Wyndham Hotels & Resorts Reports Q2 2023 Results

July 28, 2023

Wyndham Hotels & Resorts (NYSE: WH) yesterday announced results for the three months ended June 30, 2023.  Highlights include:

  • Global RevPAR grew 7% compared to second quarter 2022 in constant currency.
  • System-wide rooms grew 4% year-over-year.
  • Development pipeline grew 1% sequentially and 10% year-over-year.
  • Signings of 24,000 rooms grew 6% year-over-year and 7% compared to 2019.
  • Awarded 60 new construction projects for ECHO Suites Extended Stay by Wyndham in July, including its first hotels in Canada, bringing the total number of contracts to 265.
  • Returned $139 million to shareholders through $109 million of share repurchases and a quarterly cash dividend of $0.35 per share.
  • Successfully completed the refinancing of its Term Loan B Facility, extending maturity from 2025 to 2030.

“During the second quarter, we celebrated the tremendous progress we’ve made in our five-year journey as a new public company with another quarter of solid results including global RevPAR growth of 7%, net room growth of 4% and the 12th consecutive quarter of sequential growth in our development pipeline, which has never been stronger,” said Geoff Ballotti, president and chief executive officer.  “International travel demand continues to accelerate, our U.S. economy brands continue to outperform the industry and our nation’s infrastructure bill spend is expected to represent a meaningful tailwind for our franchisees in the months and years ahead.  We remain very confident in our ability to deliver outstanding value for our franchisees and shareholders, as does our Board of Directors who today approved a $400 million increase in our share repurchase authorization, reflecting their confidence in the ongoing strength of our business and our strong free cash flow.”

Second Quarter Financial Results

The comparability of the Company’s second quarter results is impacted by the sale of its owned hotels and the exit of its select-service management business, both of which occurred in 2022, as well as quarterly timing variances from its marketing funds.  The Company’s reported results and comparable-basis results (adjusted to neutralize these impacts) are presented below to enhance transparency and provide a better understanding of the results of the Company’s ongoing operations:

Fee-related

 and other

 revenues

Net

 income (a)

Adjusted

 EBITDA

Reported

diluted

EPS (a)

Adjusted

 diluted

 EPS (a)

2022 reported

$         354

$      92

$      175

$      1.00

$   1.07

Less: CPLG/Owned asset contribution

(12)

(2)

(3)

(0.02)

(0.02)

2022 ex. CPLG/Owned asset contribution

342

90

172

0.98

1.05

2023 reported

358

70

158

0.82

0.93

Change

16

(20)

(14)

(0.16)

(0.12)

Less: Marketing fund variability

n/a

(20)

(27)

(0.22)

(0.22)

Comparable growth

$           16

$       —

$        13

$      0.06

$   0.10

Comparable growth rate

5 %

— %

8 %

6 %

10 %

Note:

Growth rates may not recalculate due to rounding; see Table 7 for a reconciliation of non-GAAP metrics.

(a)

Includes estimated tax impact for the select-service management business, owned assets and marketing fund variability.
  • Fee-related and other revenues was $358 million compared to $354 million in second quarter 2022, which included $12 million from the Company’s select-service management business and owned hotels. On a comparable basis, fee-related and other revenues increased 5% year-over-year primarily reflecting higher royalties and franchise fees resulting from global RevPAR and system growth.
  • The Company generated net income of $70 million, or $0.82 per diluted share, compared to $92 million, or $1.00 per diluted share, in second quarter 2022. The decline in net income was expected and reflective of the marketing fund variability, higher interest expense and transaction-related costs primarily related to the Company’s refinancing of its Term Loan B Facility. On a comparable basis, adjusted diluted earnings per share grew 10% reflecting 8% growth in comparable basis adjusted EBITDA and a lower share count due to share repurchase activity.
  • Adjusted EBITDA was $158 million compared to $175 million in second quarter 2022. On a comparable basis, adjusted EBITDA increased 8% year-over-year primarily reflecting higher fee-related and other revenues.
  • During second quarter 2023, the Company’s marketing fund expenses exceeded revenues by $15 million; while in second quarter 2022, the Company’s marketing fund revenues exceeded expenses by $12 million, resulting in $27 million of marketing fund variability.

