Q4 2023 Wyndham Hotels & Resorts Inc Earnings Call

Operator: Good day, and welcome to the Wyndham Hotels and Resorts fourth quarter and full year 2023 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, 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 star 2.

Good day and welcome to the Wyndham hotels, <unk> resorts fourth quarter and full year 2023 earnings conference call.

At this time, all participants have been placed on a listen only mode and the floor will be opened for your questions. Following the presentation.

If you would like to ask a question at that time. 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 star two.

Operator: Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead.

Lastly, if you should require operator assistance, please press star zero.

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

Matt Capuzzi: Thank you, Operator. Good morning, and thank you for joining us. With me today are Jeff Vellati, 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. We will also be referring to a number of non-GAAP measures.

Matt: Thank you operator, good morning, and thank you for joining US with me today are Jeff <unk>, our CEO and Michele Allen our CFO.

Matt: 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.

Matt: 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.

Matt: We will 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 at Wyndham hotels Dotcom.

Matt Capuzzi: 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.wyndhamhotels.com. 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 measure. 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. We have also created a separate website at staywyndham.com to provide additional information relating to the ongoing situation with Choice Hotels. With that, I will turn the call over to Jeff.

Matt: 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.

Matt: In addition last evening, we posted an investor presentation containing supplemental information on our Investor Relations Web site, but 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.

Matt: Conference calls our webcast.

Matt: We have also created a separate website at stay Wyndham dot com to provide additional information relating to the ongoing situation with choice hotels.

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

Jeff Vellati: Thanks Matt and thanks everyone for joining us this morning. 2023 was an exceptional year for Wyndham, marked by outstanding operational achievements and a series of record-breaking performance metrics. But before delving into our results, we want to take a moment to discuss the ongoing matters with Choice. As we shared in our public response, Choice has nominated directors with the sole purpose of advancing its inadequate, hostile, and risk-laden offer, an offer which our board has unanimously determined is not in the best interests of our shareholders. Our board is well constituted, combining decades of experience in areas critical to overseeing the execution of our strategy, including hospitality and, more specifically, global hotel franchising, M&A, governance, and risk oversight. However, as we've consistently communicated, Choices Offer fails to address three principal concerns.

Matt: Yeah.

Jeff: Thanks, Matt and thanks, everyone for joining US. This morning, 2023 was an exceptional year for Wyndham marked by outstanding operational achievements in a series of record breaking performance metrics, but before delving into our results we want to take a moment to discuss the ongoing matters with choice.

Jeff: As we shared in our public response choices nominated directors with the sole purpose of advancing it's inadequate hostile and risk laden offer.

Jeff: And offer which our board has unanimously determined is not in the best interest of our shareholders.

Jeff: Our board is well constituted combining decades of experience in areas critical to overseeing the execution of our strategy, including hospitality and more specifically global hotel franchising M&A governance and risk oversight.

Jeff: As we've consistently communicated choices offer fails to address three principal concerns first the inadequacy of the value of the offer compared with our future growth prospects.

Jeff Vellati: First, the inadequacy of the value of the offer compared with our future growth prospects. Second, the significant amount of choice stock included in the consideration mix, which would expose our shareholders to an over-levered, pro-forma company with slower long-term growth prospects. And third, the asymmetrical risks to Wyndham and our shareholders resulting from a prolonged and uncertain regulatory review. On the regulatory topic, our concerns regarding the unique risks of this transaction have only increased as the process has unfolded, starting with the Federal Trade Commission's unsolicited outreach to us and subsequent investigation even before Choice launched its exchange offer. Moreover, State Attorneys General from Washington, Colorado, Kansas, and Vermont have also now opened their own separate investigations.

Jeff: Second the significant amount of choice stock included in the consideration mix, which would expose our shareholders to an over levered pro forma company with slower long term growth prospects.

Jeff: And third the asymmetrical risks to Wyndham and our shareholders, resulting from a prolonged and an uncertain regulatory review.

Jeff: On the regulatory topic, our concerns regarding the unique risks of this transaction has only increased as the process has unfolded starting with the federal trade Commission's unsolicited outreach to us and subsequent investigation, even before choice launched its exchange offer.

Jeff: Moreover, state attorneys general from Washington, Colorado, Kansas.

Jeff: In Vermont have also now open their own separate investigations.

Jeff Vellati: The expansive second request we received from the FTC on January 11th is requiring us to provide virtually every communication and every piece of data that relates in any way to our competition with choice. To put this into context, second requests are issued for only around 1% of deals reviewed by the FTC, and they require additional time-consuming back-and-forth discussions and meetings with the agency. Regulatory interest has undoubtedly peaked due to the continued opposition of franchisees in the Asian American Hotel Owners Association, which represents more than two-thirds of both companies' domestic hotel owners. In a recent AHOA survey of members who own either a Choice or a Wyndham Hotel, over two-thirds say they would consider leaving were the merger to occur. The uncertain timeline and outcome facing our shareholders, compounded by the risk that they are left with no deal and a damaged business at the end of a very long regulatory review process, is highlighted by a recent report showing that over 90% of significant merger investigations in 2023 resulted in a lawsuit by the government to block the deal or the abandonment of the transaction, with the FTC not accepting any pre-lawsuit settlements involving a divestiture or

Jeff: The expansive second request we received from the FTC on January 11th is requiring us to provide virtually every communication and.

Jeff: And every piece of data that related in any way to our competition with choice.

Jeff: To put this into context second requester issued for only around 1% of deals reviewed by the FTC.

Jeff: And they require additional time consuming back and forth discussions and meetings with the agency.

Regulatory interest has undoubtedly peak due to the continued opposition of franchisees in the Asian American Hotel owners Association.

Jeff: Which represents more than two thirds of both companies domestic hotel owners.

Jeff: In a recent survey of members who own either a choice or a Wyndham hotel over two thirds say they'd consider leaving where the merger to occur.

Jeff: The uncertain timeline and outcome facing our shareholders compounded by the risk that they are left with no deal and a damage business at the end of a very long regulatory review process.

Jeff: As highlighted by our recent report.

Jeff: Showing that over 90% of significant merger investigations in 'twenty twenty-three resulted in a lawsuit by the government to block the deal or the abandonment of the transaction.

Jeff: With the FTC not accepting any pre lawsuit settlements involving a divestiture or other remedy.

Jeff Vellati: This trend has continued in recent months with transactions such as JetBlue Spirit and its merger, IQvia Propel merger, and Amazon's proposed acquisition of iRobot, all of which were either blocked or now face significant delays and challenges. The potential value destruction that could arise from this ongoing and elongated process remains significant. Choice continues to try to take advantage of the uncertain timeline and outcome to exploit franchisee uncertainty for its own competitive advantage. And Choice's unsolicited offer also has significant real dollar costs for Choice shareholders, currently estimated at approximately $75 million, which includes approximately $15 million related solely to the FTC review.

Jeff: This trend has continued in recent months with the transactions such as Jetblue spirit and its merger the IQ via propel merger and Amazon's proposed acquisition of Irobot.

Jeff: All of which were either blocked or now face significant delays and challenges.

Jeff: The potential value destruction that could arise from this ongoing and elongated process remains significant.

Jeff: Choice continues to try to take advantage of the uncertain timeline and outcome to exploit franchisee uncertainty for its own competitive advantage.

