Wyndham Hotels & Resorts Inc (WH) Reports Record Growth and Dividend Increase in Q4 Earnings
System-wide Rooms Growth: Achieved a 3.5% year-over-year increase, marking 12 consecutive quarters of organic growth.
Record Openings: Opened 66,000 organic rooms, representing a 3% year-over-year increase.
Retention and Pipeline Expansion: Improved global retention rate to a record 95.6% and grew the development pipeline by 10% year-over-year to 240,000 rooms.
Financial Performance: Reported Q4 net income of $50 million with adjusted EBITDA of $154 million, and full-year net income of $289 million with adjusted EBITDA of $659 million.
Shareholder Returns: Returned $515 million to shareholders through share repurchases and dividends, with a 9% dividend increase to $0.38 per share announced.
2024 Outlook: Reiterates a positive outlook with 3-4% rooms growth, 2-3% global RevPAR growth, and adjusted EBITDA between $690 - $700 million.
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On February 14, 2024, Wyndham Hotels & Resorts Inc (NYSE:WH) released its 8-K filing, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, which operates 843,000 rooms across more than 20 brands, reported strong growth and financial performance despite challenges in the industry.
Company Overview
Wyndham Hotels & Resorts is the world's largest hotel franchising company by the number of properties, with a significant presence in the economy and midscale segments. The company's portfolio includes well-known brands such as Super 8, Days Inn, and Ramada. Wyndham has been expanding its extended stay/lifestyle brands and recently launched ECHO, a new extended stay economy scale segment concept. The United States accounts for approximately 60% of Wyndham's total rooms.
Performance Highlights and Challenges
Wyndham's system-wide rooms grew organically by 3.5% year-over-year, with a record 66,000 organic room openings. The global retention rate improved to 95.6%, and the development pipeline expanded to a record 240,000 rooms. Despite facing industry challenges such as the distraction and uncertainty caused by Choice Hotels' communications to Wyndham's franchisee base, the company achieved the best organic system growth in its history.
However, the company faced headwinds, including a higher effective tax rate, increased interest expense, and foreign currency impacts. These challenges were partially offset by higher adjusted EBITDA and the benefit of a lower share count due to share repurchase activity.
Financial Achievements
Wyndham's financial achievements are significant in the Travel & Leisure industry, where consistent growth and strong cash flow are critical. The company's net income for the fourth quarter was $50 million, with adjusted EBITDA of $154 million. For the full year, net income reached $289 million, with adjusted EBITDA of $659 million. Wyndham also generated $376 million in net cash provided by operating activities and free cash flow of $339 million for the full year.
Key Financial Metrics
Wyndham's financial performance is reflected in several key metrics:
"Fourth quarter diluted earnings per share of $0.60 and net income of $50 million; adjusted diluted EPS of $0.91, adjusted net income of $75 million and adjusted EBITDA of $154 million. Full-year 2023 diluted EPS of $3.41 and net income of $289 million; adjusted diluted EPS of $4.01, adjusted net income of $341 million and adjusted EBITDA of $659 million."
These metrics are important as they demonstrate the company's profitability and operational efficiency. The adjusted figures provide a clearer picture of the company's ongoing performance by excluding one-time items and other non-operational impacts.
Analysis of Company's Performance
Wyndham's performance in 2023 showcases the company's resilience and strategic growth initiatives. The increase in system-wide rooms and the expansion of the development pipeline highlight the company's ability to attract and retain franchisees. The record retention rate underscores the strength of Wyndham's brand and its value proposition to hotel owners.
The company's financial results, including the growth in adjusted EBITDA and net income, reflect effective cost management and revenue growth strategies. The return of over half a billion dollars to shareholders through dividends and share repurchases signals confidence in the company's financial health and commitment to delivering shareholder value.
Looking ahead, Wyndham's reiteration of its full-year 2024 outlook suggests a positive trajectory for continued growth and performance. The company's focus on expanding its room portfolio and driving RevPAR growth positions it well for future success in the competitive hospitality market.
For more detailed financial information and analysis, investors and interested parties can access the full earnings report and listen to the conference call through Wyndham Hotels & Resorts' investor relations website.
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Explore the complete 8-K earnings release (here) from Wyndham Hotels & Resorts Inc for further details.
This article first appeared on GuruFocus.