System Size

Rooms

June 30, 2023

June 30, 2022

YOY

Change (bps)

United States

495,100

492,400

50

International

356,400

326,500

920

Global

851,500

818,900

400

The Company’s global system grew 4%, reflecting 1% growth in the U.S. and 9% growth internationally.  As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 4% and 13%, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand.  The Company remains solidly on track to achieve its net room growth outlook of 2 to 4% for the full year 2023, including an increase in its retention rate compared to 2022. 

RevPAR

Second

Quarter 2023

YOY

Constant

Currency

% Change

United States

$           55.26

(1 %)

International

34.44

34

Global

46.47

7

Second quarter global RevPAR grew by 7% in constant currency compared to 2022 reflecting a 1% decline in the U.S. and growth of 34% internationally.  The Company had achieved record-breaking RevPAR in the U.S. during the preceding year due to COVID-impacted travel patterns.  Comparing to 2019 to neutralize for these impacts, U.S. RevPAR grew 8%, a 30 basis point acceleration from first quarter 2023 growth.  The international RevPAR growth was driven equally by stronger pricing power and higher occupancy levels. 

Development

  • On June 30, 2023, the Company’s global development pipeline consisted of nearly 1,850 hotels and approximately 228,000 rooms, representing a 10% year-over-year increase, including 22% growth in the U.S.
  • Approximately 72% of the Company’s pipeline is in the midscale and above segments.
  • Approximately 57% of the Company’s development pipeline is international.
  • Approximately 81% of the Company’s pipeline is new construction, of which approximately 35% has broken ground.
  • During second quarter 2023, the Company awarded 179 new contracts for its legacy brands, an increase of 8% year-over-year. In July, the Company awarded 60 additional new contracts for its ECHO Suites Extended Stay by Wyndham brand to established and experienced developers, including what will be the brand’s first hotels in Canada. This brings the total number of contracts awarded for the brand to 265 since its launch, or nearly 33,000 rooms.

Cash and Liquidity

The Company generated net cash provided by operating activities of $83 million and free cash flow of $74 million in second quarter 2023.  The Company ended the quarter with a cash balance of $63 million and approximately $800 million in total liquidity.

In May 2023, the Company successfully amended and extended its outstanding Senior Secured Term Loan B Facility (“Prior Term Loan B”), which was due May 2025.  The new $1.1 billion Senior Secured Term Loan B Facility (“New Term Loan B”) matures in May 2030 and carries an interest rate of SOFR plus 2.25% (with a 0.10% credit spread adjustment).  The net proceeds from the New Term Loan B were used to repay all outstanding principal under the Company’s Prior Term Loan B.

As a result of this transaction, the Company moved its next material debt maturity to 2027 and increased its weighted average maturity from 3.2 to 6.0 years, providing significant financial flexibility to execute on the Company’s strategic objectives of delivering outstanding value to its guests and franchisees while driving strong shareholder return.

Share Repurchases and Dividends

During the second quarter, the Company repurchased approximately 1.6 million shares of its common stock for $109 million at an average price of $68.56 per share.  Year-to-date through June 30, the Company repurchased approximately 2.4 million shares of its common stock for $165 million at an average price of $69.20 per share.  The Company’s Board of Directors recently increased the Company’s share repurchase authorization by $400 million.

The Company paid common stock dividends of $30 million, or $0.35 per share.

Full-Year 2023 Outlook

The Company is refining its outlook as follows: 

Updated Outlook

Prior Outlook

Year-over-year rooms growth

2 – 4%

2 – 4%

Year-over-year global RevPAR growth (a)

4 – 6%

4 – 6%

Fee-related and other revenues

$1.38 – $1.41 billion

$1.38 – $1.41 billion

Adjusted EBITDA

$654 – $664 million

$654 – $664 million

Adjusted net income

$336 – $348 million

$340 – $352 million

Adjusted diluted EPS

$3.92 – $4.06

$3.92 – $4.06

Free cash flow conversion rate (b)

50 – 55%

50 – 55%

(a)

Outlook represents global RevPAR growth of 6% to 8% compared to 2019.