Jeff: And choices unsolicited offer also has significant real dollar cost for our shareholders. Currently estimated at approximately $75 million, which includes approximately $15 million related solely to the FTC review.

Jeff Vellati: More fundamentally, as our 2023 results and longer-term progress demonstrate, Wyndham is positioned to generate shareholder value well in excess of the choices on offer. Over the last three years, we've consistently grown our system, our market share, and our earnings, while also expanding our pipeline to support future growth. As Michelle will cover in further detail, our strategy, which is well underway, is expected to generate an organic adjusted EBITDA CAGR of 7 to 10 percent over the next three years. We also expect to produce over $700 million of excess cash over the next two years. This resilient cash flow, along with our incremental leverage capacity—assuming only a 3.5 times net leverage ratio—can generate a total of $1.4 billion of excess liquidity, which can be deployed strategically for both organic and inorganic growth opportunities, further supporting additional value creation for Wyndham shareholders beyond our 7-10% EBITDA growth expectation.

Jeff: More fundamentally as our 2023 results in longer term progress demonstrate wyndham is positioned to generate shareholder value well in excess of choices current offer.

Jeff: For the last three years, we've consistently grown our system our market share in our earnings while also expanding our pipeline to support future growth.

Jeff: As Michele will cover in further detail our strategy, which is well underway is expected to generate an organic adjusted EBITDA CAGR of 7% to 10% over the next three years.

Jeff: We also expect to produce over $700 million of excess cash over the next two years.

Jeff: This resilient cash flow along with our incremental leverage capacity, assuming only a three five times net leverage ratio could generate a total of $1.4 billion of excess liquidity, which can be deployed strategically for both organic and inorganic growth opportunities further supporting additional value.

Jeff: Patients for Wyndham shareholders beyond our 7% to 10% EBITDA growth expectation.

Jeff: And now onto the results we were extremely pleased to report another strong quarter with a host of record breaking full year metrics. We opened 66000 rooms, the largest year of organic room additions and windows history against the backdrop of hotel transaction volumes nearly 50% below.

Jeff Vellati: We were extremely pleased to report another strong quarter with a host of record-breaking full-year metrics. We opened 66,000 rooms, the largest year of organic room additions in Wyndham's history, against a backdrop of hotel transaction volumes nearly 50% below last year, which is important to our business since each time a hotel transacts or changes hands, the new owner has a brand decision to make. We achieved this success despite the distraction over the past 10 months caused by choice.

Jeff: Last year.

Jeff: Which are important to our business since each time, a hotel transaction changes hands.

Jeff: The new owner has a brand decision to make we achieved this success. Despite the distraction over the past 10 months caused by choice.

Jeff Vellati: Our global retention rate, which includes all terminations, reached 95.6%, a 30-basis point improvement year-over-year and an over 250-basis improvement since our spinoff. With the growing support and the growing engagement of our franchisee community, along with the investments that we've made in our brands, we're now within reach of our targeted 96% retention rate, and we expect that our direct franchising retention rate will continue to improve. We delivered 3.5% net room growth, with Q4 marking the 12th consecutive quarter of organic net room growth. We grew our development pipeline for the 14th consecutive quarter to a record 240,000 rooms.

Jeff: Our global retention rate, which includes all terminations reached 95, 6%, a 30 basis point improvement year over year.

Jeff: And in over 250 basis improvement since our spin off.

Jeff: With the growing support in the growing engagement of our franchisee community along with investments that we've made in our brands. We're now within reach of our targeted 96% retention rate and we expect that our direct franchising retention rate will continue to improve.

Jeff: We delivered 3.5% of net room growth with Q4, marking the 12th consecutive quarter of organic net room growth.

Jeff: We grew our development pipeline for the 14th consecutive quarter to a record 240000 rooms.

Jeff Vellati: And our brands, all powered by Wyndham Rewards, ranked number one by USA Today for six consecutive years, continue to grow their market share, with our economy brands outperforming the STR U.S. chain scale by another 60 basis points, helping to drive 5% global RevPAR growth in constant currency, along with 7% growth in Wyndham Rewards membership to a record 106 million members. Full-year adjusted EBITDA reached an all-time high of $659 million, and we generated $339 million of free cash flow in 2023. We also returned over half a billion dollars to our shareholders, representing over 8% of our market cap at the beginning of the year. Our owner-first philosophy continues to attract a wide variety of franchisees to the Wyndham portfolio of brands.

Jeff: And our brands all powered by Wyndham rewards ranked number one by USA today for six consecutive years continue to grow their market share with our economy brands outperforming the S. T. R. U S chain scale by another 60 basis points, helping to drive 5% global Revpar growth in constant currency along with <unk>.

Jeff: 7% growth in Wyndham rewards membership to a record 106 million members.

Jeff: Full year adjusted EBITDA reached an all time high of $659 million and we generated $339 million of free cash flow in 2023.

Jeff: We also returned over half a billion dollars to our shareholders representing over 8% of our market cap from the beginning of the year.

Jeff: Our owner first philosophy continues to attract a wide variety of franchisees to the Wyndham portfolio of brands. We opened an average of two hotels each business day in 2023, and the 500 hotels. We opened this year were 11% more than the number we opened last year and the process we.

Jeff Vellati: We opened an average of two hotels every business day in 2023, and the 500 hotels we opened this year were 11% more than the number we opened last year. In the process, we introduced 13 of our brands in 24 new countries around the world, including our first La Quinta in Ecuador, our first Super 8 in the United Kingdom, and our first Hawthorne Suites in China.

Jeff: <unk> 13 of our brands in 24, new countries around the world, including our first La Quinta and Ecuador, Our first Super eight and the United Kingdom.

Jeff: And our first Hawthorn suites in China, and all of these brand launches in new countries can support more hotels from each brand going forward and more importantly were sold on a direct versus a master license franchising basis with no royalty share driving international direct net room growth in excess of 10.

Jeff Vellati: And all of these brand launches in new countries can support more hotels from each brand going forward, and, more importantly, we're sold on a direct versus a master license franchising basis with no royalty share driving international direct net room growth in excess of 10% along with a 30 basis point improvement in our international royalty rate. Our teams awarded 864 contracts globally for approximately 104,000 room additions, which was 30% more than what we signed back in 2019. In Q4 alone, we executed 33% more contracts domestically than we did back in 2019, when transaction volumes were over 30% higher than they were this year. And Q4 signings internationally increased by 35% year-over-year and by over 30% compared to 2019, with the largest increase coming from EMEA, our global region with our second highest REV PAR. Our development pipeline increased 10% year-over-year to a record 240,000 rooms.

Jeff: Percent, along with a 30 basis point improvement in our international royalty rate.

Our teams awarded 864 contracts globally for approximately 104000 room additions, which was 30% more than what we signed back in 2019 in Q4 alone we executed 33% more contracts domestically than we did back in 2019 when transaction.

Volumes with over 30% higher than it was this year at.

Jeff: In Q4 signings internationally increased by 35% year over year and by over 30% compared to 2019 with the largest increase coming from EMEA, Our global region with our second highest revpar.

Jeff: Our development pipeline increased 10% year over year to a record 240000 rooms, midscale and above brands in the pipeline increased 6% to a record 170000 rooms, and now represent nearly 70% of our pipeline.

