Hotel News Resource Mobile Edition



« | »

Wyndham Hotels & Resorts Reports Fourth Quarter 2023 Results

Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2023.  Highlights include:

“We are tremendously proud to report fourth quarter results that demonstrate the continued success of our global strategy and our accelerating momentum,” said Geoff Ballotti, president and chief executive officer.  “Despite the distraction, uncertainty and misperceptions caused by Choice and their slanted and constant communications to our franchisee base, room openings accelerated and our global development pipeline grew by 10% to an all-time high of 240,000 rooms.  Our team opened 27% more rooms than last year in the fourth quarter and we welcomed 500 new hotels to our system in 2023.  This, when combined with our improving franchisee engagement and record retention rate, drove the best organic system growth we’ve ever achieved. We grew comparable adjusted EBITDA by 6% and returned over half a billion dollars to our shareholders through dividends and share repurchases.  We are confident in the continued effectiveness of our growth strategy and see exceptional value-creation opportunities in the years ahead.”  

System Size and Development

Rooms

December 31,
2023

December 31,
2022

YOY 
Change (bps)

United States

497,600

493,800

80

International

374,200

348,700

730

Global

871,800

842,500

350

The Company’s global system grew 3.5%, marking 12 consecutive quarters of organic growth and reflecting 1% growth in the U.S. and 7% 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 3% and 13%, respectively.  The Company also increased its retention rate, which includes all terminations, by another 30 basis points year-over-year, ending the year at a record 95.6%. 

On December 31, 2023, the Company’s global development pipeline consisted of over 1,950 hotels and approximately 240,000 rooms, representing another record-high level and a 10% year-over-year increase. Key highlights include:

RevPAR

Fourth

Quarter 2023

YOY
Constant
Currency
% Change

Full-Year
2023

YOY
Constant
Currency
% Change

United States

$           44.06

(4 %)

$           50.42

(1 %)

International

32.12

7

33.21

21

Global

38.90

(1)

43.10

5

Fourth quarter global RevPAR declined 1% in constant currency compared to 2022 reflecting a 4% decline in the U.S. and growth of 7% internationally.  For the full year, global RevPAR grew 5% in constant currency compared to 2022 reflecting a 1% decline in the U.S. and growth of 21% 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 COVID-impacted travel patterns, U.S. RevPAR grew 10% in fourth quarter – a 120 basis point acceleration from third quarter 2023 growth – and 9% for the full year.  Internationally, year-over-year RevPAR growth for both the fourth quarter and the full-year was primarily driven by higher occupancy levels.  Compared to 2019, international RevPAR grew in fourth quarter and full-year by 44% and 36%, respectively, on a constant-currency basis. 

Operating Results

Fourth Quarter

Full Year

Full reconciliations of GAAP results to the Company’s non-GAAP adjusted measures for all reported periods appear in the tables to this press release.

Balance Sheet and Liquidity

The Company generated $376 million of net cash provided by operating activities and free cash flow of $339 million in the full-year 2023.  The Company ended the quarter with a cash balance of $66 million and approximately $650 million in total liquidity. 

The Company’s net debt leverage ratio was 3.2 times at December 31, 2023, within the lower half of the Company’s 3 to 4 times stated target range.

Share Repurchases and Dividends

During the fourth quarter, the Company repurchased approximately 1.7 million shares of its common stock for $127 million.  For the full-year 2023, the Company repurchased approximately 5.5 million shares of its common stock for $397 million, at an average price of $72.25, 8% lower than trading levels as of February 13th

The Company paid common stock dividends of $28 million, or $0.35 per share, in the fourth quarter of 2023 for a total of $118 million, or $1.40 per share, for the full-year 2023.

For the full-year 2023, the Company returned $515 million to shareholders through share repurchases and quarterly cash dividends.

The Company’s Board of Directors authorized a 9% increase in the quarterly cash dividend to $0.38 per share, beginning with the dividend expected to be declared in first quarter 2024.

