Strong Finish

Wyndham Hotels & Resorts, Inc. (WH) reported a strong finish to the fourth quarter of 2023 with earnings and revenues surpassing the Zacks Consensus Estimate. However, while the bottom line displayed growth on a year-on-year basis, the top line witnessed a decline. Driven by the company’s global strategy, WH’s results depicted ongoing success and accelerating momentum amidst distractions from a competitor and its biased communications.

Earnings & Revenue Discussion

Wyndham Hotels reported adjusted earnings per share (EPS) of 91 cents, beating the Zacks Consensus Estimate of 90 cents by 1.1%. This represents a growth of 26% from the year-ago quarter’s reported adjusted EPS of 72 cents. The quarterly net revenues of $321 million surpassed the consensus mark of $317.2 million by 1.2%, despite falling 3.9% from the year-ago quarter’s level of $334 million.

Q4 Highlights

During the quarter, fee-related and other revenues increased 3.2% year over year to $320 million. Within this category, royalties and franchise fees declined 0.8% to $117 million year over year, while marketing, reservation, loyalty and license and other fees saw a rise. Global RevPAR experienced a 1% decline year over year (on a constant currency basis), attributable to a 4% decline in the United States and a 7% growth internationally. Adjusted EBITDA also showed a positive trend, reaching $154 million, an increase of 22% year over year.

2023 Highlights

Total revenues for the full year 2023 were down 6.7% to $1,397 million compared with $1,498 million reported in the year-ago period. On the other hand, fee-related and other revenues showed a 2.2% increase from $1,354 million in 2022 to $1,384 million in 2023. Additionally, global RevPAR (on a constant currency basis) for 2023 grew by 5%, with room growth estimated at 3.5% year over year organically.

Financials and Outlook

As of December 31, 2023, the cash balance was $66 million compared with $79 million reported in the prior quarter. Total debt increased to $2,201 million from $2,077 million at the end of 2022. Looking forward, for 2024, Wyndham Hotels expects fee-related and other revenues in the range of $1.43-$1.46 billion, with an adjusted net income in the range of $341-$351 million. Adjusted EBITDA is expected to be between $690 million and $700 million, and adjusted diluted EPS is projected to fall within the range of $4.11-$4.23.

Industry Peers and Market Trends

Wyndham Hotels currently carries a Zacks Rank #3 (Hold). Among its peers, Hilton Worldwide Holdings Inc. reported impressive fourth-quarter 2023 results, while Marriott International, Inc. reported mixed results, and Hasbro, Inc. faced challenges in the quarter. Observations from these industry peers provide a comprehensive perspective on market trends.