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Hilton painted a more subdued picture of leisure demand. Wyndham’s results demonstrate the benefits of having a greater mix of hotels and resorts in the economy and midsize sectors.
sean o’neil
The world’s largest hotel franchisor sees strong demand for leisure and business travel, even in markets where budgets are stretched, despite economic uncertainty. Wyndham’s third-quarter results highlighted the benefits of having a strong mix of hotels and resorts in the economy and midsize segments.
“We believe demand for leisure travel will continue unabated and continue to have positive momentum from the fourth quarter through 2025,” President and CEO Jeff Ballotti said on an earnings call Thursday. Ta.
“If interest rates continue to fall, customers should have better cash flow for their holidays by lowering mortgage payments and spending less on essentials,” he said.
Hilton on Wednesday offered a more subdued picture of leisure demand through 2025. But Wyndham’s performance, which has 9,200 hotels around the world, also provides important insight into the health of the broader travel industry. Unlike Hilton, the vast majority of Wyndham’s properties are roadside select service, and its customer base is primarily working-class and middle-class families and businessmen.
Resilient hotel spending
Wyndham’s budget and mid-range segments are starting to see growth resume after demand cooled about a year ago after a post-pandemic boom.
Referring to the financial quarter, Barotti said: “In terms of the economic sector, the second quarter was better than the first and the third quarter was better than the second.” “Pricing power is strong as economy hotel revenue per available room outpaced national revenue per available room growth by a full (percentage) point in 2019.”
Average daily interest rates are 17% above pre-pandemic levels and remain below cumulative inflation of 23%, suggesting there is room for further rate hikes. Economic revenue per available room has “normalized” and is up 260 basis points from the first half.
“For the first three weeks of October, U.S. revenue per available room is trending up 3% year-over-year,” said Chief Financial Officer Michelle Allen.
The international situation is even brighter. International revenue per available room increased 7% across segments in the third quarter, including strength in the economy and midsize segments.
Where to expect growth:
Hurricane Relief: After two recent hurricanes in the United States, Wyndham Select Service hotels are hosting displaced families and first responders. Only one hotel (Super 8 in Asheville, North Carolina) is still closed. Wyndham hotels in affected areas are experiencing increased storm-related and post-storm demand, potentially contributing 40 basis points to additional revenue per available U.S. room in the fourth quarter. Texas: Windham has more hotels (about 700) than anywhere else in Texas, and the state has benefited from oil and gas exploration and data center construction. Long-term stays: “Demand for long-term stay accommodations exceeds existing supply by a 3-to-1 margin,” Barotti said. “Looking at the third quarter, extended stay revenue per available room in economy was an additional 200 basis points higher than the overall hotel economy sector. ” India: The group is bringing the Microtel brand to India and plans to open 40 Microtels by 2031. Wyndham has eight brands and 60 hotels in India. “We expect netroom growth to be double digits over the next few years,” Barotti said. Ancillary revenue: “Our co-branded credit card programs contributed the most to ancillary fee growth in 2024 and are likely to increase again in 2025,” Allen said. Wyndham Rewards Earner Business card registrations increased 34% year over year.
What’s working:
Contract Wins: Our U.S. franchise sales team closed 10% more contracts in the quarter than last year. Footprint growth: Room count increased 4% year over year to 892,600 rooms. We expanded into new markets such as Spain, Türkiye, and Indonesia. Record your pipeline. Wyndham’s list of hotel contracts is at a record level of 248,000 rooms. Approximately 85% of that pipeline is for medium-sized and larger hotels with high average rates and particularly profitable extended-stay lodging. Lucky timing. Barotti predicted even better year-over-year comparisons for “the next four quarters.”
Q3 by the numbers:
Revenues: $396 million, down slightly from $402 million in the year-ago period. Net income: $102 million, almost unchanged year-over-year. Adjusted EBITDA: $208 million, up 4% year over year due to increased room count, higher royalty rates and higher ancillary costs.
Year-to-date performance of the Lodging Sector Stock Index
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