeline consists of new construction, with 35 percent already under construction.
- 197 new contracts awarded in the third quarter, including 95 in the U.S.
RevPAR trends
RevPAR for midscale and above segments in the U.S. remained flat year-over-year, while the economy segment declined 2 percent, Wyndham said. U.S. economy brands gained 50 basis points of market share, particularly in oil and gas markets, up 250 basis points, and in states with high infrastructure bill spending, up 80 basis points. U.S. occupancy remained stable.
Internationally, RevPAR in EMEA, Latin America, and Canada rose 13 percent, driven by ADR growth of 11 percent and 2 percent growth in occupancy. In contrast, RevPAR for APAC declined 7 percent, impacted by a 2 percent decrease in occupancy and a 5 percent decline in ADR, though APAC’s third-quarter RevPAR showed a 500 basis point sequential improvement.
Operating results
Fee-related and other revenues totaled $394 million, compared to $400 million in the third quarter of 2023, which included $18 million from the global franchisee conference, the statement said. Excluding this, fee-related and other revenues grew 3 percent, driven by higher royalties, franchise fees, and ancillary revenues.
Net income was $102 million, down from $103 million in the third quarter of 2023, mainly due to higher interest expense, offset by higher adjusted EBITDA. Adjusted EBITDA grew 4 percent to $208 million, up from $200 million in the third quarter of 2023. Excluding a $5 million unfavorable impact from marketing fund variability, adjusted EBITDA grew 7 percent on a comparable basis.
Diluted earnings per share increased to $1.29 from $1.21 in the third quarter of 2023, due to a lower share count from share repurchases. Adjusted diluted EPS rose 6 percent to $1.39, compared to $1.31 in the third quarter of 2023. This increase included a $0.04 per share unfavorable impact from marketing fund variability. On a comparable basis, adjusted diluted EPS grew about 10 percent, reflecting comparable adjusted EBITDA growth and share repurchase benefits, partially offset by higher interest expense.
The company’s marketing fund revenues exceeded expenses by $12 million in the third quarter, compared to a $17 million surplus in the third quarter of 2023, Wyndham said. Marketing fund revenues are expected to roughly match expenses for the full year 2024.
Wyndham recently signed a 10-year development agreement with Reside to launch five residence-style hotels, marking the debut of the "Wyndham Residence" tier in the U.S. It also launched the "Accelerator Circle," a community platform for diverse hoteliers offering BOLD and Women Own the Room franchisees access to Wyndham's network through quarterly virtual meetups.
