Q4 2021 Wyndham Hotels & Resorts Inc Earnings Call

Speaker 1: conference call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions following the presentation.

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Speaker 1: I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations.

I would now like to turn the call over to Matt <unk> Senior Vice President of Investor Relations.

Speaker 2: Thank you, operator. Good morning and thank you for joining us. With me today are Jeff Bellotti, our CEO , and Michelle Allen, our CFO . Before we get started, I want to remind you that our remarks today will contain forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These risk factors are discussed in detail in our most recent annual report on Form 10-K , filed with the Securities and Exchange Commission, and any subsequent reports filed with the SEC.

Thank you operator, good morning, and thank you for joining US with me today are Jeff <unk>, our CEO and Michele Allen our CFO before we get started I want to remind you that our remarks today will contain forward looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those.

As expressed or implied.

These risk factors are discussed in detail in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the SEC.

Speaker 2: We'll also be referring to a number of non-GAAP measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided in our earnings release, which is available on our investor relations website at investor.windhamhotels.com.

We'll also be referring to a number of non-GAAP measures corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided in our earnings release, which is available on our Investor Relations website at Investor that Wyndham hotels Dot com.

Speaker 2: We are providing certain measures discussing future impact on a non-GAAP basis only because without unreasonable efforts, we are unable to provide the comparable GAAP metrics.

We are providing certain measures discussing future impact on a non-GAAP basis, only because without unreasonable efforts. We are unable to provide the comparable GAAP metric.

Speaker 2: In addition, last evening we posted an investor presentation containing supplemental information on our investor relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC, and any public conference calls or webcasts. With that, I will turn it over to you.

In addition last evening, we posted an investor presentation containing supplemental information on our Investor Relations website.

I continue to provide supplemental information on our website in the future occur.

Accordingly, we encourage investors to monitor our website. In addition to our press releases filings submitted with the SEC and any public conference calls or webcast.

With that I'll turn the call over to Jeff.

Speaker 3: Thanks Matt and thanks everyone for joining us this morning. 2021 once again demonstrated the strength of our brands, the resiliency of the leisure traveler, and the benefits of the select service economy and mid-scale segment.

Thanks, Matt and thanks, everyone for joining us this morning.

2021 once again demonstrated the strength of our brands the resiliency of the leisure traveler and the benefits of the select service economy and mid scale segments.

Speaker 3: Many of our franchisees reported the best year they've ever experienced since owning their hotel.

Many of our franchisees reported the best year, they've ever experienced since owning their hotel.

Speaker 3: Our team's significant progress and accomplishments throughout the year contributed to these outstanding results, positioning our owners and our business for future success.

Our teams significant progress and accomplishments throughout the year contributed to these outstanding results positioning our owners and our business for future success.

Speaker 3: We delivered $590 million of adjusted EBITDA for the full year, over $250 million more than last year, and only 5% below 2019.

We delivered $590 million of adjusted EBITDA for the full year over $250 million more than last year and only 5% below 2019.

Speaker 3: We generated $389 million of free cash flow, over 10 times more than last year, and $330 million more than we did back in 2019.

We generated $389 million of free cash flow over 10 times more than last year, and 330 million more than we did back in 2019.

Speaker 3: We close the year with net room growth in line with our expectations at 1.8%.

We closed the year with net room growth in line with our expectations at one 8%.

Speaker 3: In the United States, openings for the full year were 96% of 2019 levels. And importantly, we saw significant improvement in domestic demand as we progressed throughout the year.

In the United States openings for the full year, we're 96% of 2019 levels and importantly, we saw significant improvement in domestic demand as we progress throughout the year.

Speaker 3: In the fourth quarter, we opened 9,900 rooms, which was 20% higher than 2019's opening.

In the fourth quarter, we opened 9900 rooms, which was 20% higher than 2019 as openings.

Speaker 3: and with the transaction markets and single asset sales picking up, conversion room openings increased over 35% in the fourth quarter versus 2019.

And with the transaction markets and single asset sales picking up conversion room openings increased over 35% in the fourth quarter versus 2019.

Speaker 3: Room openings internationally ran 75% of 2019 levels, also accelerating throughout the year as they did domestic.

Room openings internationally ran 75% of 2019 levels also accelerating throughout the year as they did domestically.

Speaker 3: In the fourth quarter, we opened 82% of the rooms open in 2019 as travel restrictions were lifted and owners felt more confident about rising demand.

In the fourth quarter, we opened 82% of the rooms opened in 2019 as travel restrictions were lifted and owners felt more confident about rising demand.

Speaker 3: International net room growth was 4%. Our China direct franchising business led the way with double digit net room growth, followed by Latin America at 7% net room growth.

International net room growth was 4%, our China direct franchising business led the way with double digit net room growth followed by Latin America at 7% net room growth.

Speaker 3: We introduced 11 of our 22 brands into 18 new countries and territories strengthening our foundation for future franchise growth in those regions, including our first registry collection hotels in Mexico and Panama.

We introduced 11 of our 22 brands into 18, new countries and territories strengthening our foundation for future franchise growth in those regions.

Including our first registry collection hotels in Mexico and Panama.

Speaker 3: our first trademark hotels in New Zealand and Fiji, and our first Lakita hotel in the United Arab Emirates.

Our first trademark hotels in New Zealand, and Fiji, and our first locate the hotel in the United Arab Emirates.

Speaker 3: On their attention front, we saw improvements both domestically and internationally.

On the retention front, we saw improvements both domestically and internationally in.

Speaker 3: In the United States, we achieved our 95% retention target, up from 93% last year, and back in line with 2019.

In the United States, we achieved our 95% retention target up from 93% last year and back in line with 2019.

Speaker 3: Internationally, our attention rate also improved to 95% up from 89% last year and up from 94% back in 2019.

Internationally, our attention rate also improved to 95% up from 89% last year and up from 94% back in 2019.

Speaker 3: As our room openings and retention rates improved throughout the year, so too did our development signings.

As a room openings and retention rates improved throughout the year, So too did our development signings.

Speaker 3: We awarded 20% more contracts globally in the fourth quarter compared to last year, and 6% more than we signed in the fourth quarter of 2019.

We awarded 20% more contracts globally in the fourth quarter compared to last year and 6% more than we signed in the fourth quarter of 2019.

Speaker 3: In the United States, we awarded 33% more contracts in the fourth quarter versus 2019, bringing our full-year domestic executions to 331 deals, or 11% more than what the team signed in 2019.

In the United States, we awarded 33% more contracts in the fourth quarter versus 2019.

Bringing our full year domestic executions to 331 deals or 11% more than what the team signed in 2019.

Speaker 3: With solid select service fundamentals and increasingly improving developer confidence, new construction signings showed continued strength in the fourth quarter.

With solid select service fundamentals and increasingly improving developer confidence new construction signings showed continued strength in the fourth quarter.

Speaker 3: Our US franchise sales team signed 133 new construction contracts in 2021, which was 23% more than last year, and 32% more than 2019.

Our U S franchise sales team signed 133, new construction contracts in 2021, which was 23% more than last year and 32% more than 2019.

Speaker 3: We saw a strong demand for our new construction La Quinta del Sol, our Hawthorne Suites, and our Microtel Moda prototypes, given the efficiency of their construction and the market share outperformance of the brand.

We saw strong demand for our new construction La Quinta del Sol, our Hawthorn suites, and our microtel Moda prototypes, given the efficiency of their construction and the market share outperformance of the brands.

Speaker 3: Acknowledging our strength in the economy space and recognizing increased consumer demand for affordable extended stay products.

Acknowledging our strength in the economy space and recognizing increased consumer demand for affordable extended stay product.

Speaker 3: We will be launching, later this spring, our first Extended Stay brand for the economy segment, a brand we have been designing over the past year in consultation with several of the industry's most experienced Extended Stay developers.

We will be launching later this spring our first extended stay brand for the economy segment. Our brand we have been designing over the past year in consultation with several of the industry's most experienced extended stay developers.

We are very excited about the prospects for this new brand.

We look forward to sharing more about it in the months ahead.

On a global basis.

Speaker 3: For the full year, we signed 655 agreements throughout 2021.

For the full year, we signed 655 agreements throughout 2021.

Speaker 3: representing over 82,000 rooms, including nearly 590 direct franchise and management agreements, 12% more than 2019.

