Wyndham Hotels & Resorts is growing in leaps and bounds, with recent growth driven both by launching a new brand and buying one.
As of the end of the third quarter, the New-Jersey-based hotel brand company had 836,000 total rooms in its global portfolio — an increase of 33,400 rooms since Sept. 30, 2021. The company also has more than 212,000 rooms at approximately 1,600 hotels in its development pipeline. If all of those hotels were opened today, the rooms growth of the past year would total nearly a quarter of a million.
Wyndham grew its portfolio by 4% globally, a 420-basis-point improvement over the third quarter of 2021. Much of that growth was concentrated outside of the U.S., with international rooms increasing 9% to 343,100.
"This quarter, we grew our development pipeline by 10%, surpassed our full-year development goal for our new extended-stay brand and completed the acquisition of our 23rd brand, Vienna House," Wyndham President and CEO Geoff Ballotti said.
The $44 million acquisition of Vienna House on Sept. 8 contributed to 200 basis points of the increase in rooms internationally. Vienna House and its three brand tiers — the signature Vienna House by Wyndham, the select-service Vienna House Easy and extended-stay Vienna House Townhouse — added more than 6,400 rooms at 40 hotels in the upscale and midscale segment in the Europe, Middle East and Africa region. Twenty-eight of those hotels are in Germany.
Dimitris Manikis, president for the Europe, Middle East and Africa region at Wyndham, said in an interview with Hotel News Now that his goal is to add five to 10 new hotels to the Vienna House portfolio in the first year — two hotels are already in the development pipeline in Mannheim, Germany, and Katowice, Poland. He added that he aspires to double the size of the brand portfolio in five years.
"Why not? ... I have a very hungry development team that wants to do it. So for me, the more we do the better, but always keeping in mind three things: not cannibalizing, not compromising and keeping the brand DNA intact," he said.
On Wednesday, Ballotti said on a call with analysts to announce third-quarter earnings that "our team in Europe is looking to expand the size of the Vienna House portfolio as we plug the brand into our strong European infrastructure and distribution network."
Ballotti added that "this was the first quarter since the pandemic that all of our regions around the world returned to positive and sequential net room growth."
Developer interest is also growing for a new extended-stay brand, which the company launched in March and has the working title of Project ECHO. Wyndham has signed 120 contracts for the brand since it was announced.
The company signed a total of 214 new contracts in the third quarter compared to 151 in the third quarter of 2021. Of the rooms in the development pipeline, 76% are in the midscale segment and above. Approximately 60% of the pipeline is international and 80% is new-construction, 36% of which has broken ground.
The majority of growth is in the midscale segment and above, which the company noted is driving revenue per available room improvement.
Wyndham reported global revenue per available room in constant currency grew 12% year over year in the third quarter. That RevPAR improvement was driven by a 46% improvement internationally and a 2% increase in the U.S. Globally, RevPAR reached 110% of 2019 levels in the quarter.
Wyndham also upgraded its guidance for full-year earnings.
For full-year 2022, the company projects approximately 4% growth in rooms and 14% to 16% growth in RevPAR year over year, an improvement of 2% on the bottom line of its previous guidance. Its outlook for adjusted EBITDA improved by $13 million to a top end of $644 million, and adjusted net income is projected to reach between $349 million and $354 million, a $20 million improvement on the top line.
Net income for the quarter was $101 million, compared to $103 million in the third quarter of 2021; and adjusted earnings before interest, taxes, depreciation and amortization was $191 million, down 1.5% year over year. Fee-related and other revenues were down approximately $2 million from the same quarter last year.
In the quarter, Wyndham returned $161 million to shareholders through $132 million of share repurchases and a quarterly cash dividend of 32 cents per share. At the end of the quarter, the company had $286 million in cash and approximately $1 billion in total liquidity.
In an earnings news release, the company stated that the "decline in net income was primarily due to the exit of the company's select-service management business and owned hotels, partially offset by higher adjusted EBITDA in the company's hotel franchising segment."
Net revenues of $407 million also reflected a 12.1% decline year over year, but hotel franchising revenues were up 9% to $367 million "primarily due to the global RevPAR increase and higher license fees," the release stated.
As of press time, Wyndham Hotels & Resorts’ stock was trading at $71.97 per share, down 19.8% year to date. The S&P 400 MidCap Index was down 16.3% for the same period.