(b)

Represents the percentage of adjusted EBITDA that is expected to produce free cash flow.

The reduction in adjusted net income represents an increase in interest expense due, in part, to the refinancing of the Company’s Term Loan B.  This impact was offset in adjusted diluted EPS by second quarter share repurchase activity.

Year-over-year growth rates are not comparable due to the sale of the Company’s owned hotels and the exit of its select-service management business, both of which occurred during 2022, as well as the variability in its marketing funds due to the support that the Company provided to its owners during 2020.

The Company’s expectations for full-year 2023 marketing funds contribution to adjusted EBITDA is unchanged at $10 million.  The Company expects fund revenues will outpace fund expenses by $29 million in the second half of 2023 with approximately $10 million to $15 million per quarter.

Wyndham Hotels & Resorts (NYSE: WH) is the world’s largest hotel franchising company by the number of properties, with approximately 9,100 hotels across over 95 countries on six continents.

Table 1

WYNDHAM HOTELS & RESORTS

INCOME STATEMENT

(In millions, except per share data)

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2023

2022

2023

2022

Net revenues

Royalties and franchise fees

$          142

$          133

$          263

$          242

Marketing, reservation and loyalty

145

145

265

257

Management and other fees

5

16

8

51

License and other fees

29

27

53

46

Other

37

33

76

73

Fee-related and other revenues

358

354

665

669

Cost reimbursements

4

32

9

88

Net revenues

362

386

674

757

Expenses

Marketing, reservation and loyalty

160

133

284

237

Operating

23

28

43

64

General and administrative

31

31

61

59

Cost reimbursements

4

32

9

88

Depreciation and amortization

19

17

37

40

Transaction-related

4

—

4

—

Separation-related

(2)

(1)

—

(1)

(Gain)/loss on asset sales

—

1

—

(35)

Total expenses

239

241

438

452

Operating income

123

145

236

305

Interest expense, net

24

20

46

39

Early extinguishment of debt

3

2

3

2

Income before income taxes

96

123

187

264

Provision for income taxes

26

31

50

66

Net income

$            70

$            92

$          137

$          198

Earnings per share

Basic

$        0.82

$        1.00

$        1.59

$        2.15

Diluted

0.82

$        1.00

1.59

2.13

Weighted average shares outstanding

Basic

85.3

91.6

85.9

92.0

Diluted

85.7

92.1

86.4

92.7

Table 2

WYNDHAM HOTELS & RESORTS

HISTORICAL REVENUE AND ADJUSTED EBITDA BY SEGMENT

The reportable segments presented below represent our operating segments for which separate financial information is available and is utilized on a regular basis by our chief operating decision maker to assess performance and allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon net revenues and adjusted EBITDA.  During the first quarter of 2023, we changed the composition of our reportable  segments to reflect the recent changes in our Hotel Management segment, including the sale of our owned assets, the exit of our select-service management business and the exit from substantially all of our U.S. full-service management business.  The remaining hotel management business, which is predominately the full-service international managed business, has been aggregated, on a prospective basis, within our Hotel Franchising segment.  We believe that adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, allows a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

First

Quarter

Second

 Quarter

Third

  Quarter

Fourth

 Quarter

Full

 Year

Hotel Franchising (a)