Representing over 82000 rooms, including nearly 590 direct franchise and management agreements, 12% more than 2019.

Speaker 3: And our development pipeline grew by more than 5% to over 1,500 hotels for a record 194,000 rooms, or 24% of our current system size.

And our development pipeline grew by more than 5% to over 1500 hotels for a record 194000 rooms or 24% of our current system size.

Speaker 3: Our brands led the travel sector recovery, outperforming their competitive sets by 350 basis points versus 2019, and outpacing overall industry REVPAR growth by 1400 basis points, compared

Our brands led to travel sector recovery outperforming their competitive sets by 350 basis points versus 2019.

And outpacing overall industry revpar growth by 4800 basis points.

Compared to pre pandemic levels.

Speaker 3: In the fourth quarter, U.S. REVPAR grew by 9 percent, and each month of the quarter saw stronger growth than the month prior. Our December REVPAR, in the midst of the Omicron surge, was the strongest demand month of the quarter, growing 15 percent domestically.

In the fourth quarter U S. Revpar grew by 9% and each month of the quarter saw stronger growth in the month prior art.

Our December revpar in the midst of the omicron surge was the strongest demand months of the quarter growing 15% domestically.

On top of the overall pricing power that leisure oriented hotels have been experiencing our brands have gained nearly 300 basis points of ADR index since the start of the pandemic.

Speaker 3: On top of the overall pricing power that leisure-oriented hotels have been experiencing, our brands have gained nearly 300 basis points of ADR index since the start of the pandemic.

Speaker 3: As we've introduced new pricing tools and increased franchisee education on how to forecast more accurately, how to price more confidently, and how to achieve greater profitability, we're driving rate index gains across every chain scale in our portfolio.

As we've introduced new pricing tools and increased franchisee education on how to forecast more accurately how to price more confidently and how to achieve greater profitability, we're driving rate index gains across every chain scale in our portfolio.

Speaker 3: And in the year ahead, we will upgrade our automated revenue management system with new competitive rate shopping intelligence, new mobile enhancements, and the latest in revenue management technology, software, and algorithms.

And in the year ahead, we will upgrade our automated revenue management system with new competitive rate shopping intelligence, new mobile enhancements and the latest in revenue management technology software and algorithms.

Speaker 3: Our direct digital channels continue to outpace higher cost third-party OTA channels.

Our direct digital channels continue to outpace higher cost third party otas channels revenue from brand web bookings increased 35% compared to fourth quarter 2019.

Speaker 3: Revenue from brand web bookings increased 35% compared to fourth quarter 2019, benefiting from the success of our highly rated window map, which saw fourth quarter mobile app bookings increase over 40% versus 2019.

Benefiting from the success of our highly rated window map, which soft fourth quarter mobile app bookings increased over 40% versus 2019.

Speaker 3: Our award-winning loyalty program is another significant driver of direct business demand and market share growth.

Our award winning loyalty program is another significant driver of direct business demand and market share growth.

Speaker 3: From partnerships to promotions, we're making investments that make winning rewards even more generous.

From partnerships to promotions, we're making investments that make wyndham rewards even more generous.

Speaker 3: Wynnum Rewards now stands at over 92 million members and the program's overall domestic share of occupancy grew 350 basis points versus 2019 to nearly one out of every two guests.

Wyndham rewards now stands at over 92 million members in the program's overall domestic share of occupancy grew 350 basis points versus 2019 to nearly one out of every two guests.

Yeah.

Speaker 3: Our largest growth segment from a demand standpoint, Generation Z, Millennial, and Generation X travelers now make up 65% of all arrivals. We continue to nurture our relationship with these

Our largest growth segment from a demand standpoint generation Z millennial and generation X travelers now make up 65% of all arrivals. We continue to nurture our relationship with these younger guests via our new customer database platform powered by an parity using the recency the frequency the channel into communication preferences.

Speaker 3: via our new customer database platform powered by InParity, using the recency, the frequency, the channel, and the communication preferences that they're accustomed to, ensuring that we're reaching them at the right time, in the right way, and with the right message to keep them booking with us for their next trip and for the trip after that.

That theyre accustomed to ensuring that we're reaching them at the right time in the right way and with the right message to keep them booking with us for their next trip and for the trip after that.

Speaker 3: Just as 2021 domestic leisure demand outpaced last year, so, too, did demand from our everyday business travel.

Just as 2021 domestic leisure demand outpaced last year, so to the demand from our everyday business travel segments.

Speaker 3: infrastructure accounts, which represent the majority of our domestic business segment, contributed over 10% more revenue to our hotels in the fourth quarter than in 2019, and made up half of the newly negotiated business accounts that our sales team signed this year.

Infrastructure accounts, which represent the majority of our domestic business segment contributed over 10% more revenue to our hotels in the fourth quarter than in 2019 and made up half of the newly negotiated business accounts that our sales team signed this year.

Speaker 3: It's a trend that we expect to continue, given the recent passage of our nation's $1.2 trillion infrastructure bill.

It's a trend that we expect to continue given the recent passage of our nation's 1.2 trillion dollar infrastructure Bill.

Our franchisees are slowly seeing staffing levels for their hotels recover to their required needs with housekeepers remaining the physician in most demand.

Speaker 3: Our franchisees are slowly seeing staffing levels for their hotels recover to their required needs, with housekeepers remaining the position in most demand.

Speaker 3: While labor as a percentage of revenue runs nearly 35% for the overall U.S. industry, it runs significantly lower in the select service hotel space at around 12% for economy and mid-scale hotels.

While labor as a percentage of revenue runs nearly 35% for the overall U S industry. It runs significantly lower in the select service hotel space at around 12% for economy and mid scale hotels.

Speaker 3: with our continued move to digital check-in and check-out combined with services like our auto call routing, moving labor out of our franchisees' front offices to professionally run call centers.

With our continued move to digital check in and checkout combined with services like our auto call routing moving labor out of our franchisees front offices to professionally run call centers are.

Speaker 3: Our franchisees can drive efficiencies in their operations and flow more revenue to their bottom line.

Our franchisees can drive efficiencies in their operations and flow more revenue do their bottom lines.

Speaker 3: In the year ahead, we will introduce new tools and services to help our owners further reduce operating costs at their hotels.

In the year ahead, we will introduce new tools and services to help our owners further reduce operating costs at their hotels.

Speaker 3: Consumer intent to travel continues to strengthen and average lengths of stay continue to surpass 2019 level

Consumer intent to travel continues to strengthen and average length of stay continue to surpass 2019 levels.

Speaker 3: Thursday and Sunday nights hit historic Q4 levels of occupancy as guests extend their weekend leisure travel plans and increase their work trips for personal travel.

Thursday, and Sunday nights hit historic Q4 levels of occupancy as guests to extend their weekend leisure travel plans and increase their work trips for personal travel.

Speaker 3: Weekend and short four-night breaks continue to generate the largest percentage of leisure stays, followed by travel to visit family and friends, with our customers driving longer distances from home.

Weekend in short for Knight brakes continue to generate the largest percentage of leisure stays followed by travel to visit family and friends with our customers driving longer distances from home.

Speaker 3: In consumer survey after survey, people are indicating their desire to begin traveling again.

And consumer survey after survey people are indicating their desire to begin travelling again M.

Speaker 3: MMGY's Q4 Leisure Travel Intent Survey reveals an increasingly bullish consumer where over 70% of leisure travelers intend to book in the next three months, portending a very busy spring break for our franchisees.

M M. G wise Q4, leisure travel intent survey reveals an increasingly bullish consumer where over 70% of leisure travelers intend to book in the next three months Portending, a very busy spring break for our franchisees.

Speaker 3: And with nearly 90% of Wyndham's domestic room nights generated by drive-to demand and travel by car remaining the number one travel preference among leisure travelers surveyed, we remain best positioned to continue to capture an outsized share of travel demand in the year ahead.

And with nearly 90% of Wyndham domestic room nights generated by drive to demand and travel by car remaining the number one travel preference among leisure travelers survey, we remain best positioned to continue to capture an outsized share of travel demand in the year ahead.

Speaker 3: As we look ahead, we will continue to further simplify our business model. We were very pleased in the fourth quarter to negotiate our exit from the resource intensive, lower margin, select service management business.

