PARRSIPANY, New Jersey—“Solid” performance in 2016 shows that Wyndham Hotel Group’s growth strategy is working, officials said during the company’s fourth-quarter 2016 earnings call with investors.
During the quarter, Wyndham’s hotel portfolio showed a 2.9% net room increase, compared with year-end 2015, to more than 697,600 rooms at more than 8,000 properties. That equates to nearly two new properties every day, said Wyndham Worldwide CEO Steve Holmes.
Wyndham’s development pipeline grew in Q4 2016 to more than 1,100 hotels, representing about 138,300 rooms. A total of 67% of those properties were new-build projects.
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That growth, Holmes said, is due in large part to the “fantastic tools” that the company has given the franchise development team to sell—including improvements to the company’s Wyndham Rewards program and various technology initiatives, including a cloud-based property management system and reservations system.
Because of that, Wyndham has a “slightly more bullish perspective on its prospects for 2017,” according to EVP and CFO Tom Conforti. In the company’s guidance for 2017, executives project room growth between 3% and 5%, but flat revenue per available room, “reflecting the latest industry forecasts,” Conforti said.
Holmes said much of Wyndham’s pipeline growth has come from outside of the U.S. During the fourth quarter, a total of 60% of the company’s pipeline projects were in international markets.
“If we’re looking at regions, China has been a big contributor to that,” he said. “We’ve also seen growth in Europe.”
But while the pipeline shows an increase in new construction, Holmes said that’s only part of the growth picture.
“As a largely conversion company, we do a lot of quick conversions of independent hotels into one of our brands,” he said.
As far as growing organically versus through acquisitions, Holmes said Wyndham will strive “to do both.”
“In M&A, it’s all about opportunity,” Holmes said. “We’re very disciplined; as we’ve shown, we’re not going to do a deal just for the sake of adding more brands or more units. We do look at everything that comes out and if it makes sense, we’ll take advantage of it.”
Wyndham also sees opportunities to drive its tours and vacation rentals from its Wyndham Rewards program, which added nearly 5 million members in 2016.
“This touches all of our businesses. … Engaged loyalty members stay more and spend more,” Holmes said. “It’s not just a frequent guest program. … This past year, Wyndham Rewards became the first loyalty program to include vacation ownership and vacation rental properties. … Members now have close to 30,000 redemption options.”
As of press time, Wyndham Worldwide was trading at $83.83 per share, up 9.9% year to date. The Baird/STR Hotel Stock Index is up 17.9% for the same period.
Q4 2016 results
Wyndham Hotel Group reported a year-over-year increase of 2.9% in domestic, same-store revenue per available room in Q4 2016. The company did not include same-store RevPAR growth for full-year 2016 in the earnings news release.
Excluding oil markets, domestic RevPAR grew 3.7% for the fourth quarter. Total systemwide same-store RevPAR increased 2.7%, which the company stated “reflects softness in domestic and Canadian oil markets,” according to the news release.
Revenues for the quarter were $316 million, compared to $314 million in Q4 2015, while adjusted earnings before interest, taxes, depreciation and amortization grew 5.3% to $99 million (8% in constant currency and excluding acquisitions). The company cited higher franchise fees and growth in its Wyndham Rewards credit card program.