Jeff Vellati: Mid-scale and above brands in the pipeline increased 6% to a record 170,000 rooms and now represent nearly 70% of our pipeline. Our pipeline represents approximately $125 million of royalty fees over the next four years, with domestic hotels weighted more toward upscale and higher RevPAR brands and with our international pipeline concentrated in higher RevPAR regions like Europe and Latin America. These Red Bar Creative Rooms will come into the system over the next four years with fee bars on average 30% higher than our current system average, providing us with another tailwind for growth that Michelle will cover in more detail. Echo Suites by Wyndham, the industry's fastest growing new brand launch, grew by nearly 60% in 2023 with over 33,000 rooms now in our development pipeline. During the fourth quarter, we began to selectively award contracts for the brand to experienced individual developers, in addition to the many institutional developers we have contracted with thus far.

Jeff: Our pipeline represents approximately $125 million of royalty fees over the next four years with domestic hotels weighted more to upscale and higher revpar brands and with our international pipeline concentrated in higher Revpar regions like Europe, and Latin America.

Jeff: These red far accretive rooms will come into the system over the next four years with fee Pars on average 30% higher than our current system average providing us with another tailwind for growth that Michelle will cover in more detail.

Jeff: Echo suites by wind and the industry's fastest growing new brand launch group.

<unk> grew by nearly 60% in 2023 with over 33000 rooms now in our development pipeline.

Jeff: During the fourth quarter, we began to selectively award contract for the brand to experienced individual developers. In addition to the many institutional developers we have contracted with thus far.

Jeff Vellati: We have nearly a dozen Echo Suites now under construction, which we expect to open by year end, and 75 are expected to be open by the end of 2026. Last month at the America's Lodging Investment Summit, we announced a new partnership with SBE Entertainment. We're combining SBE's unmatched culinary and unmatched lifestyle experience with Wyndham's distribution and technology platform to fuel Project HQ's development under our growing Registry Collection Hotels brand. This partnership expands our reach. And it fills a white space in our portfolio for hotel owners searching for a differentiated, yet approachable lifestyle brand that will immediately benefit them from the scale and the resources of the world's largest hotel franchisor. Project HQ plans to open 50 Registry Collection hotels by 2030, delivering approximately 7,500 rooms designed uniquely for what millennial and Gen Z travelers are seeking.

Jeff: We have nearly a dozen echo suites now under construction, which we expect to open by year end and 75 are expected to be opened by the end of 'twenty 'twenty six.

Jeff: Last month at the American lodging investment Summit, we announced a new partnership with Sbe Entertainment, we're combining spe's unmatched culinary and unmatched lifestyle experience with Wyndham distribution and technology platform to fuel project Hq's development under our growing registry collection hotels brand.

Jeff: This partnership expands our platform.

Jeff: And it fills a white space in our portfolio for hotel owners searching for a differentiated yet approachable lifestyle brand that will immediately benefit from the scale and the resources of the world's largest hotel franchisor.

Jeff: Project HQ plans to open 50 registry collection hotels by 2030, delivering approximately 7500 rooms designed uniquely for what millennial and Gen Z travelers are seeking.

Jeff Vellati: The partnership represents the latest example of our shifting mix to higher rev par segments and increasing fee par at a faster rate than our system average. U.S. REB PAR, which was down 4% year-over-year, increased 10% versus 2019, which is a 120 basis point acceleration from Q3 performance. Q4 Trends represented a continued moderation of the Revenge Leisure travel that we saw last year, which largely favored select service chain scales internationally. Q4 RevPAR was 7% higher than last year in constant currency and 44% higher than Q4 of 2019, relatively consistent with the strong performance from Q3. In our quest to maximize franchisees' top and bottom lines and to improve owner engagement and retention, this year, we implemented a number of innovative tools We developed Wyndham Community, a state-of-the-art mobile-enabled platform that seamlessly connects our owners to the day-to-day performance of their hotels while delivering a constant connection to Wyndham's scale and resources to help maximize their profitability.

Jeff: The partnership represents the latest example of our shifting mix to higher revpar segments, and increasing fee par at a faster rate than our system average.

Jeff: U S Revpar, which was down 4% year over year increased 10% versus 2019, which is a 120 basis point acceleration from Q3 performance.

Jeff: Q4 trends represented a continued moderation of the revenge leisure travel that we saw last year, which largely favorite select service chain scales internationally Q4, Revpar was 7% higher than last year in constant currency and 44% higher than Q4 of 2019 relatively consistent with the strong performance.

Jeff: From Q3.

Jeff: In our quest to maximize franchisees' top and bottom lines and to improve owner engagement and retention. This year, we implemented a number of innovative tools, we developed Wyndham community a state of the art mobile enabled platform that seamlessly connects our owners to the day to day performance of their hotels, while delivering a constant connect.

Jeff: Turn to Wyndham scale and resources to help maximize their profitability.

Jeff Vellati: We delivered a segment-leading guest engagement platform, allowing our franchisees to sell room upgrades and services like early check-in and late check-out, along with beverages or snacks and other local amenities for in-room delivery upon a guest's arrival, a first for select service hotel owners that will provide significant incremental room revenue opportunities for them. We completed the rollout of our mobile next-generation property management systems at unprecedented prices from best-in-class suppliers, which drove REVPAR increases of over 170 basis points on average for franchisees using these systems. And we provided an OTA commission reconciliation tool, helping to put thousands of dollars back into the pockets of franchisees on a monthly basis by reconciling OTA bookings that either never show up or that depart early.

Jeff: We delivered a segment, leading guest engagement platform, allowing our franchisees to sell room upgrades and services like early check in and late checkout, along with beverages snacks and other local amenities for interim delivery. Upon I guess the arrival Ah first for select service hotel owners that will provide significant incremental room.

Jeff: Revenue opportunities for them.

Jeff: We completed the rollout of our mobile next generation property management systems at unprecedented pricing from best in class suppliers, which drove revpar increases of over 170 basis points on average for franchisees using these systems and we provided an O T. A commission reconciliation tool helping to put.

Jeff: <unk> of dollars back into the pockets of franchisees on a monthly basis by reconciling O T. A bookings at either never show up.

Depart early.

Speaker Change: Before handing the call over to Michelle all of us at Wyndham, we'd like to take a moment.

Jeff Vellati: Before handing the call over to Michelle, all of us at Wyndham would like to take a moment to honor the passing of an industry icon. In late December, we lost... Ron Rivett, co-founder of the Super 8 brand. Ron left an indelible mark on the industry with the creation of Super 8. We acquired the brand in 1993. And by following Ron's owner philosophy of being available, of being approachable, and being accountable, Super 8 is now the largest economy brand in the world with 2,663 hotels in nine countries. We're honored that not only is the very first Super 8 in Aberdeen, South Dakota, still in our system, but it's also run by Ron's family, who keeps his memory and his dedication to this industry alive every day.

Honor the passing of an industry icon in late December we lost Ron.

Speaker Change: Ron Ribbit co founder of the Super eight brand Ron leaves an indelible mark on the industry with the creation of Super eight we acquired the brand in 1993 and.

Speaker Change: And by following Ron's owner philosophy of being available being approachable.