As we look ahead, we will continue to further simplify our business model. We were very pleased in the fourth quarter to negotiate our exit from the resource intensive lower margin select service management business.

Speaker 3: And at the same time, with significant interest from buyers of leisure real estate, we began exploring the strategic sale of our two owned hotels, the Windom Grand Bonnet Creek Resort in Orlando and the Windom Grand Rio Mar Resort in Puerto Rico.

And at the same time with significant interest from buyers of leisure real estate, we began exploring the strategic sale of our two owned hotels, the Wyndham Grand Bonnet Creek resort in Orlando, and the Wyndham Grand Rio Mar resort in Puerto Rico.

Speaker 3: We'll be updating you in the coming months on the progress of those deals.

We'll be updating you in the coming months on the progress of those deals.

Speaker 3: Before handing the call over to Michelle, I'd like to take a moment to thank our team members who have been more productive than ever over the past two years.

Before handing the call over to Michelle I'd like to take a moment to thank our team members, who have been more productive than ever over the past two years.

Speaker 3: This past October , we were incredibly proud to be ranked number four among Newsweek magazine's most 100-level workplaces, followed by being named among Newsweek's most responsible companies, which honor those with superior environmental and social responsibility practices.

This past October we were incredibly proud to be ranked number four among Newsweek magazine's most 100 level workplaces, followed by being named among Newsweek's, most responsible companies, which honor those with superior environmental and social responsibility practices.

Speaker 3: And just last week, Forbes magazine recognized Wyndham on its 2022 list of America's best employers.

And just last week Forbes magazine recognized Wyndham on its 20 twenty-two list of America's best employers.

Speaker 3: Furthering our commitment to diversity and advancing woman entrepreneurs in hotel ownership, we were also very proud to welcome our first franchise member of our Woman on the Room initiative earlier this month, who will be breaking ground on two dual-branded Lakita Hawthorne Suites prototypes in Austin and Georgetown, Texas.

Furthering our commitment to diversity and advancing women entrepreneurs and our hotel ownership. We were also very proud to welcome. Our first franchise member of our women on the room initiatives earlier, this month, who will be breaking ground on two dual branded laquita Hawthorn suites prototypes in Austin in Georgetown, Texas.

Speaker 3: Our inclusive economy culture built on personal accountability, built on caring and built on social responsibility has continued to resonate among our team and our ownership community. And for the 4th consecutive year, we were delighted to receive another perfect score on the human right campaigns, 2022 corporate equality index, measuring LGBTQ workplace equality.

Our inclusive economy culture built on personal accountability built on carrying and built on social responsibility has continued to resonate among our team and our ownership community and.

And for the fourth consecutive year, we were delighted to receive another perfect score on the human rights campaign's 2022 corporate equality index measuring LGBTQ workplace equality.

Speaker 3: We know that none of this recognition would be possible without our valuable team members who pride themselves on making a meaningful impact on our industry, on the lives of our franchisees, and on all of those around them. And with that, I'll turn the call over to Michelle. Michelle?

We know that none of this recognition would be possible without our valuable team members, who pride themselves on making a meaningful impact on our industry on.

On the lives of our franchisees.

On all of those around them and with that I'll turn the call over to Michelle Michelle.

Okay.

Speaker 4: Thanks, Jeff, and good morning, everyone. I'll begin my remarks today with a detailed review of our fourth quarter and full year results. I'll then review our cash flows and balance sheet followed by our 2022 outlook.

Thanks, Jeff and good morning, everyone I'll begin my remarks today with a detailed review of our fourth quarter and full year results. I will then review our cash flows and balance sheet, followed by our 2022 outlook.

Speaker 4: We generated $314 million of fee-related and other revenues and $131 million of adjusted EBITDA in the fourth quarter, bringing our full-year fee-related and other revenues to $1.25 billion and adjusted EBITDA to $590 million, both well above our expectations.

Generated $314 million of <unk> related and other revenues and $131 million of adjusted EBITDA in the fourth quarter, bringing our full year fee related and other revenues to 1.25 billion and adjusted EBITDA to 590 million, both well above our expectations.

Speaker 4: Fourth quarter global REVPAR grew 52% year-over-year on a constant currency basis, 58% in the U.S. and 40% internationally. Versus 2019, REVPAR was up 9%, led by our economy brands, which were 19% above 2019, followed by our mid-scale brands, which also continued their sequential climb, surpassing 2019 levels by 5%.

Fourth quarter Global Revpar grew 52% year over year on a constant currency basis, 58% in the U S and 40% internationally versus 2019, Revpar was up 9% led by our economy brands, which were 19% above 2019, followed by our mid scale brands, which also continued their sequential climb surpassing <unk>.

19 levels by 5%.

Speaker 4: ADR exceeded 2019 by 8%, while occupancy exceeded by 2%. Notably, 72% of our markets in the U.S. outpaced 2019 occupancy levels in the fourth quarter. National park and beach destinations led the way. The South Atlantic region, where nearly a quarter of our system is concentrated, grew Rep Park 12%, and national park destinations, where about 4% of our system is located, grew by 17%.

ADR exceeded 2019 by 8%, while occupancy exceeded like 2%, notably 72% of our markets in the U S. Outpace 2019 occupancy levels in the fourth quarter.

National Park, and Stefan Asia led the way the South Atlantic region, where nearly a quarter of our system is concentrated grew revpar, 12% and National Park destinations were about 4% of our system is located grew by 17%.

Speaker 4: January trends continued to bode well as U.S. REF PAR was 3% above 2019, including economy REF PAR up 15%.

January trends continue to bode well as U S. Revpar was 3% above 2019, including economy Revpar up 15%.

Speaker 4: Internationally, Red Park continued to improve to 81% of 2019 levels up from 75% in the 3rd quarter. Outside of China, all international regions experienced significant sequential improvement from the 3rd quarter despite COVID spikes and new variants. Canada improved to 91% of 2019 levels up from 83% in the 3rd quarter and EMEA improved to 84% up from 75% in the 3rd quarter.

Internationally Revpar continue to improve to 81% of 2019 levels up from 75% in the third quarter outside of China, All international regions experienced significant sequential improvement from the third quarter, Despite COVID-19 spikes and new variance, Canada improved to 91% of 2019 levels up from 83% in the third quarter and.

EMEA improved to 84% up from 75% and at their corner.

Speaker 4: Recovery in China continued to moderate during the fourth quarter at 77 percent of 2019 levels as a result of sustained lockdowns, and we anticipate that this trend will continue until restrictions are once again lifted following the Beijing Olympics.

Recovery in China continued to moderate during the fourth quarter at 77% of 2019 levels. As a result of a sustained lockdowns and we anticipate that this trend will continue until restrictions are once again lifted following the Beijing Olympics.

Full year fee related and other revenues grew to 1.25 billion up 31% versus prior year and adjusted EBITDA increased 76% to $590 million versus 2019 be related and other revenues recovered to 87% and adjusted EBITDA for copper to 95.

Speaker 4: Full-year fee-related and other revenues grew to $1.25 billion, up 31% versus prior year, and adjusted EBITDA increased 76% to $590 million. Versus 2019, fee-related and other revenues recovered to 87% and adjusted EBITDA recovered to 95%, which included a 3-point benefit from a marketing fund surplus generated this year.

<unk>, which included a three point benefit from a marketing budget surplus generated this year.

Speaker 4: The marketing fund surplus was $18 million, better than what we expected, as REFPAR continued to outperform our expectations throughout the year. This surplus reflects a partial recovery of last year's $49 million investment, which puts us ahead of schedule on recovery.

Marketing post close with $18 million better than what we expected as revpar continue to outperform our expectations throughout the year. This surplus reflects a partial recovery of last year's 49 million dollar investment, which puts us ahead of schedule on recovery.

Speaker 4: Full-year global REVPAR recovered to 88% of 2019 levels, with domestic REVPAR at 97%. Global openings were at 84% of 2019, and our retention rate of 95% was in line with 2019 and our stated goal.

Full year global Revpar recover to 88% of 2019 levels with domestic revpar at 97%.

The openings were at 84% of 2019, and our retention rate of 95% was in line with 2019 and our stated goal.

Speaker 4: Our adjusted EBITDA and franchising margins both improved versus 2019. Our adjusted EBITDA margin increased 450 basis points which primarily reflects 300 basis points from the changes we made to our cost structure last year and a 150 basis point benefit from the marketing fund surplus.

