While revenue and demand were flat across the U.S. in 2024 for Wyndham Hotels & Resorts, executives with that company expect to see stronger domestic performance in 2025, fueled by infrastructure spending and more confident leisure travelers.
Speaking during the company's fourth-quarter and full-year 2024 earnings call, President and CEO Geoff Ballotti said there were roughly $1 trillion in infrastructure project starts across the U.S. in 2024. Nearly 80% of that work is in proximity to Wyndham properties, which will continue to drive performance in the new year.
Ballotti said the leisure traveler is getting more excited for 2025.
"Leisure travel intentions for the next six months have increased year over year for all income brackets, according to MMGY's latest survey, reflecting broad-based confidence in both travel and the overall economy," he said. "Consumer trends we're seeing remain healthy. Booking lead times lengthened this quarter by another 4%, while average length of stay improved by another 2%."
Michele Allen, chief financial officer and head of strategy, said Wyndham expects some reversion to the norm in terms of domestic versus international travel.
"In 2024, we saw some leisure demand shift away from the U.S. drive-to destinations like national parks," she said. "We anticipate part of that demand will return to the U.S. in the upcoming vacation season. We've already seen meaningful improvement during the fourth quarter, with leisure demand up 340 basis points, excluding hurricane impacts."
With the tailwind of a strong fourth quarter, Wyndham is projecting at least marginally stronger performance in 2025 than 2024. Coming off a year with global revenue per available room growth of 2%, the company expects 2% to 3% growth for 2025, along with rooms growth between 3.6% and 4.6%.
Wyndham finished 2024 with year-over-year RevPAR growth of 5%, with a 5% increase in the U.S. despite revenues being flat domestically for the full year. In that quarter, U.S. leisure demand jumped 3%, Allen said.
Portfolio shifts
Wyndham recorded 4% year-over-year rooms growth for 2024, and Allen said it was an improvement in the quality of properties in their portfolio that will help drive performance going forward.
"We're prioritizing strategic investments to grow our system, whether through organic expansion or acquisitions, and we're targeting high [fee per available room] accretive properties," she said. "Our goal is to improve the per-room contribution to [earnings before interest, taxes, depreciation and amortization], creating a multiplier effect that compounds over time and drives strong."
She said the company added properties in key international markets including Miami, Seattle, São Paulo, Paris and Frankfurt.
Asked by an analyst how Wyndham has fueled so much organic growth, particularly as they move further from Choice Hotels International's hostile takeover attempt ending roughly a year ago, Ballotti said getting away from the "uncertainty" created by that has helped drive deals.
"Midscale and above brands are what's driving it," he said. "85% of our pipeline — taking out one brand, the economy chain scale Echo Suites — is in that midscale, upper midscale, upscale and luxury segment. And 25% of our pipeline is now upscale and above, versus 12% of our system. So it's that move to upscale that is really allowing our upper-upscale brands to continue to grow. They're often significantly under-penetrated versus some of our larger peer competitors."
Wyndham currently has 252,000 rooms in its pipeline, a 5% year-over-year increase and a record for the company.
Earnings performance
For the fourth quarter of 2024, Wyndham recorded 9% EBITDA growth to $168 million, with net income up 70% to $85 million.
Quarterly net revenue came in at $341 million.
Full-year net revenues hit $1.4 billion for Wyndham in 2024, up 1% from the prior year. Adjusted EBITDA for the year grew 5% to $694 million, with net income of $289 million.
As of press time, Wyndham's stock was trading at $108.56 a share, up 38.1% year over year. The NYSE composite was up 17.7% for the same period.