Investor Presentation May 4, 2020
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Clear focus and Maximizing Cash Flow priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 2
Uniquely Positioned to Outperform 2 3 4 5 1 Primarily Predominately Select-Service Ability to Reignite Low Risk Leisure-Focused “Drive to” Leader the Conversion Business Locations Engine Model 3
R E A S O N # 1 Leisure Guests Power our Business; Expected to Recover First Nearly 70% Leisure Focus 69% Leisure Corporate 30% Transient Business 1% Minimal Exposure to Group Business 4
R E A S O N # 2 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. Hotels in “Drive to” Locations 96% of U.S. Guests Originate Domestically Suburban 35% 96% U.S. 87% Interstate 23% Europe 1% Small Metro 29% Canada 1% 5% Airport 1% Latin America Urban 5% 3% Asia Pacific Resorts 1% 5
R E A S O N # 3 Leader in the Attractive Select-Service Space Percent of U.S. Hotels in Advantageous Features of Select Service vs. Full Service Select-Service Hotels Hotels 1% Less labor-intensive and lower operating 6,000 4% costs Higher operating margins 4,000 44% Lower construction costs, manageable 15% 99% 72% 96% debt service 2,000 Can breakeven at 30% occupancy 85% 56% Predominately small business owners, 28% eligible for government stimulus and/or 0 Wyndham Choice WHR CHH IHG Hilton Marriott SBA debt relief Select-service Full-service 6 All data based on STR census February 2020. Select-service is defined as STR Economy, Midscale and Upper Midscale segments.
R E A S O N # 4 Proven Track Record of Growing During a Recession by Igniting the Conversion Engine Global Organic System Growth Conversion Activity as a Last Recession Percent of Total Room Openings 3% 86% 568,000 83% 72% 563,200 67% 550,600 2007 2008 2009 2007-2009 2010-2012 2013-2015 2016-2019 7 System size excludes rooms acquired in connection with the USFS acquisition.
R E A S O N # 4 Significant Growth Opportunity in Large Conversion Market Strong Value Proposition, Significant Addressable Market in the Especially in Lodging Down-Cycles Economy and Midscale Segments Hotels in U.S. World-class Distribution Platform and Industry- 16,000 Leading Loyalty Program 12,000 >2.5X Proprietary Revenue Management Tools 8,000 Hotel Profit 4,000 Lower Commission and Operating Costs 0 Wyndham Independent ROI-Approach to Owner Investments/Outlays 8
R E A S O N # 5 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk Number of Hotels Worldwide Percent of Franchised Hotels 9,280 96% Wyndham Choice 100% 7,349 7,153 Hilton 87% 6,110 5,903 IHG 83% Marriott 71% Limited exposure to operating costs and capital requirements associated with owned assets Asset-light requiring less than $50 million in annual capital expenditure spend Minimal exposure to incentive fees 9 Data as of December 31, 2019.
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Clear focus and Maximizing Cash Flow priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 10
Our Hotels are Open for Business Over 90% of Hotels in U.S. Remain Open OPEN 100% 94% 80% 87% FOR 60% BUSINESS 40% 20% 0% U.S. Global Open Hotels Total Hotels 11 Data as of May 4, 2020.
Adverse Impact on RevPAR Muted by Economy/Midscale Positioning Weekly WH U.S. RevPAR Change Weekly WH U.S. Occupancy Levels Economy / Midscale 35% segments 31% 28% 27% 26% 25% 23% 19% (50%) Higher-end (59%) segments 9% (64%) 7% (65%) (65%) 6% 6% 6% 5% (68%) (71%) March 21 st March 28 th April 4 th April 11 th April 18 th April 25 th May 2 nd March 21 st March 28 th April 4 th April 11 th April 18 th April 25 th May 2 nd Week Ending Week Ending 12
Wyndham Franchisees Positioned to Persevere Less impacted than higher chainscales Leisure demand expected to recover faster than corporate and group business Strong Breakeven at lower levels of occupancy Retention Wyndham providing multiple fee and operational concessions Rates Most qualify for some form of government stimulus, if not multiple forms Local and regional lenders more prevalent than CMBS loans 13
Our Owners are at the Center of Everything We Do, Driving Industry-Leading Retention Rates Our Approach Retention Rates Our Approach Economy Midscale 96% 96% 95% 93% Industry Wyndham Industry Wyndham 14 Retention rates for full-year 2019. Industry based on STR data.