Speaker Change: And being accountable Super eight is now the largest economy brand in the world with 2000 and 663 hotels.

Speaker Change: In nine countries.

Speaker Change: We're honored that not only is the very first super eight and Aberdeen, South Dakota still in our system, but its also run by Ron's family, who keeps his memory and his dedication to this industry alive every day.

Speaker Change: And as we commemorate Super eights, 50th anniversary. This year, we will celebrate Ron Rebit and his many accomplishments.

Jeff Vellati: And as we commemorate Super 8's 50th anniversary this year, we will celebrate Ron Rivett and his many accomplishments. We would also like to extend our heartfelt appreciation to all of our team members and all of our franchisees. Our record-setting achievement would not have occurred without their dedication and their support. Their enthusiasm for the opportunities that lie ahead, coupled with their commitment to our initiatives to deliver exceptional value, remains the key to our success. And with that, I'll now turn the call over to Michelle. Okay?

Speaker Change: We would also like to extend our heartfelt appreciation to all of our team members and all of our franchisees are record setting achievements would not have occurred without their dedication and their support their enthusiasm for the opportunities that lie ahead, coupled with their commitment to our initiatives to deliver exceptional value for.

Speaker Change: <unk> the key to our success and with that I'll.

Speaker Change: I'll now turn the call over to Michelle Michelle.

Michelle: Thanks, Jeff and good morning, everyone I'll begin my remarks today with a detailed review of our fourth quarter and full year results.

Michelle: Denburg you our cash flows and balance sheet, followed by our longer term growth prospects and finally, our 2024 outlook.

Michelle Allen: 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 longer-term growth prospects and, finally, our 2024 outlook. As Jeff mentioned, we were delighted with our operational progress in 2023. At the same time, we're pleased to put the tough year-over-year financial reporting comparisons behind us since 2023 was our first year of reporting without the inclusion of the lower-margin, select-service-managed business and owned hotels and was also impacted by lapping the revenge travel that occurred in 2022 following COVID. In the fourth quarter, we generated $320 million of fee-related and other revenues and $154 million of adjusted EBITDA.

Michelle: As Jeff mentioned, we were delighted with our operational progress in 2020, great at the same time, we're pleased to put the tough year over year financial reporting comparisons behind us.

Michelle: 23, with our first year of reporting without the inclusion of the lower margin select service managed business and hotels and was also impacted by lapping the revenge travel that occurred in 2022 following COVID-19.

Michelle: In the fourth quarter, we generated $320 million of fee related and other revenues and $154 million of adjusted EBITDA.

Michelle: <unk> and other revenues increased 3% year over year, reflecting global net rooms growth as well as higher license and ancillary fees, partially offset by a year over year Revpar decline.

Michelle: Adjusted EBITDA increased $28 million, including a favorable marketing front timing impact of $21 million as expected on.

Michelle: On a comparable basis adjusted EBITDA grew 6%, primarily reflecting our revenue growth.

Michelle: Fourth quarter adjusted diluted EPS was <unk> 91 cents, reflecting the adjusted EBITDA growth as well as benefits from our share repurchase activity, which were partially offset by higher interest expense.

Michelle Allen: Fee-related and other revenues increased 3% year-over-year, reflecting global net room growth, as well as higher license and ancillary fees, partially offset by a year-over-year REVTAR decrease. Adjusted EBITDA increased $28 million, including a favorable marketing fund timing impact of $21 million, as expected. On a comparable basis, Adjusted EBITDA grew 6%, primarily reflecting our revenue growth. Fourth quarter adjusted diluted EPS was 91 cents, reflecting the adjusted EBITDA growth, as well as benefits from our share repurchase activity, which were partially offset by higher interest expense.

Michelle: For the full year, we generated $138 billion left the related and other revenues in line with our expectations compared to a 135 billion last year, which included $15 million from the solid managed under one business day.

Michelle: On a comparable basis fee related and other revenues increased 6% year over year, reflecting global Revpar and net room growth as well as higher license and ancillary fees.

Michelle: Adjusted EBITDA was also in line with our expectations at $659 million in full year 2023, compared to $615 million last year, which included an $18 million contribution from the old management owned businesses.

Michelle: The year over year change was further impacted by $11 million of unfavorable marketing fund variability.

Michelle: Comparable basis, adjusted EBITDA increased 6% year over year, primarily reflecting our revenue growth and our adjusted EBITDA margin remained consistent at 80%.

Michelle Allen: For the full year, we generated $1.38 billion of fee-related and other revenues, in line with our expectations compared to $1.35 billion last year, which included $50 million from the sold, managed, and owned businesses. On a comparable basis, fee-related and other revenues increased 6% year-over-year, reflecting global REBPAR and net room growth, as well as higher license and ancillary fees. Adjusted EBITDA was also in line with our expectations at $659 million for full year 2023 compared to $650 million last year, which included an $18 million contribution from the sold, managed, and owned businesses. The year-over-year change was further impacted by $11 million of unfavorable marketing fund variability.

Michelle: Full year adjusted diluted EPS increased 8% on a comparable basis to $4.01, reflecting our adjusted EBITDA growth as well as benefits from our share repurchase activity, which were partially offset by higher interest expense.

Michelle: We generated $114 million of free cash flow in the fourth quarter and 339 million for the full year importantly in line with our target we converted 51% of our adjusted EBITDA to free cash flow, which at the adjusted net income line translated to nearly 100%.

Michelle: We returned $515 million to our shareholders in 2023, representing 8% of our market cap grew $397 million of share repurchases and $118 million of common stock dividend.

Michelle: We ended the year with approximately $650 million of total liquidity and our net leverage ratio of three two times within the lower half of our target range.

Michelle Allen: On a comparable basis, adjusted EBITDA increased 6% year-over-year, primarily reflecting revenue growth, and our adjusted EBITDA margin remained consistent at 80%. Full-year Adjusted Diluted EPS increased 8% on a comparable basis to $4.01, reflecting our adjusted EBITDA growth, as well as benefits from our share repurchase activity, which were partially offset by higher interest rates. We generated $114 million of free cash flow in the fourth quarter and $339 million for the full year.

Michelle: The prevailing higher interest rate environment, we continue to limit our exposure with only about 25% of our long term gross debt at variable rates.

Michelle: We now have our variable rate debt locked in at an effective interest rate of approximately five 6% through 2027.

Michelle: As Jeff mentioned, our ongoing strategic initiatives will continue to provide a significant runway for accelerated earnings growth over the next several years.

Michelle: In October we shared with you our expectation that our strategic plan will result in an adjusted EBIT CAGR of 7% to 10%, which translates to $150 million to $210 million of incremental adjusted EBITDA between 2024 and 2020.

Michelle Allen: Importantly, in line with our target, we converted 51% of our adjusted EBITDA to free cash flow, which at the adjusted net income line translated to nearly 100%. We returned $515 million to our shareholders in 2023, representing 8% of our market cap, through $397 million of share repurchases and $118 million of common stock dividends. We ended the year with approximately $650 million in total liquidity, and our net leverage ratio of 3.2 times was within the lower half of our target range.

Michelle: This plan assumes 2% to 3% revpar growth and 3% to 5% annual net rooms growth over the plan period.

Michelle: These numbers should sound familiar to you. The Revpar assumption that you asked is anchored the current industry outlook for our chain scale and can fit.

