On the company’s fourth-quarter and full-year earnings call with investors, Wyndham Hotels & Resorts President & CEO Geoff Ballotti reported net room growth of 4 percent and comparable adjusted earnings before interest, taxes, depreciation and amortization growth of 7 percent—“all in line with our expectations,” he said.
The company opened 69,000 rooms over the course of the year—“the largest number of annual organic room additions in Wyndham's history”—Ballotti said. Its global retention rate, meanwhile, improved another 10 basis points to 95.7 percent.
System Size and Development
The 4 percent total unit growth included 4 percent growth in the midscale and above segments in the U.S. as well as “strong” growth in the company’s Europe, Middle East and Africa and Latin America regions, which grew a combined 7 percent. Both the segments and the region drive higher revenue per available room than average.
As of Dec. 31, the company’s global development pipeline consisted of approximately 2,100 hotels and 252,000 rooms, representing another record-high level and a 5 percent year-over-year increase.
Among the key highlights:
- 7 percent growth in the U.S. and 4 percent internationally
- 18th consecutive quarter of sequential pipeline growth
- Approximately 70 percent of the pipeline is in the midscale and above segments, which grew 5 percent year-over-year
- Approximately 17 percent of the pipeline is in the extended-stay segment
- Approximately 58 percent of the pipeline is international
- Approximately 78 percent of the pipeline is new construction and approximately 35 percent of these projects have broken ground
During the call, Ballotti noted several opportunities for growth. The extended-stay market is predicted to grow nearly 30 percent from $21 billion in 2024 to $27 billion by 2028, he said. With multiple brands within this segment, extended-stay hotels now represent nearly a third of the company’s domestic development pipeline.
Ballotti also noted continued opportunity from projects related to investments in infrastructure and science developments. Throughout 2024, more than 2,200 major infrastructure projects broke ground totaling nearly a quarter of a trillion dollars in value— and nearly 80 percent of these projects are close to at least one—“and often several”—Wyndham-branded hotels,” he said. Furthermore, Wyndham franchisees in these markets reported a RevPAR increase of more than 6 percent in the fourth quarter alone, contributing 140 basis points to the company’s overall Q4 U.S. RevPAR growth.
Revenue
Fourth-quarter global revenue per available room increased 5 percent in constant currency compared to 2023, reflecting 5 percent growth in the U.S., which accelerated throughout the quarter, and 6 percent growth internationally. For the full year, global RevPAR was flat compared to 2023 on a reported basis, in line with the company’s outlook, and grew 2 percent in constant currency reflecting flat growth in the U.S. and 8 percent growth internationally.
In the U.S., fourth quarter results included 140 basis points of favorable hurricane impacts; excluding which, RevPAR grew 4 percent year-over-year reflecting strength in both weekday business bookings and weekend leisure demand. Overall, U.S. RevPAR improved 620 basis points sequentially from the third quarter, or 480 basis points excluding hurricane impacts.
Internationally, RevPAR strength was driven by ADR growth of 6 percent in constant currency, while occupancy remained flat. The company’s EMEA and Latin America regions saw the largest increases year-over-year in the fourth quarter, collectively growing 15 percent. RevPAR for the company’s China region declined 11 percent in the fourth quarter, driven by a 10 percent decrease in ADR.
In the quarter, net income grew 70 percent to $85 million compared to $50 million in fourth quarter 2023, reflecting higher adjusted EBITDA, as well as a lower effective tax rate and lower foreign currency impact for highly inflationary countries, which were partially offset by higher interest expense.
Adjusted EBITDA grew 9 percent to $168 million compared to $154million in fourth quarter 2023. This increase included a $4 million unfavorable impact from expected marketing fund variability, excluding which adjusted EBITDA grew 12 percent on a comparable basis, primarily reflecting higher royalties and franchise fees and margin expansion.
For the full year, the company reported net income of $289 million, consistent with 2023, as higher adjusted EBITDA was offset by higher transaction-related expenses in connection with Choice's takeover attempt. Other items include higher interest expense, restructuring costs and an impairment charge, which were offset by a lower effective tax rate, the absence of foreign currency impacts from highly inflationary countries and a benefit from the reversal of a spin-off related matter.
Adjusted EBITDA grew 5 percent to $694 million compared to $659 million in full-year 2023. This increase included a $10 million unfavorable impact, as expected, from marketing fund variability, excluding which adjusted EBITDA grew 7 percent on a comparable basis, primarily reflecting higher royalties and franchise fees, increased ancillary revenues and margin expansion.