• Net Room Growth: 4% increase, with a record 69,000 rooms opened.
• Adjusted EBITDA Growth: 7% increase year-over-year.
• Adjusted EPS Growth: 10% increase year-over-year.
• US RevPAR Growth: 5.3% increase in Q4, with a 3.9% increase excluding hurricane impacts.
• International RevPAR Growth: 6% year-over-year in constant currency.
• Fee-Related and Other Revenues: $341 million in Q4, a 7% increase year-over-year.
• Adjusted EBITDA: $168 million in Q4, a 12% increase on a comparable basis.
• Adjusted Diluted EPS: $1.04 in Q4, an 18% increase on a comparable basis.
• Full-Year Fee-Related and Other Revenues: Approximately $1.4 billion.
• Full-Year Adjusted EBITDA: $694 million, a 7% increase on a comparable basis.
• Full-Year Adjusted Diluted EPS: $4.33, a 10% increase on a comparable basis.
• Adjusted Free Cash Flow: $130 million in Q4 and $397 million for the full year.
• Shareholder Returns: $430 million returned in 2024, including $122 million in dividends and $308 million in share repurchases.
• 2025 Outlook - Global Net Room Growth: Expected to be 3.6% to 4.6%.
• 2025 Outlook - Global RevPAR Growth: Projected at 2% to 3% on a constant currency basis.
• 2025 Outlook - Adjusted EBITDA: Expected to be between $745 million and $755 million.
• 2025 Outlook - Adjusted Diluted EPS: Projected at $4.66 to $4.78.

• Warning! GuruFocus has detected 8 Warning Signs with WH.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wyndham Hotels & Resorts Inc (NYSE:WH) reported a strong finish for 2024 with net room growth of 4% and comparable adjusted EBITDA and EPS growth of 7% and 10%, respectively.
• The company achieved a record 69,000 room openings, marking the largest annual organic room additions in its history.
• Wyndham's global retention rate improved to 95.7%, indicating high franchisee engagement and satisfaction.
• The ECHO Suites brand and upscale extended stay segment showed strong performance, contributing significantly to the development pipeline.
• Wyndham Rewards membership grew by 8% to 114 million members globally, enhancing customer loyalty and engagement.

Negative Points

• China's RevPAR declined by 11% due to deflationary pressures, although ADR remains 3% ahead of 2019 levels.
• The company's financial results were impacted by the timing of marketing fund spend, with marketing fund expenses exceeding revenues by $1 million for the full year.
• Higher interest expenses partially offset the growth in adjusted diluted EPS.
• The legacy master license agreements in China had a nominal impact on EBITDA, affecting net room growth.
• The company faces continued deflationary pressures in China, impacting overall international RevPAR growth.

Q & A Highlights

Q: Can you break down the net unit growth guidance of 4.1% at the midpoint between new construction, conversions, and retention improvement? A: Michele Allen, CFO, explained that the low end of the guidance reflects 2024 performance with a 95.7% retention rate and 7.9% growth openings. The high end anticipates a 30 basis point improvement in retention and a 70 basis point increase in growth openings. New construction will play a larger role in 2025, especially as ECHO continues to ramp up, with improved results expected in the US and consistent production internationally.

Q: Are you seeing higher returns on key money investments, and how are you deploying these funds? A: Michele Allen noted that the key money strategy is attracting higher FeePAR properties in strategic markets, with less than 20% of additions involving key money. These properties bring a 40% FeePAR premium. The strategy involves deploying capital judiciously, primarily in the US, focusing on midscale and above, including ECHO.

Q: How does the pipeline's FeePAR premium factor into this year's guidance, and when will it impact results? A: Michele Allen stated that the higher FeePAR strategy is part of the expectation to outperform the industry in RevPAR. The strategy contributes to consistent brand performance and is expected to impact 2025 results, with significant contributions from infrastructure spend.

Q: How should investors view the growth of the credit card fee stream and the new debit card program? A: Geoffrey Ballotti, CEO, highlighted the debit card's potential to attract Gen Y and Z customers. Michele Allen added that the credit card program has grown 8% annually, with stronger deal economics and expected ancillary revenue growth in the low teens for 2025, partly due to the early renewal of the Barclays card.

Q: Is there any hurricane impact included in the RevPAR guidance for this year? A: Michele Allen confirmed that the hurricane benefits have been adjusted out of the 2025 RevPAR guidance, which includes a 30-basis-point headwind from hurricanes.

Q: What RevPAR environment is needed to achieve the 8.5% adjusted EBITDA CAGR by 2026? A: Michele Allen indicated that moving from flat RevPAR last year to up about 3% this year, and aiming for 3% or better next year, would imply a 1% to 2% CAGR over the three-year plan, including currency FX.

Q: How does the pipeline's evolution impact your growth strategy, and are there opportunities for deals outside organic activities? A: Geoffrey Ballotti emphasized the strong organic growth in the pipeline, particularly in midscale and above segments. The removal of uncertainty has fueled pipeline growth, and the focus remains on organic expansion, with potential opportunities for strategic deals.

Q: How is AI influencing your direct and indirect distribution mix? A: Geoffrey Ballotti explained that Wyndham's investment in technology allows for AI-driven innovations, enhancing customer engagement and operational efficiency. AI is automating tasks, improving service, and creating monetization opportunities for franchisees.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.