Michelle: With long term hospitality sector performance.

Michelle: The net room growth assumption reflects the 75 Echo hotels, we expect to have opened by 2020, along with continued improvement in our direct franchising retention rate.

Michelle: On top with 70% of our pipeline now in the higher Revpar Midscale and above category. These properties will come into the system with higher fee part combined we expect these drivers to contribute over $100 million or over half of the incremental EBITDA during the plan period.

Michelle Allen: Amidst the prevailing higher interest rate environment, we continue to limit our exposure with only about 25% of our long-term growth debt at variable rates. We now have our variable rate debt locked in at an effective interest rate of approximately 5.6% through 2027. As Jeff mentioned, our ongoing strategic initiatives will continue to provide a significant runway for accelerated earnings growth over the next several years. In October, we shared with you our expectation that our strategic plan will result in an adjusted EBITDA CAGR of 7 to 10 percent, which translates to $150 to $210 million of incremental adjusted EBITDA between 2024 and 2026. This plan assumes 2-3% rep car growth and 3-5% annual net room growth over the plan. These numbers should sound familiar to you.

Michelle: The remainder will come from our other growth initiatives.

Michelle: Wyndham is uniquely positioned to benefit from the increased government spending tied to the infrastructure and chip back.

Michelle: Hotel Company has more select service hotels located in the states, where infrastructure spending will be concentrated over the estimated eight year span a period, we expect to capture them just our fair share of Big Bend will generate $150 million of incremental royalties for Wyndham shareholders about $30 million of which will contribute to the planned 7% to 10%.

Michelle: EBIT of KBR over the next three years.

Michelle: Additionally, ancillary revenue streams provide multiple opportunities for incremental growth to supplement our core business model. These areas include our suite of co branded credit card marketing partnerships and other monetization opportunities, which we expect to contribute approximately $40 million of incremental EBITDA over the plan period.

Michelle Allen: The REV-PAR assumption in the U.S. is anchored to the current industry outlook for our chainscales and consistent with long-term hospitality sector performance. The net room growth assumption reflects the 75 Echo Hotels we expect to have open by 2026, along with continued improvement in our direct franchising retention rate. On top of that, with 70% of our pipeline now in the higher REBPAR mid-scale and above categories, these properties will come into the system with higher fee PAR. Combined, we expect these drivers to contribute over $100 million or over half of the incremental EBITDA during the planned period. The remainder will come from our other broadcasts. As you know, Wyndham is uniquely positioned to benefit from the increased government spending tied to infrastructure and chip stacks. No hotel company has more select service hotels located in the states where infrastructure spending will be concentrated.

Michelle: Finally, as Jeff mentioned, our business model generates strong free cash flow and we have significant leverage capacity, which provide additional capital to drive incremental growth opportunities over and above our 7% to 10% EBITDA CAGR for the three years ending 2026.

Michelle: Turning now to 2024 outlook, we expect our direct franchising business will grow global net room growth, 3% to 4%, including 20 to 30 basis points of expected improvement in our retention rate we.

Michelle: We are projecting global revpar growth of 2% to 3% Revpar growth is expected to be at its lowest quarterly level in Q1, as we lapped the toughest comp period in 2023, specifically the first half of the quarter, which is already behind us where global revpar throughout 2023 by about three points in January but is expected to improve.

Michelle: As we entered March and the spring break leisure travel season year over year comps become progressively easier throughout the remaining quarters.

Michelle Allen: Over the estimated eight-year spend period, we expect that capturing just our fair share of this spend will generate $150 million of incremental royalties for Wyndham's shareholders, about $30 million of which will contribute to the planned 7 to 10% EBITDA CAGR over the next three years. Additionally, ancillary revenue streams provide multiple opportunities for incremental growth to supplement our core business model. These areas include our suite of co-branded credit cards, marketing partnerships, and other monetization opportunities, which we expect to contribute approximately $40 million of incremental EBITDA over the planned. Finally, as Jeff mentioned, our business model generates strong free cash flow, and we have significant leverage capacity, which provides additional capital to drive incremental growth opportunities over and above our 7% to 10% EBITDA category for the three years ending 2026. Turning now to our 2024 Outlook.

Michelle: Fee related and other revenues are expected to be 1.43 billion to $1.46 billion, you'll recall that in 2023, we hosted our global franchisee conference, which generated EBITDA neutral marketing revenue of $18 million. Since the conference is held every 18 months. These revenues will not repeat in 2024 and therefore.

Michelle: Negatively impact our year over year growth rate by about two point.

Michelle: Adjusted EBITDA is expected to be between 690 and $700 million consistent with our October outlook, and reflecting comparable basis growth of approximately 6% to 8% based on our 2023 actual result.

Michelle: Adjusted net income is projected to be 341 million to $351 million and adjusted diluted EPS is projected at $4 and 11.

Michelle: The $4.23 based on a diluted share count of $83 million, which as usual excludes any future potential share repurchases.

Michelle: Free cash flow conversion before development advances is expected to approximate 60%.

Michelle: 2024 development advanced spend is expected to increase to $90 million from $72 million. In 2023. This increase primarily reflects the ramping of development efforts for our Echo grant as expected given.

Michelle: Given the challenging macro backdrop. This past year, we have an opportunity to attract more owners and higher chain scales and accretive revpar markets by using key money as a tool to alleviate some of their debt burden. This is a trend we expect to continue throughout 2024, we also use more key money to navigate the uncertainty and disruptions created by choice.

Michelle Allen: We expect our direct franchising business will grow global net room growth of 3% to 4%, including 20 to 30 basis points of expected improvement in our retention rate. We are projecting global rep part growth of 2% to 3%. Rep part growth is expected to be at its lowest quarterly level in Q1, as we last the toughest comp period in 2023. Specifically, the first half of the quarter, which is already behind us, where global rep part growth trails 2023 by about three points in January, but is expected to improve as we enter March and spring break leisure travel. Year over year, comps become progressively easier throughout the remaining quarter. Fee-related and other revenues are expected to be between $1.43 billion and $1.46 billion.

Michelle: And we anticipate continuing this approach while the current situation per se.

Michelle: Today's outlook exclude the $75 million of currently anticipated costs related to choices hostile offer.

Michelle: In addition to the cash we generate from operations. We also have the benefit of a strong balance sheet holding leverage flat to the three two times. We ended 2023, which will provide another $150 million of available capital in 2024 to either invest in the business or to return to shareholders.

Michelle: February three five times, just the midpoint of our stated target range, which provides $330 million and levering to the high end of four time will provide $675 million of capital to deploy.

Michelle Allen: You'll recall that in 2023, we hosted our Global Franchisee Conference, which generated EBITDA-neutral marketing revenue of $18 million. Since the conference is held every 18 months, these revenues will not repeat in 2024 and, therefore, negatively impact our year-over-year growth rate by about 2%. Adjusted EBITDA is expected to be between $690 and $700 million, consistent with our October outlook and reflecting comparable basis growth of approximately six to eight percent based on our 2023 actual results. Adjusted net income is projected to be $341 million to $351 million, and adjusted diluted EPS is projected at $4.11 to $4.23, based on a diluted share count of $83 million, which, as usual, excludes any future potential share repurchase. Free cash flow conversion before development advances is expected to approximate 60%.