Full-Year 2024 Outlook

The Company provided the following outlook for full-year 2024: 

2024 Outlook

Year-over-year rooms growth

3 – 4%

Year-over-year global RevPAR growth

2 – 3%

Fee-related and other revenues

$1.43 – $1.46 billion

Adjusted EBITDA

$690 – $700 million

Adjusted net income

$341 – $351 million

Adjusted diluted EPS

$4.11 – $4.23

Free cash flow conversion rate

~60%

NOTE:

Outlook for adjusted EBITDA, adjusted net income, adjusted diluted EPS and free cash flow conversion rate excludes all expenses and cash outlays associated with the unsolicited offer by Choice Hotels, which are currently anticipated to approximate $75 million before taxes.

Year-over-year growth rates for adjusted EBITDA, adjusted net income and adjusted diluted EPS are not comparable due to full-year 2023 marketing fund revenues exceeding expenses by $9 million, which substantially completed the recovery of the $49 million support the Company provided to its owners during COVID.  The Company expects marketing revenues to equal expenses during full-year 2024 though seasonality of spend will affect the quarterly comparisons throughout the year.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world’s largest hotel franchising company by the number of properties, with approximately 9,200 hotels across over 95 countries on six continents.  Through its network of approximately 872,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry.

Table 1

WYNDHAM HOTELS & RESORTS

INCOME STATEMENT

(In millions, except per share data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Net revenues

Royalties and franchise fees

$                       117

$                       118

$                       532

$                       512

Marketing, reservation and loyalty

133

128

578

544

Management and other fees

3

3

14

57

License and other fees

29

26

112

100

Other

38

35

148

141

Fee-related and other revenues

320

310

1,384

1,354

Cost reimbursements

1

24

13

144

Net revenues

321

334

1,397

1,498

Expenses

Marketing, reservation and loyalty

124

140

569

524

Operating

30

22

94

106

General and administrative

37

35

130

123

Cost reimbursements

1

24

13

144

Depreciation and amortization

20

19

76

77

Transaction-related

5

11

Separation-related

1

1

1

Gain on asset sale, net

(35)

Total expenses

217

241

894

940

Operating income

104

93

503

558

Interest expense, net

29

21

102

80

Early extinguishment of debt

3

2

Income before income taxes

75

72

398

476

Provision for income taxes

25

16

109

121

Net income

$                         50

$                         56

$                       289

$                       355

Earnings per share

Basic

$                      0.61

$                      0.64

$                      3.43

$                      3.93

Diluted

0.60

0.63

3.41

3.91

Weighted average shares outstanding

Basic

82.0

87.8

84.4

90.3

Diluted

82.6

88.3

84.9

90.8

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

$            402

$            321

$         1,397

2022

272

335

367

303

1,277

2021

209

283

337

270

1,099

Adjusted EBITDA

2023

$            164

$            175

$            215

$            173

$            727

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

$               —

$               —

$               —

$               —

$               —

2022

2021

Adjusted EBITDA

2023

$            (17)

$            (17)

$            (15)

$            (19)

$            (68)

2022

(16)

(16)

(17)

(16)

(66)

2021

(13)

(14)

(15)

(16)

(59)

Total Company

Net revenues

2023

$            313

$            362

$            402

$            321

$         1,397

2022

371

386

407

334

1,498

2021

303

406

463

392

1,565

Net income

2023

$              67

$              70

$            103

$              50

$            289

2022

106

92

101

56

355

2021

24

68

103

48

244

Adjusted EBITDA

2023

$            147

$            158

$            200

$            154

$            659

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)

Year Ended December 31,

2023

2022

Operating activities

Net income

$                       289

$                       355

Depreciation and amortization

76

77

Deferred income taxes

(17)

(39)

Gain on asset sale, net

(35)

Payments of development advance notes, net

(72)

(48)

Working capital and other, net

100

89

Net cash provided by operating activities

376

399

Investing activities

Property and equipment additions

(37)

(39)

Proceeds from asset sales, net (a)

263

Acquisition of hotel brand

(44)

Other, net

(29)

(1)

Net cash (used in)/provided by investing activities

(66)

