Wyndham Hotels & Resorts is standing strong against Choice Hotels International and its now public bid to acquire the company.
After “closely reviewing” Choice’s latest proposal with a nominal value of $90 per share comprising 45% in stock and 55% in cash, Wyndham said its board of directors, along with its legal and financial advisors, have decided that it was “not in the best interest” of Wyndham shareholders to accept the proposal.
It was front and center in the release of its third-quarter earnings, highlighted by fee-related and other revenues totaling $400 million, up from $375 million in Q3 2022. Wyndham now is raising its full-year 2023 EPS outlook.
“[The board] remains confident that our standalone growth prospects offer superior, risk-adjusted returns to Wyndham shareholders. Supporting that belief are our third-quarter results, which were highlighted by continued growth in global RevPAR, ongoing domestic and international organic net room growth and another 8% increase in hotel contracts awarded to franchisees,” said Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts.
Announcing the results for Q3 2023, the Parsippany, N.J.-based hotel company said it had generated a net income of $103 million, or $1.21 per diluted share, up from $101 million (or $1.13 per diluted share) in Q3 2022. This increase reflected the higher adjusted EBITDA in the company’s franchising segment and a lower effective tax rate, which was partly offset by higher interest expense.
Fee-related and other revenues totaled $400 million, up from $375 million in Q3 2022. Adjusted EBITDA improved by 5% to $200 million, indicating higher fee-related and other revenues along with marketing fund variability.
Global RevPAR in Q3 2023 improved by 3% from the third quarter 2022 in constant currency. This reflected a 1% dip in the U.S. and growth of 16% globally.
In 2022, Wyndham said it posted record-breaking RevPAR in the U.S. as a result of travel patterns affected by the pandemic. Wyndham’s economy brands in the U.S. gained a market share of 100 basis points in the third quarter.
System-wide rooms grew 3% YOY, reflecting 1% growth in the U.S. and 6% growth globally. These increases included robust growth in the higher RevPAR midscale and above segments in the U.S. as well as the direct franchising business in China, which increased by 4% and 16%, respectively.
The company’s development pipeline increased by 4% sequentially and 12% YOY to total more than 1,930 hotels and a record 237,000 rooms. This includes a 16% growth in the U.S.
About 69% of the company’s pipeline is in the midscale and above segments, while 58% of the development pipeline is international. 80% of the pipeline projects are new construction, with 34% having broken ground.
Wyndham awarded 172 new contracts for its legacy brands, increasing 4% YOY. The company signed more than 230 contracts, up 8% YOY, including 60 new construction projects for its new extended stay brand, ECHO Suites Extended Stay by Wyndham. As of September 30, the total number of contracts awarded to the extended-stay brand stood at 264, totaling close to 33,000 rooms.
The company returned $134 million to shareholders through $105 million of share repurchases and a quarterly cash dividend of $0.35 per share.
REJECTION OF CHOICE’S OFFER
Earlier this month, Wyndham said that its board of directors had unanimously rejected Choice Hotels International’s stock-and-cash proposal to acquire all outstanding shares of Wyndham.
“We remain focused on our growth strategy, which includes continued system expansion through our ECHO Suites by Wyndham brand and further improvements in franchisee retention, as well as the multi-year benefit expected from the U.S. infrastructure bill,” Ballotti said. “We’re enthusiastic about our ability to deliver exceptional value to our shareholders, guests, franchisees and team members in the months and years ahead.”