Wyndham's Record Growth: A Year in Review

Wyndham's Record-Breaking Year

Wyndham Hotels & Resorts has announced the results for the three months and the year ended December 31, 2024. Highlights include:

• Global RevPAR grew 5% in constant currency in 2023 compared to the fourth quarter of 2023, a 400 basis point improvement in sequencing constant currency; this is the full-year global RevPAR year over year in constant currency.
• U.S. RevPAR grew 5% compared to the fourth quarter of 2023, a 600 basis point improvement sequentially; full-year U.S. RevPAR was flat.
• System-wide rooms grew 4% year-over-year.
• Opened a record 68,700 rooms globally, representing 4% year-over-year growth, including nearly 28,000 in the U.S., which also grew 4% year-over-year.
• The global retention rate reaches a record level of 95.7%.
• The development pipeline grew 2% sequentially and 5% year-over-year to a record 252,000 rooms.
• Fourth quarter diluted earnings per share increased 80% to $1.08, and adjusted diluted EPS grew 14% to $1.04, or approximately 18% on a comparable basis; full-year 2024 diluted earnings per share increased 6% to $3.61, and adjusted diluted EPS grew 8% to $4.33, or approximately 10% on a comparable basis.
• Fourth quarter net income increased 70% to $85 million, and adjusted net income increased 9% to $82 million, or approximately 13% on a comparable basis; full-year 2024 net income was $289 million, or flat year-over-year, and adjusted net income increased 2% to $347 million, or approximately 4% on a comparable basis.
• Fourth quarter adjusted EBITDA increased 9% to $168 million, or approximately 12% on a comparable basis; full-year 2024 adjusted EBITDA increased 5% to $694 million, or approximately 7% on a similar basis.
• Returned $430 million to shareholders for the entire year through $308 million of share repurchases and quarterly cash dividends of $0.38 per share.
• The Board of Directors recently authorized an 8% increase in the quarterly cash dividend to $0.41 per share, beginning with the dividend expected to be declared in the first quarter of 2025.

"We're proud to report a powerful finish to 2024 with net rooms growth of 4% and comparable adjusted EBITDA growth of 7%. Our team's focus on expanding into higher FeePAR markets, growing our extended-stay footprint and unlocking new ancillary revenue streams underscore the diverse growth opportunities inherent in our asset-light, resilient business model," said Geoff Ballotti, President and Chief Executive Officer.

"What excites us most about our future is the developer interest in, and demand for, our brands both here and overseas, reflected in a pipeline that grew another 5% to a record quarter-of-a-million rooms that will open in the coming years with significant FeePAR premiums compared to our existing system.  This, when coupled with improving customer demand we're seeing across both our leisure and infrastructure segments, lays a solid foundation for sustained momentum and meaningful value creation for our shareholders, guests, franchisees and team members for many years to come."

System Size and Development

The Company's global system experienced a 4% growth. Notably, this included 4% growth in the high RevPAR midscale and above segments in the U.S., along with robust growth in the Company's higher RevPAR areas in EMEA and Latin America, which saw a combined increase of 7%. Additionally, the Company improved its retention rate by another 10 basis points year-over-year, culminating the year with a record 95.7%. 

On December 31, 2024, the Company's global development pipeline included approximately 2,100 hotels and 252,000 rooms, achieving another record-high level and reflecting a 5% year-over-year increase. Key highlights include:

• 7% growth in the U.S. and 4% internationally
• 18^th consecutive quarter of sequential pipeline growth
• Approximately 70% of the pipeline is in the midscale and above segments, which grew 5% year-over-year
• Approximately 17% of the pipeline is in the extended stay segment
• Approximately 58% of the pipeline is international
• Approximately 78% of the pipeline is new construction, and approximately 35% of these projects have broken ground

RevPAR

In the fourth quarter, global RevPAR rose 5% in constant currency versus 2023, driven by a 5% increase in the U.S. that accelerated over the quarter and a 6% rise internationally. For the entire year, global RevPAR remained unchanged compared to 2023 on a reported basis, aligning with the Company's forecast, while in constant currency it grew by 2%, with flat growth in the U.S. and an 8% increase internationally.

In the U.S., fourth-quarter results showed 140 basis points of positive effects from hurricanes; if these were excluded, RevPAR still increased by 4% year over year, driven by strong weekday business bookings and weekend leisure demand. U.S. RevPAR rose by 620 basis points sequentially compared to the third quarter, or 480 basis points excluding the hurricane effects.

Globally, RevPAR growth was fueled by a 6% rise in ADR in constant currency, while occupancy levels stayed unchanged. The Company's EMEA and Latin America regions experienced the most significant year-over-year increases in the fourth quarter, rising 15%. Conversely, RevPAR in the Company's China region fell 11% during the fourth quarter, primarily due to a 10% drop in ADR.