Highly Flexible Business Model Provides Significant Cash Preservation Opportunities 65% Variable Spend Identified Savings of $255 Million ($millions) Realignment of the business ~$80 Fixed Spend Advertising ~$90 35% Transaction-related ~$30 2019 65% Total Spend Non-essential discretionary spend ~$20 Variable $993 million Spend Capital expenditures ~$20 Owned hotels operating expense ~$15 2020 Savings $255 2021+ Savings $100 2019 Total Spend includes marketing, reservation and loyalty expense, operating expense, general and administrative expense, interest, capital expenditures and development 15 advances, and excludes non-cash bad debt and stock-based compensation expense, as well as taxes.
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Clear focus and Maximizing Cash Flow priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 16
Strong Balance Sheet and Substantial Cash Reserves Balance Sheet Debt Maturities $2,000 • Cash on hand at March 31, 2020 $749M $1,500 • Major maturities due prior to 2023 None $1,000 • First lien leverage ratio of 5.0X June 30, 2021 $500 waived until: $0 • Financial and operating liabilities Limited 2020 - 2022 2023 2024-2025 2026+ Revolver Term Loan Unsecured Notes Other 17
Ample Liquidity Under All Scenarios Minimum Cash on Hand Fixed Charge Coverage at December 31, 2021 ($ millions) Minimum Monthly Inflows: Hypothetical RevPAR Change Franchise and marketing revenues $0 (10%) >$1,100 License fee revenue 6 (2021 v. 2019) Credit card income 3 >$800 Monthly Outflows: (20%) Operating expenses (18) Interest (9) >$500 (30%) Capital expenditures (3) Monthly cash burn ($21) Total liquidity as of March 31, 2020 $749 (70%) (30%) (50%) 36 months of fixed charge coverage Hypothetical RevPAR Declines in 2020 Fixed charge coverage analysis assumes all franchise and marketing revenues are deferred until September 1, 2020. License fees are subject to $70 million minimum floor ($65 million 18 Wyndham Destinations, $5 million Platinum Equity). Credit card income reflects 40% projected decline.
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Clear focus and Maximizing Cash Flow priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 19
Wyndham’s Business Model is Capital Efficient and Generates Substantial Cash Flow Capital Spend as a Percentage of Revenue is 60% Conversion Yield Favorable versus Competition and Closest Peer ~60% $613 Conversion 30% ($59) CHH ($100) 20% $360 ($50) ($17) ($27) Peers 10% Wyndham 0% 2019 Cash taxes Interest Capital Development Working 2019 2017 2018 2019 Adjusted expense expenditures advances capital/other Adjusted EBITDA (1) Free Cash Flow (2) Note: Peer set includes Choice, Hilton and Marriott; revenue excludes pass-through reimbursable revenue. (1) Net income was $157 million for the year ended December 31, 2019. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Appendix. 20 (2) Excludes special item cash outlays of approximately $310 million related to one-time separation-related, transaction-related and contract termination expenses. Net cash provided by operating activities was $100 million for the year ended December 31, 2019. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Appendix.
Disciplined Capital Allocation Has Generated Strong Shareholder Returns 2018 – 2019 Capital Allocation 2020 – 2021 Priorities Maintain strong liquidity Capital Spend 18% Invest in the business for future growth 52% Dividends 27% Reduce leverage Share Repurchase 3% Shareholder return Debt Reduction 21
Resilient Business Model 1 Uniquely Positioned to Outperform Mitigating the Impacts of COVID-19 and 2 Clear focus and Maximizing Cash Flow priorities to drive shareholder value 3 Strong Balance Sheet and Substantial Liquidity 4 Disciplined Approach to Capital Allocation 22
The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. Economy Midscale Upper Midscale Upscale Upper Upscale Select-service 23
Recommend
More recommend