Net revenues

2023

$            313

$            362

n/a

n/a

n/a

2022

272

335

$            367

$            303

$         1,277

2021

209

283

337

270

1,099

Adjusted EBITDA

2023

$            164

$            175

n/a

n/a

n/a

2022

155

185

$            201

$            138

$            679

2021

105

166

193

128

592

Hotel Management

Net revenues

2023

n/a

n/a

n/a

n/a

n/a

2022

$              99

$              51

$              40

$              31

$            221

2021

94

123

126

122

466

Adjusted EBITDA

2023

n/a

n/a

n/a

n/a

n/a

2022

$              20

$                6

$                7

$                4

$              37

2021

5

16

16

19

57

Corporate and Other

Net revenues

2023

$               —

$               —

n/a

n/a

n/a

2022

—

—

$               —

$               —

$               —

2021

—

—

—

—

—

Adjusted EBITDA

2023

$            (17)

$            (17)

n/a

n/a

n/a

2022

(16)

(16)

$            (17)

$            (16)

$            (66)

2021

(13)

(14)

(15)

(16)

(59)

Total Company

Net revenues

2023

$            313

$            362

n/a

n/a

n/a

2022

371

386

$            407

$            334

$         1,498

2021

303

406

463

392

1,565

Net income/(loss)

2023

$              67

$              70

n/a

n/a

n/a

2022

106

92

$            101

$              56

$            355

2021

24

68

103

48

244

Adjusted EBITDA

2023

$            147

$            158

n/a

n/a

n/a

2022

159

175

$            191

$            126

$            650

2021

97

168

194

131

590

NOTE:

Amounts include the results of the Company’s Wyndham Grand Bonnet Creek Resort and Wyndham Grand Rio Mar Resort, which were sold in March 2022 and May 2022, respectively, and its select-service management business, which was exited in March 2022, through their sale/exit dates. Amounts may not add across due to rounding. See Table 7 for reconciliations of Total Company non-GAAP measures and Table 9 for definitions.

(a)

For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company’s remaining full-service management business.

Table 3

WYNDHAM HOTELS & RESORTS

CONDENSED CASH FLOWS

(In millions)

(Unaudited)

Six Months Ended

June 30,

2023

2022

Operating activities

Net income

$          137

$          198

Depreciation and amortization

37

40

Gain on asset sales

—

(35)

Trade receivables

(24)

(5)

Accounts payable, accrued expenses and other current liabilities

7

(5)

Deferred revenues

20

16

Payments of development advance notes, net

(31)

(13)

Other, net

30

46

Net cash provided by operating activities

176

242

Investing activities

Property and equipment additions

(18)

(18)

Proceeds from asset sales, net (a)

—

263

Other, net

(1)

(1)

Net cash (used in)/provided by investing activities

(19)

244

Financing activities

Proceeds from long-term debt

1,138

400

Payments of long-term debt

(1,149)

(404)

Debt issuance costs

(8)

(4)

Dividends to shareholders

(61)

(59)

Repurchases of common stock

(164)

(179)

Other, net

(10)

(10)

Net cash used in financing activities

(254)

(256)

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

(1)

(1)

Net (decrease)/increase in cash, cash equivalents and restricted cash

(98)

229

Cash, cash equivalents and restricted cash, beginning of period

161

171

Cash, cash equivalents and restricted cash, end of period

$            63

$          400

Free Cash Flow:

We define free cash flow to be net cash provided by operating activities less property and equipment additions, which we also refer to as capital expenditures. We believe free cash flow to be a useful operating performance measure to us and investors to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions and investments, as well as our ability to return cash to shareholders through dividends and share repurchases. Free cash flow is not necessarily a representation of how we will use excess cash. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Hotels is that free cash flow does not represent the total cash movement for the period as detailed in the condensed consolidated statement of cash flows.

Three Months

Ended June 30,

Six Months

Ended June 30,

2023

2022

2023

2022

Net cash provided by operating activities (b)

$            83

$          107

$          176

$          242

Less: Property and equipment additions

(9)

(8)

(18)

(18)

Free cash flow

$            74

$            99

$          158

$          224

(a)

Includes proceeds of $179 million, net of transaction costs, received from the Company’s sales of the Wyndham Grand Bonnet Creek Resort and the Wyndham Grand Rio Mar Resort and $84 million of proceeds from CorePoint Lodging related to the Company’s exit of its select-service management business.

