Wyndham Hotels & Resorts (WH) Q4 2023 earnings summary

Executive summary

• 2023 delivered record organic net room growth of 3.5%, 66,000 organic rooms opened, and record retention of 95.6%; the pipeline reached 240,000 rooms.

• Comparable Adjusted EBITDA grew 6% to $659M; $515M was returned to shareholders through repurchases and dividends.

Financial highlights

• Q4 fee-related and other revenue was $320M vs. $310M; net income was $50M vs. $56M and diluted EPS was $0.60 vs. $0.63.

• Q4 Adjusted EBITDA rose 22% to $154M, or 6% excluding $21M of favorable marketing fund variability; adjusted diluted EPS was $0.91 vs. $0.72, flat excluding a $0.19 benefit.

• FY net income was $289M vs. $355M; Adjusted net income was $341M, including $52M of after-tax adjustments. Adjusted diluted EPS was $4.01 vs. $3.96, with comparable growth of 8%.

• FY fee-related and other revenue was $1.384B, with comparable revenue growth of 6%; excluding marketing, reservation and loyalty fees, revenue was $806M and Adjusted EBITDA was $650M at an 81% margin.

• Operating cash flow was $376M and free cash flow was $339M, equal to 51% of Adjusted EBITDA and 100% of Adjusted net income.

Outlook and guidance

• 2024 guidance: direct franchise system growth of 3–4%, global RevPAR growth of 2–3%, fee-related and other revenue of $1.43–$1.46B, Adjusted EBITDA of $690–$700M and adjusted EPS of $4.11–$4.23.

• Adjusted net income guidance is $341–$351M; free cash flow conversion is ~60%. Adjusted outlook excludes Choice-related costs and cash outlays currently estimated at ~$75M pre-tax.

• Adjusted EBITDA outlook includes $40–$50M of operational growth; ancillary fee streams are projected to grow 7%, supported by credit card optimization, new products, international expansion and marketing partnerships.

• Marketing fund revenues are expected to equal expenses in 2024; the 2023 $9M surplus substantially completed recovery of $49M in COVID-era owner support.

• 2026 Adjusted EBITDA outlook is $795–$865M, implying 7–10% CAGR from 2023 comparable Adjusted EBITDA under stated annual assumptions.