Our adjusted EBITDA and franchising margins, both improved versus 2019, our adjusted EBITDA margin increased 450 basis points, which primarily reflects 300 basis points from the changes we made to our cost structure last year, and a 150 basis point benefit from the marketing funds surplus.

Speaker 4: Our franchising margin calculated on the same basis as our peers, which excludes the effects of the marketing funds, increased 250 basis points to 83 percent, again reflecting our long-term cost savings initiative.

Our franchising margin calculated on the same basis as our peers, which excludes the effects of the marketing funds increased 250 basis points to 83% again, reflecting our long term cost savings initiatives.

Adjusted diluted EPS improved to 96% of 2019 levels further reflecting lower interest expense as a result of the August 2020 note issuance and the subsequent call of the 2026 higher interest notes as well as the impact of our share repurchases.

Speaker 4: Adjusted diluted EPS improved in 96% of 2019 levels, further reflecting lower interest expense as a result of the August 2020 note issuance and the subsequent call of the 2026 higher interest notes, as well as the impact of our share repurchase.

Speaker 4: It generated $389 million of free cash flow in 2021 compared to $34 million last year and $50 million in 2019.

We generated $389 million of free cash flow in 2021, compared to $34 million last year and $50 million in 2019 with.

Speaker 4: With the acquisition and integration of Lakingta now fully behind us, the significant cash flow generation capabilities of our business model have, as promised, materialized.

With the acquisition and integration of La Quinta now fully behind us the significant cash flow generation capabilities of our business model have as promised materialized.

Speaker 4: we were able to convert over 60% of our adjusted EBITDA into free cash flow this year.

We're able to convert over 60% of our adjusted EBITDA into free cash flow this year.

Speaker 4: We returned over $190 million to our shareholders in 2021 through the payment of $82 million in dividends and the repurchase of $110 million of our common stock.

We returned over $190 million to our shareholders in 2021 through the payment of $82 million in dividends and the repurchase of $110 million of our common stock.

We ended the year with over $900 million of total liquidity and our net leverage ratio was three two times well within our stated target range of three to four times.

Speaker 4: We ended the year with over $900 million in total liquidity, and our net leverage ratio was 3.2 times, well within our stated target range of three to four times.

Speaker 4: With over $300 million of free cash flow expected to be generated in 2022, combined with the $84 million termination payment from CorePoint Lodging, we will have over $400 million of cash to deploy.

With over $300 million of free cash flow expected to be generated in 2022 combined with the $84 million termination payment from core point lodging, we will have over $400 million of cash to deploy.

Speaker 4: Our first priority is always to invest in the business. We will continue to increase development advances and key money in support of net room growth. We expect to see the launch of our new economy extended stay branch referenced earlier. And we will continue to incentivize franchisees to invest in certain new brand prototype designs to improve overall brand equity.

Our first priority is always to invest in the business. We will continue to increase development Abaxis and Kimani in support of net room growth, we expect to see the launch of our new economy extended stay brand, Jeff Brent referenced earlier.

And we will continue to incentivize franchisees to invest in certain new brand prototype designs to improve overall brand equity.

Speaker 4: We also expect to continue to be a regular dividend payer subject naturally to board approval.

We also expect to continue to be a regular dividend payer subject naturally to board approval.

Speaker 4: Beyond these priorities, we will look to allocate cash flow to acquisitions that are strategic and accretive to both earnings and net room growth and to share repurchases with the amount going to each depending largely on the opportunities that are available. Our board last week increased our share repurchase authorization by $400 million reflecting its continued commitment to shareholder return and the ongoing strength of our business.

Beyond these priorities, we will look to allocate cash flow to acquisitions that are strategic and accretive to both earnings and net room growth and to share repurchases with the amount going to each depending largely on the opportunities that are available.

Our board last week increased our share repurchase authorization by $400 million, reflecting its continued commitment to shareholder return and the ongoing strength of our business.

Speaker 4: Now turning to Outlook. In 2022, we expect global networms growth of 2 to 4%. For RepPAR, we are projecting an increase of 12 to 16% year over year, which is relatively flat to 2019.

Now turning to outlook.

2022, we expect global net rooms growth of two 4% for Revpar, we are projecting an increase of 12% to 16% year over year, which is relatively flat to 2019. This assumes continued strong trends in the U S. And importantly continued improving results internationally, we expect fee related and other revenues of 1.34.

Speaker 4: This assumes continued strong trends in the U.S. and, importantly, continued improving results internationally. We expect fee-related and other revenues of $1.34 billion to $1.37 billion.

Billion to $1 three 7 billion.

Speaker 4: We are projecting adjusted EBITDA of $605 million to $625 million in line with 2019 levels.

We're projecting adjusted EBITDA of $605 million to $625 million in line with 2019 levels.

Speaker 4: Adjusted net income is expected to be $308 million to $320 million, and adjusted diluted EPS is projected at $3.28 to $3.40, based on a diluted share count of $93.9 million, which excludes any potential share repurchase.

Adjusted net income is expected to be 308 million to $320 million and adjusted diluted EPS is projected at $3 28 to $3 40 based on a diluted share count of $93 9 million, which excludes any potential share repurchases.

Speaker 4: Finally, we're expecting free cash flow conversion from adjusted EBITDA of approximately 55%, about 10 points less than 2021, which reflected a benefit from the collection of COVID fee deferrals and a one-time true up payment from P&L related to the annual license fee minimum.

Finally, we are expecting free cash flow conversion from adjusted EBITDA of approximately 55% about 10 points less in 2021, which reflected a benefit from the collection of Covid fee deferrals, and a onetime true up payment from P&L related to the annual license fee minimum.

Speaker 4: As we bridge this outlook back to 2019, we remind you of the following and encourage you to review slide 14 in the investor presentation we posted to our website last night. In 2022, our outlook includes $5 million of adjusted EBITDA from CorePoint as this business is included only through its expected sale date in March.

As we purchased out look back to 2019, we remind you of the following and encourage you to review slide 14 in the Investor presentation, we posted to our website last night.

2022, our outlook includes $5 million of adjusted EBITDA from core point as this business. This included only through its expected sell day in March.

Speaker 4: License fees are projected at 71 percent of their 2019 levels or $80 million. This projection includes license fees from both T&L and Platinum Equity and is based on internal estimates. The recovery of this fee stream to 2019 levels is largely correlated to the recovery of vacation ownership sales at T&L. We will update as appropriate when and if T&L provides an estimate for vacation ownership interest sales.

License fees are projected at 71% of their 2019 levels or $80 million. This projection includes license fees from both P&L and platinum equity and is based on internal estimates the recovery of SB stream to 2019 levels is largely correlated to the recovery of vacation ownership sales at Pan out we will update.

As appropriate when and if P&L provides an estimate for vacation ownership interest house.

Speaker 4: Outlook for the core business implies adjusted EBITDA growth of 7 to 11 percent versus 2021 and 6 to 10 percent versus 2019.

Outlook for the core business implies adjusted EBITDA growth of 7% to 11% versus 2021, and 6% to 10% versus 2019 keeping.

Speaker 4: Keep in mind while we are in the process of marketing the sale of our two owned assets as Jeff mentioned, our outlook assumes no change in ownership. We will update you further as that process continues to evolve.

Keep in mind, while we are in the process of marketing the sale of our two owned assets as Jeff mentioned, our outlook assumes no change in ownership. We will update you further as that process continues to evolve.

Speaker 4: In closing, we are very pleased with our 2021 performance. Our adjusted EBITDA, dividend and leverage profile have substantially recovered to pre-pandemic levels. Our brands continue to demonstrate superior value and outperform their competitive sets. And our investments in digital innovation and technology are providing our franchisees with the support they need to drive improved operating margins.

In closing we are very pleased with our 2021 performance, our adjusted EBITDA dividend and leverage profile have substantially recovered to pre pandemic levels. Our brands continue to demonstrate superior value and outperform their competitive sets and our investments in digital innovation and technology are providing our franchisees with the support they need to drive improved.

Operating margins, our business, which we continue to simplify is generating significant free cash flow that we're putting to work for our shareholders. We are enthusiastic about building on our successes and capturing the opportunities that lie ahead in 2022 with that Jeff and I will be happy to take your questions operator.

