WYNDHAM HOTELS & RESORTS, INC. Q1 FY2025 earnings call

• Delivered a solid start to the year with adjusted EBITDA up 9% and adjusted EPS up 20%. - Global system grew 4% and pipeline reached a record 2,143 hotels. - Brands outperformed the industry in economic downturns (e.g., 9/11, GFC, COVID) due to select-service model anchored by blue-collar workers, limited reliance on corporate travel, drive-to markets, and attractively priced brands. - Record first quarter with 15,000 rooms opened (13% more than last year) and pipeline at 254,000 rooms (new all-time high). - Ancillary fee streams continued to grow driven by co-branded credit card, partnership initiatives, and technology innovations. - Named one of World's Most Ethical Companies for the 3rd straight year.

In the first quarter, adjusted EBITDA grew 9% on a comparable basis and adjusted EPS increased 20%. Global system grew by 4% and pipeline by 5% to a record 2,143 hotels. Royalty rates saw healthy increases in U.S. and international. Ancillary fee streams continued to grow. Global RevPAR was 2% in constant currency. U.S. RevPAR started strong in January but softened in February and March, finishing about 3 points below expectations, growing 2% for the quarter (up 60 basis points when normalizing for hurricanes and Easter shift). Excluding benefits, pricing power was steady with a 110 basis point increase against a 50 basis point decline in demand; April month-to-date RevPAR was down 3% normalized. Internationally, Latin America RevPAR grew 25% (excluding Argentina's hyperinflation), EMEA RevPAR rose 6%, Southeast Asia and Pacific Rim posted 8% YOY growth, while China's RevPAR declined 8% YOY due to pricing pressure.

• Full-year constant currency global RevPAR range between down 2% to up 1%; lower end reflects March-April trends, higher end assumes stronger performance. - Fee-related and other revenues expected $1.45B-$1.49B, down from prior outlook. - Adjusted EBITDA expected $730M-$745M, down $10M-$15M from prior outlook. - Adjusted net income projected $358M-$372M, adjusted diluted EPS $4.57-$4.74. - Free-cash flow conversion before development advances expected ~57%.

• Macro environment uncertainty impacting RevPAR and demand. - Supply chain costs concerns including tariffs, steel, aluminum, fixtures, furniture, equipment costs. - Less than 3% of U.S. bookings from international inbounds.

Q: Lizzie Dove from Goldman Sachs on U.S. RevPAR trends A: Geoff Ballotti discussed U.S. RevPAR trends, pricing holding firm, franchisee communication, cancellation rates, lead times, lengths of stay, and optimism for leisure transient in summer months. Michele Allen added on leisure performance and consumer sentiment impact.

Q: Michael Bellisario from Baird on long-term outlook A: Geoff Ballotti and Michele Allen talked about net room growth, EBITDA CAGR, and long-term trajectory remaining intact despite revised outlook.

Q: Brandt Montour from Barclays on development and conversions A: Geoff Ballotti discussed net unit growth, conversion business, sourcing strategies, and optimism about development despite cost concerns.

Q: David Katz from Jefferies on development engine and key money A: Geoff Ballotti and Michele Allen discussed development in different regions, focus on direct franchise agreements, and key money strategy.

Q: Dany Asad from Bank of America on regional outlook breakdown A: Michele Allen broke down U.S. and international RevPAR outlooks by region.

Q: Patrick Scholes from Truist on ancillary revenues A: Michele Allen discussed ancillary revenue growth expectations, contract-based revenues, and insulation from RevPAR fluctuations.

Q: Ian Zaffino from Oppenheimer on infrastructure trends A: Geoff Ballotti talked about infrastructure trends, resumption of IIJA allocations, and GSO revenue growth.

Q: Alex Brignall from Redburn Atlantic on German deal terms A: Michele Allen discussed the German deal, its strategic importance, and repayment terms.

Q: Dan Wasiolek from Morningstar on technology solutions for owners A: Geoff Ballotti talked about Wyndham's tech stack, opt-in services for franchisees, and benefits like faster check-in, revenue management, and sales support.