179

Financing activities

Proceeds from long-term debt

1,378

400

Payments of long-term debt

(1,245)

(404)

Dividends to shareholders

(118)

(116)

Repurchases of common stock

(393)

(448)

Other, net

(24)

(16)

Net cash used in financing activities

(402)

(584)

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

(3)

(4)

Net decrease in cash, cash equivalents and restricted cash

(95)

(10)

Cash, cash equivalents and restricted cash, beginning of period

161

171

Cash, cash equivalents and restricted cash, end of period

$                         66

$                       161

Free Cash Flow:

Year Ended December 31,

2023

2022

Net cash provided by operating activities (b)

$                     376

$                     399

Less: Property and equipment additions

(37)

(39)

Free cash flow

$                     339

$                     360

(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 is impacted by the absence of $13 million due to the exit of the select-service management business and owned hotels.  Excluding which, free cash flow decreased $8 million as higher cash earnings were offset by $24 million of incremental development advances and $22 million of higher interest expense.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

(Unaudited)

As of

December 31, 2023

As of

December 31, 2022

Assets

Cash and cash equivalents

$                             66

$                           161

Trade receivables, net

241

234

Property and equipment, net

88

99

Goodwill and intangible assets, net

3,104

3,131

Other current and non-current assets

534

498

Total assets

$                        4,033

$                        4,123

Liabilities and stockholders’ equity

Total debt

$                        2,201

$                        2,077

Other current liabilities

422

386

Deferred income tax liabilities

325

345

Other non-current liabilities

339

353

Total liabilities

3,287

3,161

Total stockholders’ equity

746

962

Total liabilities and stockholders’ equity

$                        4,033

$                        4,123

Our outstanding debt was as follows:

Weighted Average
Interest Rate (a)

As of

December 31, 2023

As of

December 31, 2022

$750 million revolving credit facility (due April 2027)

7.2 %

$                           160

$                              —

$400 million term loan A (due April 2027)

7.2 %

384

399

$1.6 billion term loan B (due May 2025)

1,139

$1.1 billion term loan B (due May 2030)

4.1 %

1,123

$500 million 4.375% senior unsecured notes (due August 2028)

4.4 %

495

494

Finance leases

4.5 %

39

45

Total debt

4.9 %

2,201

2,077

Cash and cash equivalents

66

161

Net debt

$                        2,135

$                        1,916

Net debt leverage ratio

3.2x

2.9x

(a)

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

Our outstanding debt as of December 31, 2023 matures as follows:

Amount

Within 1 year

$                                 37

Between 1 and 2 years

45

Between 2 and 3 years

48

Between 3 and 4 years

485

Between 4 and 5 years

514

Thereafter

1,072

Total

$                           2,201

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Year Ended December 31,

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

26,700

26,700

International

39,300

43,700

(4,400)

(10)

Global

66,000

70,400

(4,400)

(6)

Deletions

United States

(22,900)

(23,500)

600

3

International

(13,800)

(14,500)

700

5

Global

(36,700)

(38,000)

1,300

3

Ending Room Count (December 31)

United States

497,600

493,800

3,800

1

International

374,200

348,700

25,500

7

Global

871,800

842,500

29,300

3 %

As of December 31,

FY 2023
Royalty
Contribution

2023

2022

Change

% Change

System Size

United States

Economy

230,800

235,800

(5,000)

(2 %)

Midscale and Upper Midscale

247,600

239,000

8,600

4

Upscale and Above

19,200

19,000

200

1

Total United States

497,600

493,800

3,800

1 %

80

International

Greater China 

171,100

161,100

10,000

6 %

3

Rest of Asia Pacific

34,600

30,400

4,200

14

2

Europe, the Middle East and Africa

88,700

79,200

9,500

12

7

Canada

39,900

39,500

400

1

5

Latin America

39,900

38,500

1,400

4

3

Total International

374,200

348,700

25,500

7 %

20

Global

871,800

842,500

29,300

3 %

100 %

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months Ended
December 31, 2023

Constant Currency

% Change (a)