Michelle: Finally, while we expect our marketing funds to breakeven on a full year basis, we will continue to see timing differences in the quarterly results as we deploy incremental spend to capture building leisure demand for the spring break season ahead for Q1, we expect to fund over spend $10 million to $15 million and like last year. We expect Q2 will also overspend and then though.

Michelle: As announced will reverse in the back half of this year.

Michelle: In closing we are extremely proud of our 2023 performance, we successfully executed on our key business objectives achieved a host of record breaking performance metrics grew adjusted EBITDA, 6% and generated significant capital return for our shareholders. Looking ahead, we approach 2024 with a compelling strategy poised to accelerate our growth.

Speaker Change: And enhance returns for our shareholders with that Jeff and I will be happy to take your questions operator.

Speaker Change: 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.

Speaker Change: If at any point. Your question has been answered you may remove yourself from the queue by pressing star two.

Michelle Allen: 2024 Development Advancement is expected to increase to $90 million from $72 million in 2023. This increase primarily reflects the ramping of development efforts for our ECHO brand, as expected. Given the challenging macro backdrop this past year, we had an opportunity to attract more owners in higher chain scales and accretive rep car markets by using key money as a tool to alleviate some of their debt burden. This is a trend we expect to continue throughout 2024. We also use more key money to navigate the uncertainty and disruptions created by Choice, and we anticipate continuing this approach while the current situation persists. Today's Outlook excludes the $75 million of currently anticipated costs related to Choices Hostel Office.

Speaker Change: Again, we do ask that you limit yourself to one question and one follow up.

Speaker Change: <unk>.

Speaker Change: And speakers at this time, we currently are.

Speaker Change: Our waiting for Mr. <unk> to dial back in we were trying to reconnect him.

Speaker Change: We'll pause just a moment.

Speaker Change: Okay.

Speaker Change: We now have Mr. <unk> Conference again, Thats Star one to ask a question.

Speaker Change: We'll go first to Joe Greff with J P. Morgan. Please go ahead.

Joe Greff: Hi, good morning, everybody.

Joe Greff: Jeff just trying to get a sense of maybe how disruptive.

Joe Greff: The choice offer is in the developer community obviously.

Joe Greff: Not an issue in the fourth quarter with <unk>.

Joe Greff: Pipeline.

Joe Greff: Actual room openings.

Joe Greff: But here in the fourth quarter are you seeing an impact in either elongated construction timelines or.

Joe Greff: Interest in partnering with you, particularly maybe with the <unk> brand.

Joe Greff: Or maybe asked differently would your net rooms growth be higher were it not for.

Joe Greff: Maybe this perceived distraction on the part of developers with.

Joe Greff: This choice offer.

Joe Greff: And how much of the $90 million in development advances.

Joe Greff: As a function of you're having to do that to grow.

Michelle Allen: In addition to the cash we generate from operations, we also have the benefit of a strong balance sheet. Holding leverage flat to the 3.2 times we ended 2023 with, we'll provide another $150 million of available capital in 2024 to either invest in the business or return to shareholders. Leveraging to 3.5 times just the midpoint of our stated target range would provide $330 million, and levering to the high end of four times would provide $675 million of capital to deploy. Finally, while we expect our marketing funds to break even on a full-year basis, we will continue to see timing differences in the quarterly results as we deploy incremental spend to capture building leisure demand for the spring break season ahead.

Joe Greff: Because of maybe.

A distraction with the with choice and maybe that impact there any color would be helpful. Thank you.

Speaker Change: Yes, Thanks, Joe.

Speaker Change: We could've Si.

Speaker Change: Deals in the fourth quarter to your question, we've seen both deals.

Speaker Change: Ground breaks paused many of the small business owners as experienced with choice and they want to see this resolved certainly before moving forward I mean with Echo we were thrilled with the 200 668 I believe we executed in 2023 that was 90% of what we committed to to do last year.

Speaker Change: Our focus has shifted on echo from the large multi unit developers to individuals.

Speaker Change: We certainly had some progress I think we executed three in the quarter.

Speaker Change: But we could have executed more.

Speaker Change: But look we're thrilled with the tremendous success.

Speaker Change: Selling through this uncertainty I mean, it really began back in may with the Wall Street Journal leak.

Operator: For Q1, we expect the funds to overspend $10 to $15 million, and like last year, we expect Q2 will also overspend, and then those amounts will reverse in the back half of this. In closing, we are extremely proud of our 2023 performance. We successfully executed on our key business objectives, achieved a host of record-breaking performance metrics, grew adjusted EBITDA 6%, and generated significant capital returns for our shareholders. Looking ahead, we approach 2024 with a compelling strategy poised to accelerate our growth and enhance returns for our shareholders. With that, Jeff and I would be happy to take your questions. Operator.

Speaker Change: And we expect to continue to do the same in 2020 for our franchise sales teams around the world I could tell you are fired up.

Speaker Change: The fourth quarter as you say was a record of openings, but more deal noise to your point certainly create some more challenging sales environment, which really comes in two forms owners as I said moving more slowly on committing to deals with us.

Speaker Change: And a second sort of increased competitive deal landscape to your point on Dan's is becoming more prevalent as choice pushes through really reverse its declining system.

Speaker Change: But yes, we know our record Q4 could've been better both domestically and internationally without the noise.

Speaker Change: Yes and to your last question Joe.

Operator: Thank you. The floor is now open to 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 star 2.

Speaker Change: The last part of your question, Joe I would say pushing through choice, that's probably less than 10% of the total $90 million budgeted for 2024.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question will come from David Katz with Jefferies. Please go ahead.

Operator: Again, we do ask that you limit yourself to one question and one follow-up. Thank you, and speakers at this time. We are currently, uh, waiting for Mr. Bellotti to dial back in. We are trying to reconnect him.

David Brian Katz: Hi, Good morning, everyone. Thanks for taking my question.

David Brian Katz: I do want to talk about some of the nug environment in a broader sense.

David Brian Katz: Obviously, theres a lot of discussion out there about conversions.

David Brian Katz: And conversion competitiveness, if you could color on for us just a little bit.

Operator: We'll pause just a moment. We now have Mr. Velotti back in conference. Again, that's star number one to ask a question. We'll go first to Joe Gref with J.P. Morgan. Please go ahead. Good morning, everybody.

David Brian Katz: Where you fit in that landscape, but obviously, we will look at this through a public company loans.

David Brian Katz: But give us a sense for just how competitive that conversion environment.

Jeff Vellati: Jeff, just try to get a sense of maybe how disruptive... and the developer community. Obviously, not an issue in the fourth quarter with the pipeline and actual room opening. But here in the fourth quarter, are you seeing an impact in either elongated construction timelines or interest in partnering with you, particularly maybe with the Echo brand? And maybe ask differently: would your net room growth be higher were it not for...! !! !! !! ! In, www.wyndhamhotels.com is a function of your having to do that, grow because of maybe a distraction with choice and maybe that impact there. Any color would be helpful.

David Brian Katz: As you know as well as for the new builds like in your segments, given the street's perception right that it's become much more competitive.

David Brian Katz: Sure.