Operating Results

Fourth Quarter

• Fee-related and other revenues grew 7% to $341 million, compared to $320 million in the fourth quarter of 2023. This increase reflects higher royalties and franchise fees.
• Net income grew 70% to $85 million compared to $50 million in the fourth quarter of 2023. This increase reflects higher adjusted EBITDA, a lower effective tax rate, and lower foreign currency impact for highly inflationary countries, partially offset by higher interest expense.
• Adjusted EBITDA grew 9% to $168 million compared to $154 million in the fourth quarter of 2023. This increase included a $4 million unfavourable impact from expected marketing fund variability, excluding which adjusted EBITDA grew 12% on a comparable basis, primarily reflecting higher royalties, franchise fees, and margin expansion.
• Diluted earnings per share grew 80% to $1.08 compared to $0.60 in the fourth quarter of 2023, primarily reflecting higher net income and the benefit of a lower share count due to share repurchase activity.
• Adjusted diluted EPS grew 14% to $1.04 compared to $0.91 in the fourth quarter of 2023. This increase included an unfavourable impact of $0.04 per share related to expected marketing fund variability (after estimated taxes). On a comparable basis, adjusted diluted EPS increased approximately 18% year-over-year, reflecting comparable adjusted EBITDA growth and the benefit of share repurchase activity, partially offset by higher interest expense.
• In the fourth quarter of 2024, the Company's marketing fund revenues exceeded expenses by $5 million, while in the fourth quarter of 2023, they exceeded expenses by $9 million, resulting in $4 million of marketing fund variability.

Full Year

• Fee-related and other revenues grew 1% to $1.40 billion compared to $1.38 billion in full-year 2023, which included $18 million of pass-through revenues associated with the Company's 2023 global franchisee conference, absent which, fee-related and other revenue increased 3%. This growth primarily reflects higher royalty franchise fees and ancillary revenues.
• The Company reported a net income of $289 million, consistent with 2023. Higher adjusted EBITDA was offset by increased transaction-related expenses associated with a successful hostile takeover attempt. Other items include higher interest expense, restructuring costs, and an impairment charge, offset by a lower effective tax rate, the absence of foreign currency impacts from highly inflationary countries, and a benefit from reversing a related spin-off.
• Adjusted EBITDA grew 5% to $694 million compared to $659 million in full-year 2023. As expected, this increase included a $10 million unfavourable impact from marketing fund variability, excluding which adjusted EBITDA grew 7% on a comparable basis, primarily reflecting higher royalties and franchise fees, increased ancillary revenues and margin expansion.
• Diluted earnings per share grew 6% to $3.61 compared to $3.41 in full-year 2023, which primarily reflects the benefit of a lower share count due to share repurchase activity.
• Adjusted diluted EPS grew 8% to $4.33 compared to $4.01 in full-year 2023. As expected, this increase included an unfavourable impact of $0.09 per share related to marketing fund variability (after estimated taxes). On a comparable basis, adjusted diluted EPS increased approximately 10% year-over-year, reflecting comparable adjusted EBITDA growth and the benefit of share repurchase activity, partially offset by higher interest expense.
• During the full year 2024, the Company's marketing fund expenses exceeded revenues by $1 million; in 2023, the Company's marketing fund revenues exceeded expenses by $9 million, resulting in $10 million of marketing fund variability.

The tables in this press release offer comprehensive reconciliations of GAAP results to the Company's non-GAAP adjusted metrics for every reported period.

Balance Sheet and Liquidity

For 2024, the company generated $290 million in net cash from operating activities and $397 million in adjusted free cash flow. It concluded the quarter with a cash balance of $103 million and roughly $765 million in total liquidity. 

As of December 31, 2024, the company's net debt leverage ratio was 3.4 times, just below the midpoint of its stated target range of 3 to 4 times and in line with expectations.

Share Repurchases and Dividends

During the fourth quarter, the Company repurchased approximately 0.3 million shares of its common stock for $23 million. In 2024, it repurchased approximately 4.1 million shares of its common stock for $308 million.

The Company paid ordinary stock dividends of $30 million, or $0.38 per share, during the fourth quarter of 2024, for a total of $122 million, or $1.52 per share, for the entire year of 2024.

For 2024, the Company returned $430 million to shareholders through share repurchases and quarterly cash dividends.

The Company's Board of Directors authorized an 8% increase in the quarterly cash dividend to $0.41 per share, beginning with the expected dividend in the first quarter of 2025.

Outlook

The Company provided the following outlook for the full year 2025: 

The Company expects marketing fund revenues to equal expenses during the full year 2025; however, the seasonality of spending will affect the quarterly comparisons throughout the year.

More detailed projections can be found in Table 8 of this press release. The Company is providing specific financial metrics only on a non-GAAP basis because, despite reasonable efforts, it cannot predict with certainty the occurrence or amount of all adjustments or other potential adjustments that may arise during the forward-looking period, which can depend on future events that cannot be reliably predicted. Based on past reported results, where one or more of these items has been applicable, such excluded items could be material to the reported results, individually or collectively. 

Conference Call Information

Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Thursday, February 13, 2025, at 8:30 a.m. ET.  Listeners can access the webcast live through the Company's website at https://investor.wyndhamhotels.com. The conference call may also be accessed by dialling 800 225-9448 and providing the passcode "Wyndham".  Listeners are urged to call five minutes before the scheduled start time.  An archive of this webcast will be available on the website beginning at noon ET on February 13, 2025.  A telephone replay will be available for approximately ten days beginning at noon ET on February 13, 2025, at 800 839-5127.