During the third quarter, Wyndham Hotels & Resorts' domestic revenue per available room exceeded 2019 levels by 7 percent and grew 59 percent over 2020, according to results for the three months ended Sept. 30. Adjusted earnings before interest, taxes, depreciation and amortization were $194 million, compared to $103 million in third quarter 2020. This was nearly 90 percent more than last year and 1 percent more than Q3 2019.
Wyndham reported net income of $103 million compared to $27 million in Q3 2020 and adjusted net income of $109 million compared to $34 million in the same quarter last year.
“The intent to travel among our 70 percent leisure customer base continues to strengthen,” President and CEO Geoffrey A. Ballotti said during a call with investors. “Same-day bookings continue to drop. Multinight bookings continue to grow and average length of stay continues to surpass 2019 levels.”
Global RevPAR recovered to 97 percent of 2019 levels and international RevPAR declined 25 percent. The 7 percent increase in the U.S. represents continued sequential improvement compared to a decline of 5 percent in the second quarter of 2021.
Notably, RevPAR for the company’s economy brands exceeded 2019 levels by 14 percent in the third quarter. The 25 percent international decline is an improvement from the 44 percent decline in Q2, led by growth in regions where travel restrictions subsided. Canada improved 32 points to a 17 percent decline and EMEA improved 43 points to a 25 percent decline, partially offset by a 10 point sequential decrease to a 17 percent decline in China due to travel restrictions resulting from local COVID outbreaks in August and September.
Fee-related and other revenues increased 48 percent to $377 million compared to $255 million in the third quarter of 2020 primarily reflecting the ongoing recovery in travel demand and its impact on global RevPAR.
System Growth
Year-to-date, the company’s global system grew 80 basis points, reflecting quarter-over-quarter sequential growth of 60 basis points driven by 40 basis points of growth in the U.S. and 80 basis points of growth internationally. Third-quarter room openings exceeded 2019 levels by 4 percent globally reflecting a 46 percent increase in domestic additions.
Wyndham’s annualized retention rate through the third quarter stood at approximately 95 percent, putting the company on track with its goal of achieving a 95 percent retention rate.
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“While new construction efforts in the quarter were consistent with 2019 levels, new construction continues to perform better than expected, with almost 460 deals signed since the onset of the pandemic,” Ballotti said. “The number of projects in our new-construction pipeline is now over 1,000 hotels for the first time in our company's history.”
During the quarter, Wyndham opened 15,000 rooms, more than 50 percent above its Q3 2020 openings and 4 percent up by rooms than the same quarter in 2019. Year-to-date additions are trending at nearly 80 percent of 2019 levels and 50 percent higher than last year, with year-to-date terminations 47 percent below 2020 and 15 percent below 2019.
Wyndham awarded 151 new contracts this quarter, 3 percent (10 contracts) higher than 2019, bringing the year-to-date domestic development activity to a level which is now on par with 2019. As of Sept. 30, the company’s global development pipeline increased 4 percent domestically and 5 percent internationally to more than 1,450 hotels and approximately 193,000 rooms. Approximately 65 percent of the company’s development pipeline is international and 76 percent is new construction, of which approximately 34 percent has broken ground.
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Domestically, the pipeline growth was heavily weighted toward the higher-RevPAR brands, with more than 4,000 rooms added in the midscale and upscale segments compared with the same quarter last year.
2021 Outlook
The company updated its outlook for full-year 2021, expecting net rooms growth of 1.5 percent to 2 percent compared to the previous outlook of 1 percent to 2 percent. Wyndham now predicts RevPAR growth of approximately 43 percent compared to 2020, or a decline of approximately 14 percent compared to 2019, which is improved from growth of approximately 40 percent versus 2020, or a decline of approximately 16 percent compared to 2019.
Fee-related and other revenues will likely reach $1.21 billion to $1.23 billion, up from $1.16 billion to $1.19 billion, and adjusted EBITDA is poised to reach $560 million to $570 million, up from $525 million to $535 million. In total, Wyndham expects adjusted net income of $275 million to $285 million for the full year, up from $244 million to $254 million.
The company did not offer guidance for 2022, but CFO Michele Allen did say that the company expects to see continued improvement toward driving net room growth above the 3 to 5 percent range.