Speaker 4: Our business, which we continue to simplify, is generating significant free cash flow that we are putting to work for our shareholders. We are enthusiastic about building on our successes and capturing the opportunities that lie ahead in 2022. With that, Jeff and I would be happy to take your questions. Operator?

Speaker 1: The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. Again, we do ask that you limit yourself to one question and one follow-up. Thank you.

The floor is now open for questions.

At this time, if you have a question or comment. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing the pound Kate again, we do ask that you limit yourself to one question and one follow up.

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Speaker 1: We'll take a question from Joe Greff of JP Morgan.

We'll take a question from Joe Greff of J P. Morgan.

Speaker 5: Good morning everybody. Jeff, I was hoping you can give us a little bit more detail on this Extended Stay brand launch. You know, how will that be positioned versus what Choice and I guess what Blackstone and Barry now own with the Extended Stay America brand price point, the value proposition to hotel owners. Can you just talk a little bit more about that please?

Good morning, everybody.

Jeff I was hoping you can give us a little bit more detail on this extended stay brand launch.

How will that be positioned versus what choice.

And I guess, what Blackstone and Barry now owned with the extended stay America brand price point.

The value proposition to hotel owners can you just talk a little bit more about that please.

Speaker 2: Sure. Thanks, Joe. I think it'll be positioned right alongside. I mean, extended stay demand has proven to be just absolutely recession and pandemic proof. And we know that the demand is is growing. I mean, we've seen in our upper mid scale extended stay brand with Hawthorne suites of 50% increase in our pipeline.

Sure. Thanks, Joe I think it'll be positioned right alongside I mean extended stay demand has proven to be just absolutely recession and pandemic proof and we know that the demand is growing I mean, we've seen in our upper Midscale extended stay brand with Hawthorn suites, a 50% increase in our pipeline.

Speaker 3: over the last year and and we know that demand is out there for uh... an extended stay economy brand you you referenced uh... brands that are doing very well in that space up our developers are asking for an economy extended stay brand our franchisees are asking for it and and most importantly our corporate accounts are asking for it i mean we know that there are over ten million construction workers out there that that travel every

Over the last year, and we know that demand is out there for an extended stay economy brand. You. You referenced are brands that are doing very well in that space. So our developers are asking for an economy extended stay brand our franchisees are asking for it and and most importantly, our corporate accounts are asking for it I mean, we know that there are over 10.

Construction workers out there that that travel every week.

Speaker 3: And we also know that relocation and long-term assignments are going to continue to pick up. We're going to see, we feel, millions of more essential workers hitting the road with the coming infrastructure bill and keeping that industry-wide extended stay, average daily rate, occupancy up in the high 70s and 80% rate.

And we also know that that relocation and learned long term assignments are going to continue to pick up what we're gonna see we feel millions of more essential workers hitting the road with the coming infrastructure Bill and in keeping that industry wide extended stay.

Average daily rate.

Occupancy up in.

The high Seventy's and an 80% range and these are our customers. These are our business accounts.

Speaker 3: And these are our customers, these are our business accounts, so last year we assembled a developers council with many of the nation's top extended state developers to really help us think through the design, the room counts, the operational processes, and to help us design a prototype that they know will work and that they will want to build themselves. I mean, many of these developers have already built other new construction prototypes before of ours, they've worked.

So last year, we assembled the developers council.

With many of the nation's top extended stay developers to to really help us think through the design the room counts the operational processes and to help US design a prototype that they know will work and that they will want to build themselves.

I mean, many of these developers have already built other new construction prototypes before of ours they've worked with.

Speaker 3: uh... are award-winning architectural design and construction team uh... who couldn't be happier with that uh... that we inherited

Our award winning architectural design and construction team, who we couldnt be happier with it that we inherited from from La Quinta I mean this is a team. That's that's designed and opened over 150, La Quinta del Sol prototypes over the past few years, and and and designed our new Hawthorn suites extended stay prototyping, our new economy microbes.

Speaker 3: from La Quinta. I mean, this is a team that's designed and opened over 150 La Quinta Del Sol prototypes over the past few years and designed our new Hawthorne Suites Extended Stay prototype and our new Economy Micro-Telmoda prototype with the same approach. So we know that there's demand out there. We think this will be more popular than our other new construction prototypes. I mean, our Economy Micro-Telmoda.

Moda prototype with with the same approach.

So we know that a that there's demand out there. We think this will be more popular.

Our other new construction prototypes I mean, our economy Microtel moda.

Speaker 3: We signed over a dozen new construction executions.

We are we signed over a dozen new construction executions in the fourth quarter alone and we now have 13000 rooms out there in the pipeline and that economy brand group and our pipeline, 40% year over year. So we think it is going to be more popular. We we are we were seeing.

Speaker 3: In the fourth quarter alone and we now have 13,000 rooms out there in the pipeline and and and that economy brand

Speaker 3: in our pipeline, 40% year over year. So we think it is going to be more popular. We're seeing very strong developer interest right now. We're already being asked by those developers for sites. And we'll have a lot more to talk about in the future.

Very strong developer interest right now.

We're already being asked by those developers.

For for sites and and we'll have a lot more to talk about and in the coming weeks about it.

Speaker 5: Great. And then my follow-up, maybe this is for Michelle or Matt. Can you talk about the cadence of net rooms growth throughout 2022? Is it similar to past normal years or how, I guess, back-end loaded it might be or not be, if you can give us some commentary there that would help us?

Great and then my follow up maybe this is for Michelle or Matt can can you talk about the cadence of net rooms growth throughout 2022 is it similar to past normal years or or how I guess.

Yes, backend loaded and it might be or not be if you can give us.

Some commentary there that would help us.

Speaker 4: Sure, Joe. Good morning. As you know, the net room growth is typically back-end weighted, and I wouldn't expect to see any changes to that as we move throughout 2022. I think what we're really focused on is making sure we're posting sequential net room growth every quarter, but I think you'd expect to see the largest of that coming in the fourth quarter as is typical for our business.

Sure Joe Good morning, as you know the net room growth is typically backend weighted I and I wouldn't expect to see any changes to that as you know as.

As we move throughout 2022 I think.

What we're really focused on is making sure. We're posted we're posting sequential net room growth every quarter, but I think you would expect to see the largest of that coming in the fourth quarter as is typical for our business.

Speaker 5: Great. And just one other one, if I could squeeze in there, Jeff. I thought what was interesting was in the fourth quarter, December stronger than November , November stronger than October and December stronger, despite the impact from Omicron. Can you talk about what you've seen so far year to date, quarter to date? And that's all for me. Sure. Yeah, no, it's.

Great.

Just one other one if I could squeeze in there Jeff I thought what was interesting was in the fourth quarter December is stronger than November November stronger than October and December stronger. Despite the impact from Amazon can you talk about what you've seen so far.

Year to date quarter to date and that's all for me Yeah no. It it's.

Speaker 2: The demand is really impressive, Joe. Michelle and I are heading down on Monday to our resort in Orlando and meeting with 300 or 400 franchisees.

The demand is is it really an impressive Joey that Michele and I are heading down on on Monday to a to a resort in Orlando and in meeting with the three or 400 franchisees next.

Speaker 3: Next week, at one of our executive summits, and we were told that Friday and Saturday night are sold out at average daily rates at 20-30% above what it was in 2019, and the teams told us that that was the same for really every weekend through Easter for not only that hotel, but our other hotels like the Windham Grand and Clearwater. We've been looking at the business on the books for our top 20 spring break markets, and it's running.

Next week at one of our executive Summit, and we were told that a Friday and Saturday night or are sold out at average daily rates at a 20, 30% about above what it was at 19 and and and and the team has told US that that was the same for really every weekend through Easter for not only that hotel, but our other hotels like the Wyndham Grand in Clearwater.

We've been looking at the business on the books for our top 20 spring break markets and it's running two times what it was versus the same time last year led by our California, We're seeing a good demand, Florida, we're seeing off the chart demand, Texas you know, what we've seen I could I could say over.

Speaker 3: two times what it was versus the same time last year led by California. We're seeing good demand Florida.

