Wyndham Bullish on Biz Travel Contracts Going into Fall

Wyndham CEO Geoff Ballotti projected confidence in Wednesday’s earnings call that the hotel’s thriving performance indicators were insulated against some ongoing economic challenges. He dismissed the concept that rising gas prices would ding the company’s strong performance with drive-to travelers. Gas prices, he said, have a “weak correlation” to revenue per available room and went on to suggest the price at the pump was not “materially impacting customers’ travel decisions right now.”

That looked to be true in the second quarter when the hotel company’s RevPAR grew 23 percent compared to 2021 and beat 2019 by 3 percent. In the United States, Wyndham recorded 15 percent RevPAR growth over 2021. Internationally, that figure was 59 percent. Ballotti additionally offered a peek into third quarter performance, pegging July month-to-date domestic RevPAR at 6 percent ahead of 2019.

Asked about a potentially recessionary environment going into the fall and whether franchisees would hold the rates underpinning that RevPAR performance, Ballotti said the company had given hoteliers all the tools to do so but that winning business travel would play a major role after the summer season simmered down.

“What we’re trying to do with all of our state-of-the-art … revenue management pricing tools is to allow them to just create more optionality around pricing power and to train them to reduce their reliance on more highly discounted pay rates that might be out there,” he said. But Ballotti also added that key in the effort to maintain rates would be “to realize that what they really should be doing right now, especially as they come into the winter and fall is responding to those RFPs for contracted business.”

Banking on Infrastructure Business

The so-called “everyday business traveler” has been a huge focus for Wyndham. While rate has been the foundation of the hotel industry’s recovery, “we still have occupancy yet to fully recover,” said CFO Michele Allen. The company has seen “the infrastructure side” of its business bookings—ie bookings related to road building, electrical lines, water and public works—grow 10 percent already year to date. Allen added that the company expects continued growth in that sector as funds from the Biden Administration’s infrastructure bill gets allocated down to the state level.

Ballotti called the infrastructure bill a “huge upside” for Wyndham that is generating “so much good news” from the company’s global sales offices.

“Our brands are gaining share on the weekends versus 2019, but they are gaining more index during the weekday for exactly the reason that Michele pointed out,” he said. “We are attracting more than our fair share of that everyday business traveler.” Ballotti added that Wyndham global sales would focus “first and foremost” on companies contracting for public works projects, but that the company was also picking up private sector business related to the infrastructure developments, particularly in the energy and oil sector.

Second Quarter Performance

Wyndham reported total revenue $386 million for the three months ending June 30; net income was $92 million. The company also revised its higher outlook for the remainder of 2022, projecting adjusted net income at $323 million to $334 million. Its previous outlook put that figure at $317million to $329 million.

Executives noted guests continue to stay longer and spend more at the property level, and booking windows are beginning to increase after an extended period of close-in trip planning due to Covid-19.

RevPAR grew 23 percent globally in constant currency, driven primarily by stronger pricing power but underpinned as well by higher occupancy levels. The company did not disclose average daily rate or occupancy statistics.

Wyndham’s global system grew 3 percent, reflecting 2 percent growth in the US and 4 percent growth internationally, with strength in the midscale and higher segments. Total rooms grew to 818,900 compared to 798,000 in 2021.

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