Over the first quarter of 2023, global revenue per available room at Wyndham Hotels & Resorts grew 12 percent compared to first quarter 2022 in constant currency, while RevPAR at U.S. hotels grew 4 percent year over year at 37 percent at international hotels. The company credited approximately two-thirds of this increase to stronger pricing power, while the remainder is driven by higher occupancy levels.
"Our impressive first quarter results demonstrate continued momentum with global RevPAR growth of 12 percent, net room growth of 4 percent and the 11th consecutive quarter of sequential growth in our development pipeline,” Wyndham President and CEO Geoffrey Ballotti said in a statement. “We outperformed our adjusted [earnings before interest, taxes, depreciation, amortization and depreciation] expectations, leading us to raise our full-year outlook as a result. With our seasonally strongest summer season on the horizon and no signs of slowdown in our middle-income guests' desire to spend on travel, we’re enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees and team members."
In 2022, the company sold its owned hotels and exited its select-service management business, which is affecting some of the results.
First Quarter Financial Results
The company generated net income of $67 million compared to $106 million in first quarter 2022. The decline in net income was primarily due to the sale of the company's owned hotels and the exit of its select-service management business, partially offset by higher adjusted EBITDA in the company's hotel franchising segment.
Adjusted EBITDA was $147 million compared to $159 million in first quarter 2022, which included a $15 million contribution from the company's select-service management business and owned hotels. On a comparable basis, which excludes the marketing fund variability, adjusted EBITDA increased 10 percent year over year, reflecting higher fee-related and other revenues.
The company's global system grew 4 percent, reflecting 1 percent growth in the U.S. and 9 percent growth internationally. As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 4 percent and 10 percent, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand. The company remains solidly on track to achieve its net room growth outlook of 2 to 4 percent for the full year 2023, including an increase in its retention rate compared to 2022.
Development
As of March 31, the company's global development pipeline consisted of approximately 1,800 hotels and 226,000 rooms, representing an 11 percent year-over-year increase, including 28 percent growth in the U.S. The pipeline also has grown sequentially for 11 consecutive quarters, with 5 percent sequential growth in the U.S. The pipeline covers 60 countries, including 11 in which Wyndham has traditionally not had a presence.
Approximately 72 percent of the company's pipeline is in the midscale and above segments, and approximately 57 percent of the company’s development pipeline is international and 80 percent is new construction, of which approximately 35 percent has broken ground.
During first quarter 2023, the company awarded 123 new contracts for its legacy brands, an increase of 7 percent year over year, and 35 new contracts for its ECHO Suites Extended Stay by Wyndham brand, bringing the total number of contracts awarded for the brand to 205 since its launch. Three of these hotels have broken ground. The pipeline includes over 25,000 rooms associated with the company's ECHO brand.
The company updated its outlook for full-year adjusted EBITDA to $654-$664 million from $650-$660 million, and its adjusted net income to $340-$352 million from $337-$349 million.