David Brian Katz: I think if you were talking to our chairman Steve Holmes I'd tell you David it's always been competitive but the biggest question aside from the strength of our brands and how our franchisees are feeling about us and they are certainly feeling great about us with our attention at record highs.

David Brian Katz: We have a saying that people do business with us because they know us they like us and they trust us it's really when it comes down to competition. It's all about the size and the strength of our franchise sales team and our franchise sales team has never been larger and it's never been stronger and that's really around the world whether in Europe Africa Middle East Asia Pacific down in Latin America.

Jeff Vellati: Yeah, thanks, Joe. We could have signed deals in the fourth quarter, to your question. We've seen both deals and groundbreaks pause. Many of these small business owners have experience with choice, and they want to see this resolved, certainly before moving forward. I mean, with Echo, we were thrilled with the 268 we believe we executed in 2023. That was 90% of what we committed to do last year. Our focus has shifted on Echo from the large multi-unit developers to individuals, and we certainly have made some progress. I think we only executed three in the quarter, but we could have executed more.

David Brian Katz: They they are as I said.

David Brian Katz: Putting up record numbers right now on the conversion front.

David Brian Katz: We had a great year, we had a great quarter.

David Brian Katz: We didnt slowdown our quarter was up 60% versus 2019 and conversion assigned.

David Brian Katz: Our signings when transaction volumes as we pointed out in the script were a lot lower.

David Brian Katz: On the new construction side look our pipeline grew eight 8% to prior year, we have a record 1400.

David Brian Katz: New construction hotels in our pipeline.

Jeff Vellati: But look, we're thrilled with the tremendous success in selling through this uncertainty. I mean, it really began back in May with the Wall Street Journal leak. And we expect to continue to do the same in 2024. Our franchise sales teams around the world, I could tell you are fired up. The fourth quarter, as you say, was a record of openings.

David Brian Katz: And we saw no slowdown in new construction starts those were also up year to date developers are seeing very strong.

David Brian Katz: Rois despite higher interest rates are in ground percentage improved it was up I think 90 basis points from the third quarter. So so projects are still getting built.

Jeff Vellati: But more deal noise, to your point, certainly creates a more challenging sales environment, which really comes in two forms. Owners, as I said, moving more slowly on committing to deals with us, and a second sort of increased competitive deal landscape, to your point on Dan's, which is becoming more prevalent as choice pushes to really reverse its declining system. But yes, we know our record Q4 could have been better both domestically and internationally without the noise. Yeah, and to your last question, Joe, to the last part of your question, Joe, I would say pushing through choice is probably less than 10% of the total $90 million budgeted for 2024. Thank you. Our next question will come from David Katz with Jeffries. Please go ahead. Good morning, everyone.

David Brian Katz: And yes developer events notes are being used on competitive deals.

David Brian Katz: We're really pleased with with with our brand offerings, how our brands are performing and from a competitive standpoint, just how our franchisees are feeling and our sales teams.

David Brian Katz: Our selling our products.

Speaker Change: Thank you.

Speaker Change: Okay My follow up.

Speaker Change: Yesterday choice did put out a preliminary proxy which has some commentary in there just in an open ended way.

Speaker Change: Anything any thoughts perspectives or comments, you can share about that I'm sure we'd all be interested in here.

Speaker Change: Yeah no.

Speaker Change: No surprise to your question it was completely expected by <unk>.

Speaker Change: By our team and really just procedural moment in a non event I mean this was choices first step of course to hold a preliminary proxy for a special meeting of the shareholders.

Jeff Vellati: Thanks for taking the question. I do want to talk about the NUG environment in a broader sense. Obviously, there's a lot of discussion out there about conversions and competitiveness in conversion. If you could paint for us just a little bit of where you fit in that landscape, and obviously, we look at this through a public company lens. But, you know, give us a sense for just how competitive that conversion environment is as well as for the new builds, like in your segments, given the street perception, right, that it's become much more competitive. Sure.

Speaker Change: Required to approve the issuance of choice choices shares in connection with a deal.

Speaker Change: They believe.

Speaker Change: They they they could do the filing it didn't change the offer it didn't remove any of the numerous conditions to it like the financing contingency or I don't know their due diligence out or.

Speaker Change: Most importantly, their need for FTC clearance to name just a few of their offer David remains highly conditional and it still does not address adequately our board's three key issues that we talked about in the script.

Jeff Vellati: I think if you were talking to our chairman, Steve Bones, he'd tell you, David, it's always been competitive. But the biggest question, aside from the strength of our brands and how our franchises are feeling about us, and they're certainly feeling great about us with our attention at record highs. We have a saying that people do business with us because they know us, they like us, and they trust us.

Speaker Change: Got it thank you very much.

Speaker Change: Thanks, David.

Our next question comes from Patrick <unk> with <unk> Securities. Please go ahead.

Patrick: Hi, good morning, Jeff and Michelle.

Patrick: Good morning, Patrick.

Patrick: Two questions. My first one Jack you briefly touched on the feedback you had been receiving from.

Patrick: Your large or top shareholders can you just give us a little bit more color what.

Patrick: Specifically the feedback has been.

Jeff Vellati: It's really, when it comes down to competition, it's all about the size and the strength of our franchise sales team. And our franchise sales team has never been larger, and it's never been stronger. And that's around the world, whether we're in Europe, Africa, the Middle East, Asia Pacific, or down in Latin America.

Patrick: Alright.

Patrick: Michel and I there is not a day that goes by where we're not talking to our large shareholders.

Patrick: And the feedback consistently has been from them and I'm sure we'll be on the phone with many of them. This afternoon is.

Is that they are generally supportive of the risks the asymmetrical risks that are out there that we've been talking about that our board.

Jeff Vellati: They are, as I said, putting up record numbers right now. On the conversion front, we had a great year. We had a great quarter. We didn't slow down.

Patrick: Has objected to and certainly would want to see addressed before for continuing discussions.

Patrick: Okay.

Patrick: Secondly.

Jeff Vellati: Our quarter was up 60% versus 2019 in conversion signings when transaction volumes, as we pointed out in the script, were a lot lower. And on the new construction side, look, our pipeline grew 8% the prior year. We have a record 1,400 new construction hotels in our pipeline. And we saw no slowdowns in new construction starts.

Regarding the 2% to 3% Revpar growth for this year, how would you break that out between.

Patrick: International and domestic.

Patrick: Domestic and again you noted you expect to.

Sizable acceleration.

Speaker Change: Yes, certainly I Wouldnt say January for domestic.

Speaker Change: Domestic hotels, especially economy Midscale has been spectacular.

Speaker Change: <unk>.

Speaker Change: You know what.

I guess, what you mentioned about what drives that acceleration domestically, but what's your expectation for international to get to those numbers. Thank you.

Jeff Vellati: Those were also up here to date. Developers are seeing very strong ROIs. Despite higher interest rates, our in-ground percentage improved. It was up, I think, 90 basis points from the third quarter.

Speaker Change: Sure Patrick.

Speaker Change: International is definitely going to grow faster than that.

Speaker Change: You ask.

Patrick: The full year and we see that in January as well right International is up about 4% and the domestic system is that it's certainly down January results not a surprise to us, giving given how difficult. The comps were this year January last year Revpar was up 6% with it must always go.