(b)

The year-over-year comparability of the three months ended June 30th is impacted by $19 million of higher marketing spend and $12 million of higher development advance spend.  The year-over-year comparability of the six months ended June 30th is impacted by $21 million of higher marketing spend and $18 million of higher development advance spend, as well as the absence of $13 million due to the exit of the select-service management business and owned hotels.  While the Company has now lapped the sale of its owned hotels and the exit of its select-service management business, the marketing fund variability will continue to impact the year-over-year comparisons for the remainder of 2023.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

(Unaudited)

As of

June 30, 2023

As of

December 31, 2022

Assets

Cash and cash equivalents

$                                 63

$                               161

Trade receivables, net

258

234

Property and equipment, net

94

99

Goodwill and intangible assets, net

3,118

3,131

Other current and non-current assets

523

498

Total assets

$                           4,056

$                           4,123

Liabilities and stockholders’ equity

Total debt

$                           2,058

$                           2,077

Other current liabilities

432

386

Deferred income tax liabilities

344

345

Other non-current liabilities

342

353

Total liabilities

3,176

3,161

Total stockholders’ equity

880

962

Total liabilities and stockholders’ equity

$                           4,056

$                           4,123

Our outstanding debt was as follows:

Weighted Average

Interest Rate (a)

As of

June 30, 2023

As of

December 31, 2022

$750 million revolving credit facility (due April 2027)

$                                 —

$                                 —

$400 million term loan A (due April 2027)

6.8 %

394

399

$1.6 billion term loan B (due May 2025)

3.7 %

—

1,139

$1.1 billion term loan B (due May 2030)

4.0 %

1,127

—

4.375% senior unsecured notes (due August 2028)

4.4 %

495

494

Finance leases

4.5 %

42

45

Total debt

4.3 %

2,058

2,077

Cash and cash equivalents

63

161

Net debt

$                           1,995

$                           1,916

(a)

Represents weighted average interest rates for the second quarter 2023, including the effects from hedging.

Our outstanding debt as of June 30, 2023 matures as follows:

Amount

Within 1 year

$                                   37

Between 1 and 2 years

40

Between 2 and 3 years

48

Between 3 and 4 years

339

Between 4 and 5 years

19

Thereafter

1,575

Total

$                             2,058

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Six Months Ended June 30,

2023

2022

Change

% Change

Beginning Room Count (January 1)

United States

493,800

490,600

3,200

1 %

International

348,700

319,500

29,200

9

Global

842,500

810,100

32,400

4

Additions

United States

12,500

13,100

(600)

(5)

International

15,500

12,700

2,800

22

Global

28,000

25,800

2,200

9

Deletions

United States

(11,200)

(11,300)

100

1

International

(7,800)

(5,700)

(2,100)

(37)

Global

(19,000)

(17,000)

(2,000)

(12)

Ending Room Count (June 30)

United States

495,100

492,400

2,700

1

International (a)

356,400

326,500

29,900

9

Global

851,500

818,900

32,600

4 %

As of June 30,

FY 2022

Royalty

Distribution

2023

2022

Change

% Change

System Size

United States

Economy

231,600

238,500

(6,900)

(3 %)

Midscale and Upper Midscale

244,500

235,400

9,100

4

Upscale and Above

19,000

18,500

500

3

Total United States

495,100

492,400

2,700

1 %

85 %

International

Greater China 

164,600

156,800

7,800

5 %

2

Rest of Asia Pacific

32,600

29,200

3,400

12

1

Europe, the Middle East and Africa (b)

80,600

67,900

12,700

19

5

Canada

39,500

39,100

400

1

5

Latin America

39,100

33,500

5,600

17

2

Total International

356,400

326,500

29,900

9 %

15

Global

851,500

818,900

32,600

4 %

100 %

(a)

2023 includes 6,400 rooms associated with the acquisition of Vienna House in third quarter of 2022.