Regional RevPAR Growth

United States

Economy

$                           35.83

(7 %)

Midscale and Upper Midscale

49.47

(4)

Upscale and Above

89.85

5

Total United States

$                           44.06

(4 %)

International

Greater China

$                           16.58

44 %

Rest of Asia Pacific

33.28

2

Europe, the Middle East and Africa

52.15

5

Canada

44.75

4

Latin America

43.91

(12)

Total International

$                           32.12

7 %

Global

$                           38.90

(1 %)

Three Months Ended December 31,

2023

2022

% Change

Average Royalty Rate

United States

4.6 %

4.6 %

International

2.3 %

2.0 %

30 bps

Global

3.8 %

3.8 %

Year Ended
December 31, 2023

Constant Currency

% Change (a)

Regional RevPAR Growth

United States

Economy

$                           41.76

(2 %)

Midscale and Upper Midscale

56.27

Upscale and Above

97.14

4

Total United States

$                           50.42

(1 %)

International

Greater China

$                           16.76

33 %

Rest of Asia Pacific

32.58

15

Europe, the Middle East and Africa

52.02

21

Canada

54.35

12

Latin America

44.53

15

Total International

$                           33.21

21 %

Global

$                           43.10

5 %

Year Ended December 31,

2023

2022

% Change

Average Royalty Rate

United States

4.6 %

4.6 %

International

2.4 %

2.1 %

30 bps

Global

3.9 %

3.9 %

(a)

 International and global 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

$         49.71

$         38.90

$         43.10

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

$         58.46

$         44.06

$         50.42

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

$         38.05

$         32.12

$         33.21

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

858,000

871,800

871,800

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

495,700

497,600

497,600

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

362,300

374,200

374,200

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

$         49.71

$         38.90

$         43.10

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

$         58.46

$         44.06

$         50.42

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

$         38.05

$         32.12

$         33.21

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

858,000

871,800

871,800

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

495,700

497,600

497,600

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

362,300

374,200

374,200

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 to Adjusted EBITDA:

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year

2023

Net income

$             67

$             70

$           103

$             50

$           289

Provision for income taxes

24

26

33

25

109

Depreciation and amortization

19

19

19

20

76

Interest expense, net

22

24

27

29

102

Early extinguishment of debt (a)

3

3

Stock-based compensation

9

9

10

11

39

Development advance notes amortization

3

4

4

5

15

Transaction-related (b)

4

1

5

11

Separation-related (c)

2

(2)

1

Foreign currency impact of highly inflationary countries (d)

1

1

3

9

14

Adjusted EBITDA

$           147

$           158

$           200

$           154

$           659

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 Choice Hotels’ unsolicited offer.

(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
December 31,

Year Ended
December 31,

2023

2022

2023

2022

Diluted earnings per share

$        0.60

$        0.63

$        3.41

$        3.91

Net income

$           50

$           56

$         289

$         355

Adjustments:

Acquisition-related amortization expense (a)

7

6

27

31

Foreign currency impact of highly inflationary countries

9

2

14

4

Transaction-related

5

11

Early extinguishment of debt

3

2

Separation-related

1

1

1

Gain on asset sale, net

(35)

Total adjustments before tax

21

9

56

3

Income tax provision/(benefit) (b)

(4)

1

4

(2)

Total adjustments after tax

25

8

52

5

Adjusted net income

$           75

$           64

$         341

$         360

Adjustments – EPS impact

0.31

0.09

0.60

0.05

Adjusted diluted EPS

$        0.91

$        0.72

$        4.01

$        3.96

Diluted weighted average shares outstanding

82.6

88.3

84.9

90.8

(a)

 Reflected in depreciation and amortization on the income statement.

(b)

 Reflects the estimated tax effects of the adjustments.  The 2023 amounts include a foreign tax assessment impacting years 2017, 2018 and 2019.

