Wyndham Hotels & Resorts, Parsippany, New Jersey, on Wednesday announced results for the three months ended March 31, 2021. Highlights include:
- Diluted earnings per share was $0.26, and adjusted diluted earnings per share was $0.36.
- Net income was $24 million and adjusted net income was $33 million.
- Adjusted EBITDA was $97 million.
- Generated $64 million of net cash provided by operating activities and $59 million of free cash flow.
- Global RevPAR declined 11% compared to first quarter 2020 and 31% compared to first quarter 2019 in constant currency.
- Paid quarterly cash dividend of $0.16 per share.
- Redeemed all $500 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2026 on April 15, 2021.
“Wyndham’s select-service franchise business model delivered a strong start to 2021 as leisure customers hit the road at a pace not experienced since the pandemic started and demand from our everyday business travelers continued to accelerate,” said Geoffrey Ballotti, president and chief executive officer. “We were very pleased to see our development pipelines grow sequentially, both domestically and internationally, and our room openings and deletions improve year-over-year. We were also encouraged to see conversion room openings increase year-over-year, representing over 70% of total openings this quarter.”
Revenues declined from US$410 million in the first quarter of 2020 to US$303 million in the first quarter of 2021. The decline includes lower pass-through cost-reimbursement revenues of US$55 million in the company’s hotel management business, which have no impact on adjusted EBITDA. Excluding cost-reimbursement revenues, revenues declined US$52 million primarily reflecting an 11% decline in constant-currency global RevPAR.
Wyndham generated net income of US$24 million, or US$0.26 per diluted share, compared to US$22 million, or US$0.23 per diluted share, in the first quarter of 2020. The increase of US$2 million, or US$0.03 per diluted share, was a result of the company’s COVID-19 cost mitigation plan implemented in April 2020, lower volume-related expenses and the absence of restructuring and transaction-related expenses, which were partially offset by the global RevPAR decline.
System size
During the first quarter of 2021, Wyndham’s global system grew 20 basis points reflecting strong growth in the company’s direct-franchising business in China, primarily offset by the impact from supply chain delays on new construction openings in the United States. As expected, terminations normalized in the first quarter and the company remains solidly on track with its goal of achieving a 95% retention rate for the full year 2021.
RevPAR results
Global and International RevPAR began to lap the onset of the COVID-19 pandemic in January 2021 while the U.S. began to lap its onset in March 2021. As such, comparisons to 2019 (on a two-year basis) are more meaningful when evaluating trends. On this basis, global RevPAR declined 31% reflecting a 25% decline in the U.S. and a 45% decline internationally. The 25% decline in the U.S. represents continued sequential improvement compared to a decline of 31% in the fourth quarter of 2020. The 45% decline internationally is consistent with the fourth quarter 2020 performance.
Development news
Wyndham awarded 112 new contracts this quarter compared to 115 in first quarter 2020 and 124 in first quarter 2019. At March 31, 2021, the company’s development pipeline consisted of approximately 1,400 hotels and approximately 187,000 rooms, growing sequentially by 120 basis points, 70 basis points domestically and 150 basis points internationally. Approximately 64% of the company’s development pipeline is international and 75% is new construction. Approximately 34% of the new construction pipeline under development has broken ground.
Wyndham is not providing a complete outlook for full-year 2021 given the RevPAR uncertainties ahead; however, the company is updating the projections provided in February:
- Net rooms growth of 1% to 2%, consistent with February’s projection.
- Every point of RevPAR change versus 2020 is now expected to generate approximately US$2.8 million of adjusted EBITDA change versus 2020 (increased from US$2.5 million per point in February).
- License fees are expected to be US$70 million reflecting the minimum levels outlined in the underlying agreements, consistent with February’s projection.
- Marketing, reservation and loyalty expenses are not expected to exceed marketing, reservation and loyalty revenues, consistent with February’s projection. As such, the company expects no meaningful impact to full-year 2021 adjusted EBITDA from the marketing, reservation and loyalty funds.
- The company does not expect any meaningful special-item cash outlays in 2021, consistent with February’s projection.