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months

Ended 
June 30, 2023

 Constant Currency

% Change (a)

Regional RevPAR Growth

United States

Economy

$                         45.69

(2 %)

Midscale and Upper Midscale

61.58

—

Upscale and Above

108.74

1

Total United States

$                         55.26

(1 %)

International

Greater China

$                         18.12

45 %

Rest of Asia Pacific

30.99

22

Europe, the Middle East and Africa

54.43

33

Canada

56.76

18

Latin America

43.72

38

Total International

$                         34.44

34 %

Global

$                         46.47

7 %

Three Months Ended June 30,

2023

2022

% Change

Average Royalty Rate

United States

4.6 %

4.6 %

—

International

2.4 %

2.1 %

30 bps

Global

3.9 %

4.0 %

(10 bps)

Six Months
Ended
June 30, 2023

Constant Currency

% Change (a)

Regional RevPAR Growth

United States

Economy

$                         40.67

— %

Midscale and Upper Midscale

55.62

2

Upscale and Above

97.67

4

Total United States

$                         49.57

1 %

International

Greater China

$                         16.14

30 %

Rest of Asia Pacific

31.11

32

Europe, the Middle East and Africa

47.96

39

Canada

48.83

22

Latin America

45.60

48

Total International

$                         31.25

35 %

Global

$                         41.86

9 %

Six Months Ended June 30,

2023

2022

% Change

Average Royalty Rate

United States

4.6 %

4.6 %

—

International

2.3 %

2.2 %

10 bps

Global

3.9 %

4.0 %

(10 bps)

(a)

International excludes the impact of currency exchange movements.

Table 6

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

Hotel Franchising (a)

Global RevPAR

2023

$         37.20

$         46.47

n/a

n/a

n/a

2022

$         33.08

$         43.74

$         48.61

$         39.18

$         41.23

2021

$         24.02

$         35.69

$         44.67

$         34.77

$         34.85

U.S. RevPAR

2023

$         43.84

$         55.26

n/a

n/a

n/a

2022

$         41.01

$         54.70

$         58.45

$         45.49

$         50.00

2021

$         29.68

$         46.99

$         56.38

$         42.45

$         43.95

International RevPAR

2023

$         27.99

$         34.44

n/a

n/a

n/a

2022

$         21.05

$         26.80

$         33.90

$         30.16

$         28.11

2021

$         15.26

$         18.21

$         26.62

$         23.13

$         20.86

Global Rooms (b)

2023

844,800

851,500

n/a

n/a

n/a

2022

793,200

799,200

816,300

827,100

827,100

2021

748,700

752,500

758,600

769,400

769,400

U.S. Rooms

2023

494,400

495,100

n/a

n/a

n/a

2022

486,600

487,600

488,100

493,500

493,500

2021

452,500

454,200

458,000

465,100

465,100

International Rooms (b)

2023

350,400

356,400

n/a

n/a

n/a

2022

306,600

311,600

328,200

333,600

333,600

2021

296,200

298,300

300,600

304,300

304,300

Hotel Management

Global RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         56.55

$         65.13

$         71.54

$         68.04

$         64.07

2021

$         38.17

$         56.08

$         64.63

$         57.57

$         53.81

U.S. RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         69.92

$       135.35

$       126.34

$         98.28

$         92.66

2021

$         42.89

$         67.42

$         78.27

$         66.77

$         63.20

International RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         40.26

$         40.89

$         53.57

$         59.49

$         48.61

2021

$         27.12

$         31.20

$         37.53

$         40.96

$         34.31

Global Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

20,100

19,700

19,700

15,400

15,400

2021

48,500

45,500

44,000

40,700

40,700

U.S. Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

5,300

4,800

4,800

300

300

2021

33,500

30,600

28,800

25,500

25,500

International Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

14,800

14,900

14,900

15,100

15,100

2021

15,000

14,900

15,200

15,200

15,200

Table 6 (continued)

