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—i.e. 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
outlook higher 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 stats.
Wyndham’s global system grew 3 percent, reflecting 2 percent
growth in the U.S. 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.