Wyndham Hotels & Resorts' third-quarter systemwide revenue per available room increased year over year due to "higher occupancy levels and stronger pricing power," adding to the hotel company's list of "well substantiated reasons" to refuse Choice Hotels International's acquisition bid, Wyndham executives said Thursday during an earnings call.
In Q3, Wyndham's systemwide RevPAR was $49.71, up 3 percent year over year. International RevPAR was $38.05, up 16 percent year over year, while U.S. RevPAR decreased 1 percent year over year to $58.46. Wyndham attributed the decline in U.S. RevPAR to a more normalized environment following a record-breaking year in 2022. Wyndham's U.S. RevPAR in Q3 exceeded 2019 levels by 9 percent.
Wyndham president and CEO Geoffrey Ballotti on the call said, "revenue growth from our general infrastructure-related business accounts" helped the company's economy brands "to gain market share, outperforming their competitors by another 100 basis points this quarter."
Wyndham executives also detailed the company's decision to refuse Choice's proposal, which was made public this month. Wyndham executives "strongly believe that Wyndham's standalone plan and multiple levers of growth provide a more compelling proposition compared to Choice's offer," Wyndham board chairman Stephen Holmes said on the call.
For its part, Choice on Wednesday issued a press release calling on Wyndham "to engage in good faith discussions so that shareholders of both companies can benefit from the compelling combination."
"We respect Wyndham's desire to achieve the best outcome for its shareholders, but that can't happen if Wyndham unilaterally ends our discussions," Choice president and CEO Patrick Pacious said in the statement. "Choice is ready to move expeditiously to negotiate binding terms, including mechanisms to provide market standard protections for Wyndham shareholders."
Ballotti said Choice's offer did not include market volatility protection, which Wyndham specified was necessary, company executives said. The hotel company requested "creative and appropriate protections for shareholders."
Ballotti noted offer is now "worth less" than when it was originally proposed due to a drop in Choice's stock after the hotel company made its proposal public. Choice's stock was trading at just below $112 per share Wednesday afternoon, down from a high of $124.90 on Oct. 16, the day before Choice made its acquisition offer public.
Holmes highlighted areas of concern regarding Choice's offer, such as the lack of "organic growth, less vibrant loyalty program and virtually no international capabilities in Choice's platform."
Ballotti also underscored these differentiators by highlighting Choice's "declining pipeline" against Wyndham's growing one.
As of Sept. 30, Wyndham's global pipeline reached 858,000, up 3 percent year over year. The hotel company's international pipeline increased 6 percent, and its U.S. pipeline grew 1 percent. The company opened more than 14,500 new rooms in the third quarter, Ballotti said, with 5,900 opening in the United States.
Regarding next steps with Choice, Holmes called the publicity of the proposal an "amazing distraction" for both businesses, adding that Wyndham has not heard from Choice since last week.
"They're not growing, they have some serious issues within their organization… they're trying to address that by making us the elixir to their problems," Holmes said. He added that the hotel company has offered multiple solutions to the deal, to which Choice cannot accommodate.
"Their plan seems to be to put out repetitive press releases and churn the water enough to make it interesting for us … that's a bit of a desperate plan," Holmes said.
"The ball is in their court," he added.
Additional Q3 Metrics
In Q3, Wyndham reported $402 million in revenue, down 1.2 percent year over year. The company's net income in the quarter was $103 million, up from $101 million during the same period in 2022.
— Chris Davis contributed to this report.
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