Investor Presentation July 28, 2020
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 2
In Worst Lodging Quarter In History, Wyndham Hotels & Resorts… $79M $101M Provided $79M Restructured its Realized $101M of support to our operations to drive of cash savings (b) franchisees (c) future profitable growth >40% per >1 $63M day Collected over 40% of ~120 new contracts Generated $63M billings despite fees of Adjusted EBITDA (d) signed deferred until Sept. 1 st (a) (a) Through July 24, 2020. (b) Includes $37 million from realignment of the business, $35 million from advertising and $29 million from other savings. (c) Represents $67 million of fees deferred until September 1 st and $12 million of non-royalty fee waivers. (d) Net loss was $174 million for the quarter ended June 30, 2020. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found 3 in the Appendix.
…And Our Franchisees Continued to Welcome Guests OPEN FOR BUSINESS GAINED MARKET SHARE >99% in U.S. Economy and Midscale brands gain >300 and >1,000 bps >95% globally (a) of RevPAR index (c) IMPROVED OCCUPANCY WELL POSITIONED Steadily improved Continue to benefit from occupancy with ~70% of ~70% leisure and ~90% our U.S. system drive-to everyday travelers above 40% (b) (a) As of July 24, 2020. (b) Month-to-date through July 18, 2020. 4 (c) Based on Comp Set data from STR.
RevPAR Steadily Improving, Benefiting From Economy/Midscale Positioning Weekly WH U.S. RevPAR Change Weekly WH U.S. Occupancy Levels Normalized for seasonality of 4 th of July holiday Economy/Midscale 50% 49% segments * 43% 37% (39%) 35% 31% (45%) 33% 31% (50%) 23% (52%) Higher-end 19% 23% (59%) segments 13% 7% (71%) 5% March 21 st April 11 th May 2 nd May 23 rd June 13 th July 4 th July 18 th March 21 st April 11 th May 2 nd May 23 rd June 13 th July 4 th July 18 th Week Ending Week Ending 5 (*) Includes WH brands in the economy, midscale and upper-midscale segments, as defined by STR.
Positive Cash Flow Generated Before Franchisee Support and Special Items ($millions) +$10 million Change in Cash before Franchisee Support and Special Items $63 ($28) $749 ($14) ($8) ($3) $664 ($67) ($28) Beginning Cash Adjusted Interest Capital Dividends Working Capital Franchisee Special-Item Ending Cash @ (a) (c) (b) @ March 31, EBITDA Expense Expenditures/ and Other Support Cash Outlays June 30, 2020 2020 Development Advances (a) Net loss was $174 million for the quarter ended June 30, 2020. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Appendix. (b) Reflects deferred franchise fees in connection with our franchisee relief measures. 6 (c) Primarily relates to transaction-related and separation-related cash payments, as well as our restructuring payments.
Diversified Global Pipeline Provides Runway for Growth Diversification U.S. Composition 55% 45% Scale New 36% 64% construction Conversion ~180K ~1,350 U.S. International Globally Global rooms Global hotels ~46k New construction rooms in the ground 8K or 4% 76% 24% 13 New countries with no Year-over-year New current WH presence construction Conversion • Softer Q2 sales activity due to travel restrictions • Increased hurdle rates applied to all deals • More conservative view taken on all deals without financing secured 7
Positioning Company for Post-COVID-19 Success ($millions) Key Actions # 2019 Rooms Adjusted Exiting Region EBITDA • Removing unprofitable and operationally challenged 7,000 China hotels in monetary default $0 hotels, redeploying infrastructure to support 4,300 Legacy European portfolio in monetary default $1.8 more engaged and Q3 U.S. management guarantee contracts (a) $0 3,500 compliant franchisees • Resized international 2,100 Korea hotels in monetary default $0 infrastructure to drive 1,200 Termination of sub-licensee in Saudi Arabia $0.5 profitable operations, including combination of Q4 1,200 Termination of developer agreement in Europe (b) $0.7 China and SEAPR into one organizational structure 19,300 $3.0M (a) Primarily represents SVC portfolio; excludes RLJ portfolio, which is expected to exit the system in 2021. 8 (b) Approximately 2,000 rooms expected to exit the system in 2021.
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 9
Our Franchisees Have Benefited From Various Relief Programs… 90% 41% <10% of U.S. franchisees of U.S. franchisees of U.S. franchisees took a PPP loan took an EIDL have CMBS loans >60% ~70% of U.S. franchisees received of U.S. franchisees some form of debt relief above 40% occupancy * from lenders 10 (*) Month-to-date through July 18, 2020.
...and We Are Providing Wide-Ranging Support to Our Franchisees Revenue Generation Champion of Count On Us Financial Relief Support Advocacy Efforts • Comprehensive initiative to build • Rate strategy training and • Generous fee relief and deferral • Actively supporting efforts guest confidence and support guidance to maximize RevPAR program to expand financial relief hotels as they welcome back guests potential during recovery to franchisees • Waived $12 million in non- royalty fees through June 30 th on • Ecolab partnership to provide EPA • Prospecting efforts to uncover • Conducting franchisee surveys registered, hospital-grade essential worker travel top of $67 million fee deferral to gauge financial health and until September 1 st disinfecting and cleaning solutions opportunities for hotels guide advocacy efforts • Drop-shipped safety essentials to • Hotel action plans to best • Continual monitoring of • Representation on multiple all U.S. hotels leverage current sales conditions and ability to extend industry councils and partnerships relief measures as circumstances roundtables • Expert-guided training on warrant post-COVID safety and cleaning measures 11
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 12
Capital Allocation Principles Unchanged 3. Return Capital to 1. Maintain Strong 2. Invest in Business Shareholders Balance Sheet • Expect to continue paying • Supporting franchisees with fee • $664 million of cash on hand dividends, increase when deferrals/waivers until at June 30, 2020 prudent September 1, 2020 • Significant liquidity runway • Ability to resume share • Supporting franchisees’ recovery • No near-term debt repurchases after credit and implementation of new maturities agreement restrictions health and safety guidelines expire April 2021 or upon early • Selective deployment of capital to termination of the amendment grow system 13
Strong Balance Sheet and Substantial Cash Reserves Balance Sheet Debt Maturities $2,000 • Cash on hand at June 30, 2020 $664 million $1,500 • Major maturities due prior to 2023 None $1,000 • First lien leverage ratio of 5.0x June 30, 2021 testing waived until: $500 • Financial and operating liabilities $0 Limited 2020-2022 2023 2024-2025 2026+ Revolver Term Loan Unsecured Notes Other 14
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% Conversion 30% $613 CHH ($59) 20% ($100) $360 ($50) ($17) Peers ($27) 10% Wyndham 0% 2019 Cash taxes Interest Capital Development Working 2019 2017 2018 2019 Adjusted expense expenditures advances capital/other Adjusted EBITDA (a) Free Cash Flow (b) Note: Peer set includes Choice, Hilton and Marriott; revenue excludes pass-through reimbursable revenue. (a) 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. (b) 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 15 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 Capital Spend Maintain strong liquidity 18% Debt Reduction Invest in the business for 3% future growth 52% Share Repurchase Reduce leverage 27% Dividends Shareholder return 16
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 17
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