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

Total System

Global RevPAR

2023

$         37.20

$         46.47

n/a

n/a

n/a

2022

$         34.06

$         44.28

$         49.17

$         39.86

$         41.88

2021

$         24.90

$         36.92

$         45.80

$         35.99

$         35.95

U.S. RevPAR

2023

$         43.84

$         55.26

n/a

n/a

n/a

2022

$         42.11

$         55.57

$         59.15

$         45.96

$         50.72

2021

$         30.62

$         48.37

$         57.73

$         43.84

$         45.19

International RevPAR

2023

$         27.99

$         34.44

n/a

n/a

n/a

2022

$         21.95

$         27.46

$         34.79

$         31.44

$         29.05

2021

$         15.83

$         18.84

$         27.15

$         23.99

$         21.52

Global Rooms (b)

2023

844,800

851,500

n/a

n/a

n/a

2022

813,300

818,900

836,000

842,500

842,500

2021

797,200

798,000

802,600

810,100

810,100

U.S. Rooms

2023

494,400

495,100

n/a

n/a

n/a

2022

491,900

492,400

492,900

493,800

493,800

2021

486,000

484,800

486,800

490,600

490,600

International Rooms (b)

2023

350,400

356,400

n/a

n/a

n/a

2022

321,400

326,500

343,100

348,700

348,700

2021

311,200

313,200

315,800

319,500

319,500

NOTE:

Amounts may not foot due to rounding. Results reflect the reclassification of rooms from the Hotel Management segment to the Hotel Franchising segment related to the CorePoint Lodging asset sales, including approximately 19,000 rooms in first quarter 2022.

(a)

For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company’s remaining full-service management business.

(b)

Includes 6,400 Vienna House rooms acquired in the third quarter of 2022.

Table 7

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions)

The tables below 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 impact of such adjustments. We believe that adjusted EBITDA, adjusted net income and adjusted EPS financial measures provide useful information to investors about us and our financial condition and results of operations because these measures are used by our management team to evaluate our operating performance and make day-to-day operating decisions and adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. These measures also assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. These non-GAAP reconciliation tables should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

Reconciliation of Net Income/(Loss) to Adjusted EBITDA:

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

2023

Net income

$             67

$             70

Provision for income taxes

24

26

Depreciation and amortization

19

19

Interest expense, net

22

24

Early extinguishment of debt (a)

—

3

Stock-based compensation

9

9

Development advance notes amortization

3

4

Transaction-related (b)

—

4

Separation-related (c)

2

(2)

Foreign currency impact of highly inflationary countries (d)

1

1

Adjusted EBITDA

$           147

$           158

2022

Net income

$           106

$             92

$           101

$             56

$           355

Provision for income taxes

34

31

38

16

121

Depreciation and amortization

24

17

18

19

77

Interest expense, net

20

20

21

21

80

Early extinguishment of debt (a)

—

2

—

—

2

Stock-based compensation

8

9

8

8

33

Development advance notes amortization

3

3

3

3

12

(Gain)/loss on asset sale, net (e)

(36)

1

—

—

(35)

Separation-related (c)

—

(1)

1

1

1

Foreign currency impact of highly inflationary countries (d)

—

1

1

2

4

Adjusted EBITDA

$           159

$           175

$           191

$           126

$           650

2021

Net income

$             24

$             68

$           103

$             48

$           244

Provision for income taxes

11

25

36

19

91

Depreciation and amortization

24

24

23

25

95

Interest expense, net

28

22

22

22

93

Early extinguishment of debt (a)

—

18

—

—

18

Stock-based compensation

5

8

7

8

28

Development advance notes amortization

2

2

3

3

11

Impairments, net (f)

—

—

—

6

6

Separation-related (c)

2

1

—

—

3

Foreign currency impact of highly inflationary countries (d)

1

—

—

—

1

Adjusted EBITDA

$             97

$           168

$           194

$           131

$           590

NOTE:

Amounts may not add due to rounding.

