WYNDHAM HOTELS & RESORTS, INC. Q3 FY2024 earnings call

• Q3 illustrated success against the long-term growth strategy, with comparable adjusted EBITDA and EPS growth of 7% and 10% respectively. - System grew 4%, with over 17,000 rooms opened year-to-date globally. - Increased US and international royalty rates and saw significant growth in ancillary fee streams. - Sustained strong development momentum, with a record development pipeline of 248,000 rooms. - RevPAR in the US declined 80 basis points Y/Y but economy RevPAR normalized. Internationally, RevPAR increased 7% Y/Y in constant currency. - Leveraged technology with the Wyndham Connect guest engagement platform, driving incremental revenue for franchisees. - Returned $380 million to shareholders year-to-date and maintained a strong capital allocation strategy.

In the third quarter, Wyndham generated $394 million in fee-related and other revenues. Adjusted EBITDA was $208 million. Royalties and franchise fees grew 5% due to global system expansion and higher fee par, while ancillary revenues increased 8% driven by credit card and partnership fees. Domestically, net rooms grew sequentially and year-over-year, with mid-scale and above brands contributing 3% net room growth. Internationally, net rooms grew 8% year-over-year, with EMEA, Latin America, Southeast Asia, and China showing strong growth. For example, EMEA grew net rooms by 11%, Latin America by 11%, Southeast Asia and Pacific Rim by 10%, and China's direct franchising system grew 13%.

• Increased adjusted diluted EPS projection to a range of $4.22 to $4.34. - Expect full-year adjusted free cash flow to convert at approximately 60% of adjusted EBITDA. - Anticipate more favorable RevPAR comparisons in Q4 due to easier year-over-year comps and infrastructure momentum. - Hurricane impacts provided a 40 basis point benefit to Q4 RevPAR, with potential for more depending on relief efforts' duration.

• Potential impact of hurricanes on RevPAR beyond initial estimates. - Election distractions could affect business travel, though Wyndham's business is less impacted. - Cyclical nature of economy segment performance, though viewed as more comp-driven.

Q: Joe Greff asked about net rooms growth for next year and composition.

A: Geoff Ballotti discussed confidence in net room growth, noting a record pipeline and strong franchise sales teams.

Q: Stephen Grambling asked about 2026 EBITDA and trend.

A: Michele Allen discussed confidence in driver assumptions, highlighting ancillary revenue opportunities.

Q: Michael Bellisario asked about data centers and AI.

A: Geoff Ballotti discussed data center growth and its impact on RevPAR and unit growth.

Q: David Katz asked about ancillary fees and growth.

A: Michele Allen discussed ancillary fees outpacing core RevPAR fees.

Q: Ian Zaffino asked about market share gains and economy segment.

A: Geoff Ballotti discussed market share gains and ECHO Suites' impact.

Q: Patrick Scholes asked about retention rates.

A: Michele Allen and Geoff Ballotti discussed retention progress and US vs international breakdown.

Q: Brandt Montour asked about hurricane impact and election distraction.

A: Michele Allen compared hurricane impacts and discussed election effects.

Q: Lizzie Dove asked about economy segment and China.

A: Geoff Ballotti discussed cyclical nature and China recovery.

Q: Steve Pizzella asked about development pacing and margins.

A: Michele Allen discussed development pacing and margin drivers.

Q: Meredith Jensen asked about technology and ancillary fees.

A: Geoff Ballotti and Michele Allen discussed technology investments and ancillary fee growth.