For the first quarter ended March 31, Wyndham Hotels & Resorts reported global RevPAR grew 12% compared to first-quarter 2022, with U.S. RevPAR up 4% for the same period a year ago.
“Our impressive first quarter results demonstrate continued momentum with global RevPAR growth of 12%, net room growth of 4% and the 11th consecutive quarter of sequential growth in our development pipeline,” said Geoff Ballotti, president/CEO, Wyndham Hotels & Resorts. “We outperformed our adjusted EBITDA expectations, leading us to raise our full-year outlook as a result. With our seasonally strongest summer season on the horizon and no signs of slowdown in our middle-income guests’ desire to spend on travel, we’re enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees and team members.”
Q1 highlights
- Global RevPAR grew 12% compared to first-quarter 2022 in constant currency.
- U.S. RevPAR grew 4% compared to first-quarter 2022.
- Systemwide rooms grew 4% year-over-year (YOY), including 1% of growth in the U.S. and 9% of growth internationally.
- Development pipeline grew 11% YOY to 226,000 rooms, and signings increased 7%, excluding ECHO Suites Extended Stay by Wyndham.
- Awarded 35 new-construction projects for ECHO Suites Extended Stay by Wyndham, bringing the total number to 205 since launch in March 2022.
- Company raises full-year 2023 outlook.
Q1 financial results
- Fee-related and other revenues was $308 million compared to $316 million in first-quarter 2022, which included $38 million from the company’s select-service management business and owned hotels. On a comparable basis, fee-related and other revenues increased 11% YOY, primarily reflecting global RevPAR growth of 9%, higher franchise fees and incremental license fees.
- The company generated net income of $67 million, or 77 cents per diluted share, compared to $106 million, or $1.14 per diluted share, in first-quarter 2022. The decline in net income was primarily due to the sale of the company’s owned hotels and the exit of its select-service management business, partially offset by higher adjusted EBITDA in the company’s hotel franchising segment.
- Adjusted EBITDA was $147 million compared to $159 million in first-quarter 2022, which included a $15 million contribution from the company’s select-service management business and owned hotels. On a comparable basis—which excludes the marketing fund variability—adjusted EBITDA increased 10% YOY reflecting higher fee-related and other revenues.
- During first-quarter 2023, the company’s marketing fund expenses exceeded revenues by $4 million, while in first-quarter 2022, marketing fund revenues exceeded expenses by $7 million.
System size
The company’s global system grew by 4%, reflecting 1% growth in the U.S. and 9% growth 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 4% and 10%, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand. The company remains solidly on track to achieve its net room growth outlook of 2% to 4% for the full-year 2023, including an increase in its retention rate compared to 2022.
RevPAR
First-quarter global RevPAR grew by 12% in constant currency compared to 2022 as the U.S. grew 4% and international grew 37%. Approximately two-thirds of this increase is driven by stronger pricing power, while the remainder is driven by higher occupancy levels.
Development
- On March 31, the company’s global development pipeline consisted of approximately 1,800 hotels and 226,000 rooms, representing an 11% YOY increase, including 28% growth in the U.S.
- Approximately 72% of the pipeline is in the midscale and above segments.
- Approximately 57% of the development pipeline is international and 80% is new construction, of which approximately 35% has broken ground.
- During first-quarter 2023, the company awarded 123 new contracts for its legacy brands, an increase of 7% YOY, and 35 new contracts for its ECHO Suites Extended Stay by Wyndham brand, bringing the total number of contracts awarded for the brand to 205 since its launch. The pipeline includes more than 25,000 rooms associated with the ECHO brand.
Cash and liquidity
The company generated net cash provided by operating activities of $93 million and free cash flow of $84 million in first-quarter 2023. It ended the quarter with a cash balance of $150 million and approximately $890 million in total liquidity.
Full-year outlook
For full-year 2023, the company expects:
- YOY rooms growth of 2% to 4%.
- YOY RevPAR growth of 4% to 6%.
- Fee-related and other revenues of $1.38 billion to $1.41 billion.
- Adjusted EBITDA of $654 million to $664 million
- Adjusted net income of $340 million to $352 million