(a)

Amount in 2023 relates to non-cash charges associated with the Company’s refinancing of its term loan B. Amount in 2022 relates to non-cash charges associated with the Company’s extension of its revolving credit facility and the prepayment of $400 million of its term loan B. Amount in 2021 relates to the redemption premium and non-cash expenses associated with the early redemption of the Company’s 5.375% senior unsecured notes.

(b)

Represents costs related to corporate transactions, including the Company’s refinancing of its term loan B.

(c)

Represents costs associated with the Company’s spin-off from Wyndham Worldwide.

(d)

Relates to the foreign currency impact from hyper-inflation, primarily in Argentina, which is reflected in operating expenses on the income statement.

(e)

Represents (gain)/loss on sales of the Company’s owned hotels, the Wyndham Grand Bonnet Creek Resort and Wyndham Grand Rio Mar.

(f)

Represents a non-cash charge to reduce the carrying values of the Company’s owned hotels long-lived assets to their fair value in connection with the Company’s Board approval of a plan to sell these assets in 2022.

Table 7 (continued)

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions, except per share data)

Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS:

Three Months Ended

June 30,

Six Months Ended

June 30,

2023

2022

2023

2022

Diluted EPS

$       0.82

$       1.00

$       1.59

$       2.13

Net income

$           70

$           92

$         137

$         198

Adjustments:

Acquisition-related amortization expense (a)

7

6

14

18

Transaction-related

4

—

4

—

Early extinguishment of debt

3

2

3

2

Foreign currency impact of highly inflationary countries

1

1

3

2

Separation-related

(2)

(1)

—

(1)

(Gain)/loss on asset sales

—

1

—

(35)

Total adjustments before tax

13

9

24

(14)

Income tax provision/(benefit) (b)

3

2

6

(3)

Total adjustments after tax

10

7

18

(11)

Adjusted net income

$           80

$           99

$         155

$         187

Adjustments – EPS impact

0.11

0.07

0.20

(0.11)

Adjusted diluted EPS

$       0.93

$       1.07

$       1.79

$       2.02

Diluted weighted average shares outstanding

85.7

92.1

86.4

92.7

(a)

Reflected in depreciation and amortization on the income statement.

(b)

Reflects the estimated tax effects of the adjustments.

Table 8

WYNDHAM HOTELS & RESORTS

2023 OUTLOOK

As of July 26, 2023

(In millions, except per share data)

2023 Outlook

Fee-related and other revenues

$

1,379 – 1,409

Adjusted EBITDA (a)

654 – 664

Depreciation and amortization expense (b)

48 – 50

Development advance notes amortization expense

13 – 15

Stock-based compensation expense

37 – 39

Interest expense, net

100 – 102

Adjusted income before income taxes

449 – 463

Income tax expense (c)

113 – 115

Adjusted net income

$

336 – 348

Adjusted diluted EPS

$

3.92 – 4.06

Diluted shares (d)

85.8

Marketing, reservation and loyalty funds (e)

Approx. $10

Capital expenditures

Approx. $35

Development advance notes

Approx. $60

Free cash flow conversion rate (f)

50% – 55%

Year-over-Year Growth

Global RevPAR (g)

4% – 6%

Number of rooms

2% – 4%

(a)

Year-over-year growth rates are not comparable due to the sale of the Company’s owned hotels and the exit of its select-service management business during 2022, as well as the variability in its marketing funds due to the recovery of the COVID support that the Company provided to its owners during 2020. 

(b)

Excludes amortization of acquisition-related intangible assets of approximately $27 million.

(c)

Outlook assumes an effective tax rate of approximately 25%.

(d)

Excludes the impact of any share repurchases after June 30, 2023.

(e)

Represents the recovery of $49 million COVID support that the Company provided to its owners during 2020. The Company recovered $38 million of the $49 million support during 2021 and 2022 combined.  

(f) 

Represents the percentage of adjusted EBITDA that is expected to produce free cash flow. Free cash flow plus capital expenditures equals net cash from operating activities.

(g)

Outlook represents global RevPAR growth of 6% – 8% compared to 2019.

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