Speaker 3: seeing off the chart demand Texas you know what we've seen I could I could say over

Speaker 3: uh... you know through the fifth it'll be interesting to see what comes out and smith i think you'll see a little bit of softness last week because president's week was a week earlier last year i think you'll see really strong demand uh... this weekend but uh... what what we've seen through the uh... to to the second of February was uh... you know just again continued uh... strong strong demand uh... January was was up fifteen percent

Through the fifth it'll be interesting to see what comes out and Smith I think you'll see a little bit of softness last week, because president's week was a week earlier last year and I think you'll see really strong demand this weekend, but what what we've seen through the through the second of February .

Was.

You know just again continued a strong strong demand gen.

January was up 15%.

Speaker 3: uh... in our economy space uh... repar um... the weekend in February fifth was also up uh... double digits

In our economy space Revpar the weekend in February 5th was also up double digits.

Speaker 3: uh... but uh... you know the last two months uh... the last eight weeks through the weekend in February fifteenth our economy repartees is uh... is running nineteen percent ahead of where it was in the in in twenty nineteen and our mid-scale repartees running six percent ahead of where it was in in twenty nine

But.

The last two months.

The last eight weeks through the week ending February 15th our economy. Revpar is is is running 19% ahead of where it was in 2019 and our Midscale Revpar is running 6% ahead of where it was in 2019.

Speaker 3: And so, you know, look, we had expected seasonal lower occupancy this quarter, but we've been seeing.

And so you know I I.

Look.

We had expected seasonal lower occupancy this quarter, but we've been seeing.

Speaker 2: increasing occupancy and increasingly occupancy growth in the midweek, which is where we think there is going to be the real opportunity for us in the weeks and the months ahead.

Increasing occupancy and increasingly increasingly occupancy growth in the mid week, which is where we think there is going to be the real opportunity for us in our in the weeks and the months ahead.

Yeah.

Thank you.

Thanks Scott.

Our next question is from.

David Katz of Jefferies.

Speaker 6: Hi, good morning everyone. Thanks for taking my question.

Hi, good morning, everyone. Thanks for taking my questions.

Speaker 6: I wanted to ask about the kind of long-term trend line for net unit growth, right? As we sort of progress through all this, there's a lot of noise in the numbers. Where do you think the domestic and international net unit growth numbers kind of settle in for Wyndham as we think about, you know, how to value, you know, your stock, right, on a long-term recurring basis?

Hi.

I wanted to ask about the long term trend line for net unit growth.

As we sort of progressed through all of this there's a lot of noise in the numbers, where do you think the domestic and international net unit growth numbers kind of settle in.

For Wyndham as we think about how to value.

Your stock right on a long term recurring basis.

That's a great question, David Thanks for that you know domestically.

Speaker 2: That's a great question, David. Thanks for that. Domestically.

Speaker 2: We were really impressed with how domestic opens accelerated. We opened 10,000 rooms, which was 5,000 over last year, and 20% more than 19.

We were really impressed with how our domestic opens accelerated we opened 10000 rooms, which was 5000 over last year and 20% more than 19 in 'twenty, one and in domestically or our system grew 70 basis points in 'twenty one than it was back to the same levels that.

Speaker 2: in 21, and domestically our system grew 70 basis points in 21, and it was back to the same levels that it was in 2019. So we would expect growth to increase further domestically in 22, and would expect to start the year, we're expecting to start the year with positive domestic Q1 growth.

But it was in 2019, so we would expect growth to increase further domestically and in 'twenty, two and would expect to start the year, we're expecting to start the year with positive domestic Q1 growth.

Speaker 2: And we'll continue to target and see growth in the mid-scale and above segments as strong as it's been. We were thrilled with the 5% net room growth.

And we'll we'll continue to target and see growth in the midscale and above segments.

As strong as it's been we were thrilled with a 5% net room growth domestic.

Speaker 2: increase in those segments in 2021. I think your question over the long term, you know, we have right now best in segment retention rates at 95%, as we've talked about. We're looking to move those to 96%. That of course would add another point to our domestic net room growth. We were able to achieve that in 2021.

The increase in in those segments in 2021, I think to your question over the long term, we have right now best in segment, our retention rates at 95% as we've talked about we're looking to move those to 96% that of course would add another point to our domestic net room growth we were able to.

<unk> that in 2021.

Speaker 3: And with new launches like our new economy extended stay brand, we're expecting strong growth.

And.

With new launches like our new economy extended stay brand, we're expecting strong growth from them.

Speaker 3: from hotel brands in that segment, and we're very optimistic about that. And then internationally, we've seen really strong growth. We had a 5% increase in our direct franchising business, a 4% international net room growth overall in the fourth quarter, and we'll be looking to, you know, continue to do that.

From from hotels hotel brands like like in that in that segment and we're very optimistic about that and then enter internationally. We've seen a really strong growth we had a 5% increase.

In our direct franchising business, a 4% international net room growth overall.

And in <unk>.

And in the fourth quarter, and we'll be looking to continue to move that up as we were able to do in 2019.

Yeah.

Speaker 6: Perfect. And as my follow-up, I'm going to sort of wrap.

Perfect and then as my follow up I mean, I'm going to sort of wrap.

Speaker 6: two things in there if it's okay, because I think they're interesting. Just in terms of capital allocation, with the launch of the economy extended, say,

Two things in there or if it's okay, because I think there are interesting.

Just in terms of capital allocation with the launch of the economy extended stay.

Speaker 6: you know, brand, is it potentially, you know, going to consume some capital, you know, in terms of key money or other inducements with it? And as, you know, I go back to Michelle's commentary around, you know, prospective accretive acquisitions, which, you know, is normally part of the.

Brand is it potentially.

Going to consume some capital.

In terms of key money or other inducements with it.

I'd go back to Michelle's commentary around.

No prospective accretive acquisitions, which you know is normally part of the.

Speaker 6: you know, range of potential allocation options.

You know range of potential allocation options.

Speaker 6: If you could classify that just a little bit or help us with the boundaries of that, would they be immediately accretive? And are there any boundaries of size or scale or type that you would or wouldn't consider?

If you could classify that just a little bit or help us with the boundaries of that would they be immediately accretive.

And are there any boundaries of size or scale or or or type that you.

You know what or wouldn't consider seriously.

Speaker 4: Sure, David. On the first part of your question related to the economy extended stay brand, we will look to put a good amount of capital to work there. We are very interested in the

Sure David.

On the first part of your question related to the economy extended stay brand, we will look to put a good amount of capital to work. There we are very interested in.

Speaker 4: in committing to the brand for long-term success, and you'll hear more from us about what that commitment will look like in the coming weeks. I would say we will absolutely expect some of those outflows this year, but those outflows would pick up much more meaningfully in 2023 and beyond.

And committing to the brand for long term success and you'll you'll you'll hear more from us about what that commitment will look like in the coming weeks I would say, we will absolutely expect some of those outflows this year, though but those outflows will pick up much more meaningfully in a in 2023 and beyond.

With respect to your M&A question, Yes, immediately accretive to both earnings and net room growth.

Speaker 4: With respect to your M&A question, yes, immediately accretive to both earnings and net room growth. We look for opportunities globally, particularly in high growth markets or in regions where we have gaps in our portfolio. You'll likely see bolt-ons of smaller brands, but nothing is off the table if it's a strategic fit and again, value accretive.

Look for opportunities globally, particularly in.

In high growth markets or in regions, where we have gaps in our portfolio.

You'll likely see bolt ons of smaller brands, but nothing's off the table, if it's a strategic bet and again our value accretive.

Super helpful. Thank you.

Thank you.

Speaker 1: Our next question is from Danny Assad of Bank of America.

Our next question is from Danny Assad of Bank of America.

Hey, good morning, Jack Michele Matt.

Speaker 7: Jeff, can you maybe help us unpack that global REVPAR expectation for 2022 when we kind of think about it versus 2019? Can you kind of help us through either the progression through the year and also kind of if we were to kind of break out your U.S. expectations versus how you expect the international kind of state to recover through the year? Can you kind of help us walk through that a little bit?

Jeff can you maybe help.

Help us unpack your kind of that that global Revpar expectation for 2022, what are you kind of think about it versus 19 can you kind of help us through either you know the progression through the year and also kind of if we were to kind of break out your U S expectations versus how.

How you expect that.

The international kind of stay to recover through the year.

Just walk through that a little bit.

Hi, Danny sure.

