Wyndham Hotels & Resorts reported impressive results for 4Q21 revenue and RevPAR growth on Wednesday, and highlighted pipeline growth with the launch of an economy extended-stay brand to meet burgeoning demand.
While light on details about the new brand, it is clear Wyndham sees the opportunity in the extended-stay category, especially as U.S. infrastructure spending starts to pick up with construction workers looking for temporary homes.
Wyndham President and CEO Geoff Ballotti said the brand has been very well received by the franchise development community and is among the most popular prototypes among new-construction concepts.
“Our developers are asking for an economy extended-stay brand, our franchisees are asking for it, and most importantly, our corporate accounts are asking for it,” Ballotti said. “We know that there are over 10 million construction workers out there that travel every week. And we also know that relocation and long-term assignments are going to continue to pick up… We’re seeing very strong developer interest right now. We’re already being asked by those developers for sites. And we’ll have a lot more to talk about in the coming weeks about it.”
RevPAR growth was driven by ADR improvements, which jumped 8% in the quarter year-over-year. RevPAR in the United States for 4Q21 actually exceeded 2019 levels by 9% and 58% year-over-year. Global RevPAR matched 2019 levels, even though it faced headwinds of a 19% decline outside its U.S. market. For the full year, RevPAR in the U.S. reached 97% of 2019 performance, while global RevPAR recovered to 88% versus 2019.
“New COVID variants did not impact our domestic, drive-to leisure travel business and consumer demand portends a very busy Spring Break for our franchisees,” Ballotti said. “We enter 2022 with strong occupancy trends in the U.S., our largest ever development pipeline and a multitude of new technology services and marketing programs to enhance our franchisees’ top and bottom lines. In addition, our Board authorized a quarterly dividend of US$0.32 per share and increased our share repurchase authorization, which reflects the ongoing strength of the business and our strong free cash flow.”
System-wide rooms grew 180 basis points year-over-year, including 70 basis points of growth in the U.S. and 350 basis points of growth internationally.
Diluted earnings per share for the quarter was US$0.52 and net income reached US$48 million; diluted EPS for the full year was US$2.60, while net income reached US$244 million.
Adjusted EBITDA was US$131 million for the quarter and US$590 million for the full year.
Wyndham also returned over US$190 million to shareholders for the full year through share repurchases and dividends.
With its biggest pipeline ever recorded, Wyndham said at the end of 2021 there were some 1,500 hotels under development representing more than 194,000 rooms. In 4Q21, the pipeline grew 5% year-over-year with projects outside the U.S. up 6%. Fully, 79% of new construction is international. The current pipeline also reflects a move up market as 80% of development is midscale and above.
The company signed 655 new contracts with franchisees in 2021 and grew its global portfolio by 180 basis points, reflecting an increase of 70 basis points in the U.S. and 350 basis points outside of the U.S.
Room openings in the fourth quarter were at 97% of 2019 levels globally — driven by a 21% increase in U.S. room openings — and the company had a 95% rooms retention rate for the full year.
As of December 31, 2021, Wyndham had 810,100 rooms in its global portfolio — 490,600 of which were in the U.S. In the fourth quarter, the company opened 9,900 rooms. Conversions of existing hotels was up more than 35% in the quarter compared to 2019.
In 2021, Wyndham signed 655 new franchise deals and grew its global portfolio by 180 basis points (70 basis points in the U.S. and 350 basis points abroad).
Led by a jump in conversion opportunities, room openings in Q4 reached 97% of 2019 levels globally. At the end of the year, Wyndham had 810,100 rooms in its global portfolio with some 490,600 in the U.S.
Looking ahead, Wyndham remained bullish with projections saying RevPAR should grow 12% to 16% over 2021, while net room growth in 2022 is expected to range from 2% to 4%. It is also projecting adjusted EBITDA between US$605 million and US$625 million, up 3% to 6%.