Wyndham Hotels & Resorts saw a marked improvement during the third quarter compared with second-quarter results, and part of the credit goes to the company's "everyday business travelers," Wyndham CEO Geoffrey Ballotti said during a Thursday earnings call.
"Our brands collectively gained more than 300 basis points of market share domestically during the quarter," he said, drawing a comparison with the second quarter. "This improvement was driven by rising demand in drive-to leisure travel during the weekends, which improved 26 percentage points compared to the second quarter, combined with the robust return of our everyday business traveler during the weekdays, which increased 19 points compared to the second quarter."
Approximately 70 percent of Wyndham's bookings are leisure travel, Ballotti said. Of the 30 percent that is business travel, "two-thirds comes from the infrastructure industries, including construction crews, utility workers and engineers," he said. "While this travel demand declined 49 percent [year over year] in the second quarter, we are experiencing a strong rebound in the third quarter, with this business down only 24 percent, a 25-point improvement sequentially."
Of the remaining one-third of business travel, the vast majority includes logistics industries, such as manufacturing, trucking, rail and warehouse workers. "We've seen similar rebounds in this segment from bookings being down 40 percent [year over year] in the second quarter to 26 percent down in the third quarter, a 14-point improvement sequentially."
Ballotti added that business travelers pay a "slightly higher rate" than leisure travelers, and he would like to see the share grow. Wyndham CFO Michele Allen said that the company was making investments in Wyndham Business and Wyndham Direct, the direct-billing solution launched in August, which "are there to capture a higher degree of that segment."
Other factors positively affecting performance were the company's drive-to portfolio and ability to tightly manage costs, Allen added.
Q3 Results
Despite the quarter-over-quarter improvement, revenue for the third quarter was $337 million, a decline from $560 million for the same period in 2019. Third-quarter net income was $27 million, compared with $45 million one year prior.
Comparable global revenue per available room, in constant currency and excluding hotels temporarily closed due to Covid-19, declined by 35 percent year over year, including by 32 percent in the United States and 43 percent internationally, Allen said. In the U.S., select-service brands saw a 30 percent RevPAR decline, with two-thirds of the decrease attributed to lower occupancy and one-third attributed to lower average daily rates.
Systemwide occupancy peaked at 50 percent in July and pulled back to 49 percent in August and 47 percent in September, which translates to year-over-year reductions of 25 percent in July, 21 percent in August and 17 percent in September, "continuing the sequential improvement trends since our April lows," Allen said, adding that for the week ending Oct. 17, month-to-date occupancy was running at 50 percent.
Average daily rate for the select-service space also has shown improvement, increasing from a decline of 23 percent year over year at its low point to its current level of a 12 percent decrease, Allen said.
Total systemwide rooms declined 2 percent year over year, however the company during the quarter also opened 76 hotels with 9,600 rooms, a year-over-year decline of 34 percent due to deals resulting from the pandemic, according to the company. Wyndham's development pipeline includes about 1,400 hotels with 185,000 rooms, a 3 percent decline year over year, but a 3 percent increase from Q2. The company executed 152 hotel agreements, including 23 percent more domestic conversion signings than in the third quarter of 2019.
About 99 percent of the company's U.S. portfolio was open as of Oct. 24, with more than 97 percent open globally.
During the quarter, Wyndham also launched a new app, which offers contactless booking and check-in, as well as a new credit card for businesses.
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