Speaker 4: Hi, Danny, sure what you'll, you'll see, we finished the year 12% globally down and our US businesses down only 3% with international still down 30% we're projecting at the midpoint of our guidance a flat for 2022 for rep part growth. It's not evenly distributed across the regions though. So we do expect the US is going to lead the way, particularly in the economy segment and they'll finish up year over year or.

You'll you'll see we finished the year at 12% globally down and our U S business was down only 3% with international still down 30%, we're projecting at the midpoint of our guidance of flat for 2022 for Revpar growth, it's not evenly distributed across the region South. So we do expect the U S is going to lead the way.

Early in the economy segment, and they'll finish up year over year.

Speaker 4: even up versus 2019, clearly. Internationally, though, we're not expecting to get all the way back to 2019 levels. As we get through the first quarter with the Olympics and Omicron behind us and cross-border travel opening up, we expect meaningful improvement as we move throughout the year. I would think, I wouldn't be surprised to see China surpassing 2019 rep parts in the back half of the year.

Even up versus 2019, clearly internationally, though we're not expecting to get all the way back to 2019 levels as we get through the first quarter with the Olympics omicron behind Us in cross border.

Travel opening up we expect a meaningful improvement as we move throughout the year I would think I wouldn't be surprised to see China, surpassing 2019, revpar in the back half of the year and and and and I think we could easily end the year with them with U S. China and a couple of the other regions at or above.

Speaker 4: And I think we could easily end the year with U.S., China, and a couple of the other regions at or above 2019 levels, though some regions still below 2019, particularly

2019 levels, though.

Regions Ah <unk>.

<unk> are still below 2019, particularly.

Speaker 4: in Southeast Asia and some parts of the European continent.

And Ah in Southeast Asia, and some parts of the European continent continent.

Speaker 7: Got it. That makes sense. My, my follow up was a little bit unrelated, but, you know, we've had several quarters now of, like, healthy royalty rate growth, you know, globally in the US also, you know, but if we look kind of, you know, your contribution to unit growth has been.

Got it that makes sense, Mike My follow up was a little bit unrelated, but we've had several quarters now of like healthy royalty rate growth globally in the US Also you know, but if we look kind of your contribution to unit growth has been.

Speaker 7: A lot more coming through the, you know, at the higher end chain scales, you know, you're kind of what you categorize upscale and above. If if that pattern continues for some time, you know, how do you, how would that affect?

Lot more coming through that at the higher end chain scales, you know you're kind of what you categorized as upscale and above.

If if that pattern continues for some time.

You know how do you how would that affect you know.

Speaker 7: you know, that that dynamic, like how that dynamic kind of goes on, how would that affect the, you know, royalty rate kind of in the, in the coming quarters and years.

That dynamic like how does that dynamic kind of goes on how would that affect that royalty rate kind of in the in the coming quarters and years.

Yes.

Speaker 4: The royalty rate, we think about it separately between domestic and international, and you'll see in 2021, our domestic rate improved 2%, and that was on the back of 5% net room growth in the mid scale and above category. So that's that's a trend that we would expect to continue to hold as we grow faster in some of those higher end categories. We should see some continued improvement in the overall domestic world.

Royalty rate when we think about it separately between domestic and international and you will see in 2021, our domestic rate improved 2% and that was on the back of 5% net room growth in the Midscale and above category. So that's that's a trend that we would expect to continue to hold as we grow faster in some of those higher end.

<unk>, we should see some continued improvement in the overall domestic world.

Speaker 4: Internationally, we saw a 20% improvement in the royalty rate for China this year, and that's reflecting our strategy to focus on direct franchising opportunities there, and as well as some of the benefits from the strategic terminations.

Nationally, we saw 20% improvement in the royalty rate for China, This year and Thats, reflecting our strategy to focus on direct franchising opportunities there and as well as some of the benefits from the strategic terminations. We completed in 2021, but I would expect that as we grow up grow the direct franchising business in.

Speaker 4: We completed in 2021, but I would expect that as we grow the direct franchising business in China faster than the masters, we would continue to see improvement in that royalty rate. Our long-term goal really is to steadily improve the royalty rates within each region and how that impacts the overall global rate will really depend more on the regional weighting of the system growth. Thank you.

And at a faster than the Masters, we would continue to see improvement in and that royalty rate and our long term goal really is to steadily improve the royalty rates within each region and how that impacts the overall global rate will really depend.

Really depend more on the regional weighting of the system breath.

Yeah.

Got it thank you very much.

Thank you.

Yeah.

Our next question is from Stephen Grambling of Goldman Sachs.

Speaker 1: Our next question is from Stephen Grambling of Goldman Sachs.

Speaker 8: Hey, everyone, thanks for taking the questions to start. I'd like to follow up on. I think this is Joe's questions on extended stay and the launch there. Are there any upfront expenses or investments that you envision to ramp up? Whether it's revenue management for the segment or a sales force or this largely leverage existing teams?

Hey, everyone. Thanks for taking the questions to start I'd like to follow up on I think of this as Joe's questions on extended stay and the launch there are there any upfront expenses or investments that you envision to ramp up whether it's revenue management for this segment of our sales force well this largely leverage existing teams.

Speaker 4: Sure, there are going to be some upfront costs because the majority of these teams will be dedicated to serving a different customer type than a transitory hotel, but those costs right now are already reflected in our in our guidance.

I'm sure there are going to be some upfront costs because people. They are the majority of these teams will be dedicated to serving a different customer types than transitory hotel, but those costs right now are already reflected in our and our guidance.

Speaker 8: Great. Maybe that dovetails into my second question, which is, as we think about the 2022 EBITDA guidance, I guess, can you give any sensitivity to, you know, maybe every 100 basis point change in REBPAR or how REBPAR performance across geographies might influence that sensitivity? Thanks.

Great and maybe that dovetails into my second question was just as we think about the 2022 EBITDA guidance I guess can you give any sensitivity to.

Maybe every 100 basis point change in Revpar or how revpar performance across geographies might influence that sensitivity. Thanks.

Speaker 4: Sure. About 100 basis point change in REVPAR is around $3 million of EBITDA impact. And you would definitely see a higher REVPAR sensitivity for faster growth domestic than you would internationally. Clearly, it's more sensitive to changes domestically than it is internationally.

Sure about 100 basis point change in Revpar is around $3 million of EBITDA impact and and you would definitely see a higher revpar rep par sensitivity for faster growth domestic then you would enter.

Nationally clearly its more sensitive to changes domestically than it is internationally.

Great. Thanks, I'll jump back in queue.

Thanks, Steve Thank you.

Speaker 1: Our next question is from Patrick Scholes of Truist Securities. All right, thank you.

Our next question is from Patrick Scholes of Truest Securities.

Alright, Thank you and good morning, everyone.

Good morning.

Speaker 8: A high-level visionary question for you, where in a couple of years do you envision your new all-inclusive brand, how big could that be and is a large growth strategy, is that in your vision?

High level, a visionary question for you.

A couple of years do you envision your new all inclusive brands you know, how how how big could that be and is.

As a large growth strategy is that is that.

And your vision. Thank you.

Speaker 2: Well, I think in our vision for the extended stay economy, Brian , we just talked about, could be large. Altra is, as we've talked about.

Well I think in our vision for the extended stay economy brand. We just talked about it could be b b large altra is as we've talked about.

Speaker 2: in the all-inclusive space is going to be more strategic. We're working on several applications right now in the Caribbean, in Mexico, and in Central America. We've seen some interest as well in Europe , in places like Tenerife and Costa del Sol. And certainly the consumer interest in that space is growing, we've got a great partner with Playa. But it will be opportunistic where it makes sense.

In the all inclusive space is a is going to be more strategic we're working on several applications right now in the Caribbean and Mexico and in Central America.

We've seen some interest as well in Europe .

In places like Tenerife and in Costa del Sol.

And you know certainly the consumer interest in that space is is is growing we've got a great partner with with Playa.

But it will be it will be opportunistic where it makes sense for us both domestically and internationally.

Speaker 3: for us both domestically and internationally. And again, our focus is in the economy and the mid-scale selects for those larger growth brands.

And again, our focus is in the <unk> and in the economy and mid scale select serve for those for those larger growth brands.

Okay.

Okay. That's it thank you.

Thanks, Patrick.

Speaker 1: Our next question is from Ian Zaffiano of Oppenheiner.

Our next question is from Ian Zaffino of Oppenheimer.