Table 8

WYNDHAM HOTELS & RESORTS

2024 OUTLOOK

As of February 14, 2024

(In millions, except per share data)

2024 Outlook (a)

Fee-related and other revenues

$

1,430 – 1,460

Adjusted EBITDA

690 – 700

Depreciation and amortization expense

46 – 48

Development advance notes amortization expense

23 – 25

Stock-based compensation expense

43 – 45

Interest expense, net

118 – 120

Adjusted income before income taxes

454 – 468

Income tax expense (b)

114 – 117

Adjusted net income

$

341 – 351

Adjusted diluted EPS

$

4.11 – 4.23

Diluted shares (c)

83.0

Capital expenditures

Approx. $40

Development advance notes

Approx. $90

Free cash flow conversion rate

~60%

Year-over-Year Growth

Global RevPAR

2% – 3%

Number of rooms

3% – 4%

NOTE:

Outlook for adjusted EBITDA, adjusted net income, adjusted diluted EPS and free cash flow conversion rate excludes all expenses and cash outlays associated with the unsolicited offer by Choice Hotels, which are currently anticipated to approximate $75 million before taxes.

(a)

Year-over-year growth rates for adjusted EBITDA, adjusted net income and adjusted diluted EPS are not comparable due to full-year 2023 marketing fund revenues exceeding expenses by $9 million (before taxes), which substantially completed the recovery of the $49 million support the Company provided to its owners during COVID.

(b)

Outlook assumes an effective tax rate of approximately 25%.

(c)

Excludes the impact of any share repurchases after December 31, 2023.

In determining adjusted EBITDA, interest expense, net, adjusted income before income taxes, adjusted net income, adjusted diluted EPS and free cash flow conversion rate, we exclude certain items which are otherwise included in determining the comparable GAAP financial measures. We are providing these measures on a non-GAAP basis only because, without unreasonable efforts, we are unable to predict with reasonable certainty the occurrence or amount of all the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

Table 9
WYNDHAM HOTELS & RESORTS
DEFINITIONS

Adjusted Net Income and Adjusted Diluted EPS: Represents net income/(loss) and diluted earnings/(loss) per share excluding acquisition-related amortization, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales and foreign currency impacts of highly inflationary countries. The Company calculates the income tax effect of the adjustments using an estimated effective tax rate applicable to each adjustment.

Adjusted EBITDA: Represents net income/(loss) 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-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. Adjusted EBITDA is a financial measure that is not recognized under U.S. GAAP and should not be considered as an alternative to net income/(loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company’s definition of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.

Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.

Comparable Basis: For 2023, represents a comparison eliminating the contribution from the Company’s owned hotels and select-service management business – both of which were exited in the first half of 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.  For 2024, represents a comparison eliminating the year-over-year variability of the Company’s marketing funds.

Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).

Free Cash Flow: For 2023, represents net cash provided by operating activities less capital expenditures. For 2024, the Company’s definition of free cash flow was modified to reflect the add back of development advances as such outflows represent capital deployment into the business.  The Company believes free cash flow to be a useful operating performance measure to it and investors. This measure helps the Company and investors evaluate its ability to generate cash beyond what is needed to fund capital expenditures, debt service and other obligations. Notwithstanding cash on hand and incremental borrowing capacity, free cash flow reflects the Company’s ability to grow its business through investments and acquisitions, as well as its ability to return cash to shareholders through dividends and share repurchases or even to delever. Free cash flow is not a representation of how the Company 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.

Free Cash Flow Conversion Rate: Represents the percentage of adjusted EBITDA that is converted to free cash flow and provides insights into how efficiently the Company is able to turn profits into cash available for use, such as for investments, debt reduction, dividends or share repurchases.

Net Debt Leverage Ratio: Calculated by dividing total debt less cash and cash equivalents by trailing twelve months adjusted EBITDA.

Number of Rooms: Represents the number of rooms at the end of the period which are (i) either under franchise and/or management agreements or Company-owned and (ii) properties under affiliation agreements for which we receive a fee for reservation and/or other services provided.

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR.

Royalty Rate: Represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues.

SOURCE Wyndham Hotels & Resorts

Posted by on February 15, 2024.

Categories: Financial

« | »




Recent Posts


Pages