Speaker 9: I agree, Doc. Thank you very much. Good quarter. Do you want to maybe drill down a little bit on the...

Hi, great. Thank you very much good quarter do you want to maybe drill down a little bit on the.

Speaker 9: cash flow statement. I'm kind of looking here, you know, you gave us the free cash flow conversion, you know, you gave us other ranges, so...

Cash flow statement I'm kind of looking here you know you gave us the free cash flow conversion.

You gave us other ranges so.

Speaker 9: You know, but if I do this, it looks like there's, I don't know, I'll call it 340, 340 million of cash flow.

But if I do this it looks like there's about call it 340 $340 million of cash flow.

And then I guess, my kind of Ed and other things like core point.

Speaker 9: But then I guess if I kind of add in other things like CorePoint, I think that's a little bit under $100 million. And then also some of these asset sales, that's probably, I don't know, over $100 million, maybe $150 million, $200 million. I'm kind of getting up to like a $600 million number.

I think that's a little bit under $100 million and then also some of these asset sales, that's probably I don't know over 100 million, maybe $1 5200.

I'm kind of getting up to like a $600 million number.

Hum.

What do you what do you do with it.

And how do we think about that.

Sure right Ah Yeah, I think that's the right way to think about it and and and so on.

Speaker 4: Sure, right. Yeah, I think that's the right way to think about it. And and and.

Speaker 4: They are going to be either allocated to investment in the business.

They are going to be either allocated to investment in the business to support future growth or for shareholder return and the amount we allocate to each it's going to depend largely on the opportunities that emerged to invest more heavily in the business, while we're eager to reinvest to Cree.

Speaker 4: support future growth or for shareholder return. The amount we allocate to each is going to depend largely on the opportunities that emerge to invest more heavily in the business. While we're eager to reinvest to create recurring earnings and cash flows, at the same time we do place a high value of importance on shareholder return. There's no reason we can't do both and AssetLight business model warrants that.

Recurring earnings and cash flows at the same time, we do place a high value of importance on the shareholder return. There's no reason, we can't do both and asset light business model warrants that.

Speaker 9: Okay. And then if I just had a follow-up to this, the dividend that you authorized, hadn't you arriving or how are you now thinking about subsequent maybe dividend increases? Is there sort of a golden, you know, rule that you're following? How do we think about that?

Okay, and then if I just had a follow up to this the dividend that you authorized how did you how did you arriving or how are you thinking about subsequent maybe dividend increases is there sort of a golden.

Boules that you're following.

How do we think about that thanks.

Yes, our or our dividend policy is to target a low to mid thirties net income payout ratio.

Alright, great. Thank you very much good quarter.

Thank you.

Speaker 1: Our next question is from Daniel Adam of Loop Capital Markets.

Our next question is from Daniel Adam of Loop capital markets.

Speaker 10: Hi, thank you and good morning, everyone. I'm like, I'm like, some of your peers, your willingness to sort of stick your neck out there and offer detailed full year guidance is is pretty commendable. I guess what gives you confidence in the outlook for the year and then as a related follow up the, the twelve to sixteen percent red bar range for the year. Is there any way you could further break that down between occupancy and rate?

Alright, Thank you and good morning, everyone.

Unlike unlike some of your peers your willingness to sort of stick your neck out there offer detailed full year guidance is pretty commendable I guess, what gives you confidence in the outlook for the year.

And then as it related follow up.

The 12% to 16% Revpar range for the year is there any way you could further break that down between occupancy and rate.

Okay.

Speaker 4: Hi, Daniel. Welcome to the call. I would say from an Outlook perspective, our business is pretty predictable. It's demonstrated a high level of resilience, and we feel confident in being able to

Hi, Danielle welcome to the call.

I would say from an outlook perspective, our business is it's pretty predictable.

Demonstrated a high level of resilience and we feel we feel confident and being able.

Speaker 4: in being able to predict what we think the business will produce from an earnings and a cash flow perspective. With respect to occupancy and ADR split, we don't provide guidance for the individual components, but we would expect to see continued improvement in ADR and occupancy also recovering closer to its 2019 levels. For more information visit www.FEMA.gov

And being able to predict what we think the business will produce from an earnings and a cash flow perspective with respect to occupancy and ADR split we don't provide guidance for for the individual components, but we would expect to see continued improvement in ADR and occupancy.

And occupancy also are recovering to its 29th closer to its 2019 levels.

Okay.

Great. Thanks, so much.

Okay.

Speaker 1: Our next question is from Michael Bellisario of Baird.

Our next question is from Michael Bellisario of Baird.

Thanks, Good morning, everyone.

Speaker 8: Good morning Mike. Just two sort of follow-up questions from me. First, for this new extended stay brand, what's your initial view of what a typical construction timeline is going to look like? And then do you think this brand introduction will be enough to get you from your two to four percent net unit growth target to your, I guess, into your longer term three to five percent net unit growth target?

Good morning, Mike.

Two sort of follow up questions for me first.

For this new extended stay brand what's your initial view of what a typical construction timeline is going to look like and then.

Do you think this brand introduction will be enough to get you from your 2% to 4% net unit growth target to your biggest.

It gets into your longer term, 3% to 5% net unit growth target.

Speaker 3: Sure, Mike, it's certainly going to help. I mean, again, the demand out there that we're seeing from developers that have been side-by-side with us.

Sure, Mike, It's certainly going to help them I mean again the demand out there that we're seeing from developers that are have been side by side with us.

Speaker 3: uh... over the last uh... many months developing this uh...

Over the last many months developing this and and.

Speaker 3: are beginning to have conversations with us we uh... you know we think that every uh... every one hundred uh... you know hotels could could add a you know point or two to uh... to our our our net room growth domestically in terms of timeline we uh... you know typically on all of our extended stay brands uh... target anywhere between eighteen and twenty four months from uh... from from

Are beginning to have conversations with US. We are you know we think that every every 100 hotels.

Hotels could kit at a you know a point or two to our to our our our net room growth domestically in terms of timeline. We are you know typically on all of our extended stay brands.

Target anywhere between 18, and 24 months from from from from planning to.

Speaker 3: to ground break to opening, we think that'll be right in the same sort of ballpark in terms of time.

To ground break to opening we think that'll be right and the and the same are the same sort of a ballpark in terms of timetable.

Okay.

Speaker 8: Got it. So it's more of a 24 impact to net unit growth, at least at this point, right?

Got it so it's more of a 'twenty four impact to net unit growth and at least at this point right.

Speaker 3: And then just a quick second question on asset sales, is there any tax impact that we should be aware of in terms of the gross versus net proceeds you might receive if and when you sell those hotels? There will be a small tax impact, yes.

Late 'twenty through 'twenty for you.

And then just quickly.

Second question on asset sales is there any.

Tax impact that we should be aware of in terms of the gross versus net proceeds you might receive if and when you sell those hotels.

There will be a small tax impact yes.

Okay. Thank you.

Thanks, Mike Thank you.

Okay.

Our final question.

Speaker 1: Actually, we have no further questions at this time. I'd be happy to return the call to Jeff Belotti for any closing remarks. All right. Well, thank you, Leo. And listen, thanks, everyone, for joining us this morning on what we know is an extremely busy day for many of you. Michelle, Matt, and I very much appreciate your continued interest, of course, in Wyndham.

Actually we have no further questions at this time I'd be happy to return the call to Jeff <unk> for any closing remarks.

Alright, well thank you Leo.

And Oh listen thanks, everyone for joining us. This morning on what we know is an extremely busy day for for many of you.

Michele Matt and I very much appreciate your continued interest of course in Wyndham.

Speaker 2: We look forward to talking to you, Zooming with you, and much more importantly, hopefully, seeing you soon in person.

We look forward to talking to you zooming with you and and much more importantly, hopefully seeing you soon in person.

Speaker 2: and throughout 2022. Thanks again, everybody, and have a great day.

And throughout 2022, thanks, again, everybody and have a great day.

Yeah.

Speaker 1: Thank you. This does conclude today's Wyndham Hotels and Resorts fourth quarter and full year 2021 earnings conference call. Please disconnect your lines at this time and have a wonderful day.

Thank you. This does conclude today's Wyndham hotels, and resorts fourth quarter and full year of 2021 earnings Conference call. Please disconnect. Your lines at this time and have a wonderful day.

Yeah.

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