Jeff Vellati: So projects are still getting built, and yes, developer advance notes are being used on competitive deals. But we're really pleased with our brand offerings, how our brands are performing, and from a competitive standpoint, just how our franchisees are feeling, and how our sales teams are selling our products. And look, as my follow-up, you know, yesterday Choice did put out a preliminary proxy, which has some commentary in there, just in an open-ended way. Anything, any thoughts, perspectives, or comments you can share about that, I'm sure we'd all be interested in hearing.

Patrick: To be our most difficult month.

Patrick: Chicken Paragon and then as you move throughout the quarter the.

Patrick: Can't get progressively easier.

Patrick: Easier by the end by the end of the quarter in March I think Revpar is only growing 1% and let me start at 6% all the way down to 1% and then and then obviously as you move out of the first quarter the comps get tremendously easier for.

Jeff Vellati: Yeah. No surprise to your question. It was completely expected by our team and really just a procedural moment and a non-event.

Patrick: For the remainder of the year. So when we think about the full year forecast at 2% to 3%.

Jeff Vellati: I mean, this was Choice's first step, of course, to hold a preliminary proxy for a special meeting of their shareholders required to approve the issuance of Choice's shares in connection with a deal that they believed they could do. The filing didn't change the offer. It didn't remove any of the numerous conditions attached to it, like the financing contingency or, I don't know, their due diligence out or, most importantly, their need for FTC clearance, to name just a few. Their offer, David, remains highly conditional, and it still does not address adequately our board's three key issues that we talked about in the script. Thank you very much. Thanks, David. Our next question comes from Patrick Scholz with Truist Securities. Please go ahead. Hi, good morning, Jeff and Michelle. Good morning, Patrick.

Patrick: Specifically answering your question with respect to the NASDAQ.

Patrick: We're expecting really three three movements, we're expecting to see some benefits from the infrastructure pick up that the continued momentum we have coming out of 2023, and we know projects new projects are getting approved every day.

Patrick: We are also expecting to see some impact from occupancy tailwind.

Patrick: We're still trailing 2019 levels by about nine points. So we're only assuming a very very small impact maybe a point a little bit a little bit less of that coming back into the into the 2024 results and then.

Patrick: And then from an ADR perspective is just really modest growth across <unk>.

Jeff Vellati: My first one, Jeff, you briefly touched on the feedback you had been receiving from your large or top shareholders. Can you just give us a little bit more color on what specifically the feedback has been? Sure, I mean, Michelle and I, there's not a day that goes by where we're not talking to our large shareholders, and the feedback consistently has been from them, and I'm sure we'll be on the phone with many of them this afternoon, is that they're generally supportive of the risks, the asymmetrical risks that are out there that we've been talking about that our board has objected to and certainly would want to see How would you break that out between... international and domestic?

Patrick: Across the globe, we continue to see ADR trail the rate of inflation in the U S by three points in a couple of point internationally as well.

Patrick: And we are still very limited new supply environment.

Patrick: Economy, and mid scale, which generally favors pricing and overall revpar growth is highly correlated to GDP and that still expected to grow 2% to 3% and then finally I felt fundamentals remained strong despite.

Patrick: Despite kind of the headlines that we still see our middle income cohorts consumers.

Patrick: <unk> latest faster than the rate.

Patrick: Then the ADR.

Patrick: We're seeing savings still elevated probably about 30% versus their pre pandemic levels and unemployment still remains really low and im very importantly, I'd say the intent to travel and the prioritization of travel spend continues to increase and we think we were just looking at on a recent survey by IC that showed 60% of our respondents.

Michelle Allen: And again, you know that you expect a sizable acceleration, certainly I wouldn't say January for domestic and domestic hotels, especially economy and mid-scale, have been spectacular. You know, what's... I guess what you mentioned about what drives that acceleration domestically, but what are your expectations for international hotels to get to those numbers? Thank you. Sure, Patrick.

Patrick: Becky.

Patrick: Expecting to take one to four additional trips this year. So that's pretty meaningful of course, we're not seeing any of that any of that in the January results, but like I said that is that that is the toughest comp we have year over year can you put it all together and with the international we see multiple paths to that two to three year full year assumption, 2% to 3%.

Michelle Allen: I would say international is definitely going to grow faster than the U.S. in the full year, and we see that in January as well, right? International is up about 4%, and the domestic system is certainly down. January's results were not a surprise to us, given how difficult the comps were this year. January last year, WebPAR was up 6%, so it was always going to be our most difficult month to compare against. And then, as you move throughout the quarters, the comp gets progressively easier.

Patrick: Our assumption.

Speaker Change: Okay Michele thank you for the detail I'm all set.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Michael Bellisario with Baird. Please go ahead.

Michael Joseph Bellisario: Thanks, everyone. Good morning.

Michael Joseph Bellisario: For.

Michael Joseph Bellisario: First question just can you help us understand what is the FTC asking for how long is the list.

Michael Joseph Bellisario: Maybe any examples on <unk>.

Michael Joseph Bellisario: Customer facing our franchisees banking type questions and request would be helpful.

Michelle Allen: By the end of the quarter in March, I think WebPAR had only grown 1%. So we start at 6%, we go all the way down to 1%, and then obviously, as you move out of the first quarter, the comps get tremendously easier for the remainder of the year. So when we think about the full-year forecast at 2% to 3%, specifically answering your question with respect to domestic, we're expecting really three movements. We're expecting to see some benefits from the infrastructure pickup. That's the continued momentum we have coming out of 2023, and we know new projects are getting approved every day. We're also expecting to see some impact from occupancy tailwinds. We're still trailing 2019 levels by about 9 points, so we're only assuming a very small impact, maybe a point, a little bit less of that coming back into the 2024 results. And then from an ADR perspective, it's just really modest growth across the globe. We continue to see ADR trail the rate of inflation in the U.S. by 3 points and a couple of points internationally as well, and we're still in this very limited new supply environment in economy and mid-scale, which generally favors pricing.

Michael Bellisario: Sure.

Michael Bellisario: List is long Michael.

Complying expeditiously with the second request, which we predicted all along would occur and which happens in less than as we said 1% of FTC reviews and of course, we're also working with four state Attorney Generals, who we mentioned who are also now investigating it it is a tremendous effort.

It has over 300 different work streams and data requests generated by a 44 page letter that we received from them.

Michael Bellisario: Boy in terms of examples Michele can you can you think of a good one.

Michael Bellisario: From your side.

Michele Allen: Yeah, I, most certainly Ken I'm living it every day maybe.

Michele Allen: Maybe just to give some flavor one of the 300 work streams is asking for a listing of every bid we've ever provided for any franchisee franchise service and that would be they want it over the past five years. They want it by brand must include a bunch of details, including whether there was a prior brand affiliation.

Michele Allen: Across the industry the details of each stage of the negotiation so.

Michele Allen: So the initial interim and final bids for each deal is so broad is asking for all factors considered in establishing the pricing for those bids and then our cost around those negotiating activities, whether whether those costs are fixed or variable. The part of the chain scale hotels switched to who we were competing against on and on and on.

Michelle Allen: And overall, WebPAR growth is highly correlated to GDP, and that's still expected to grow 2% to 3%. And then finally, I said fundamentals remain strong. Despite the headlines, we still see our middle-income cohort consumers growing wages faster than ADR growth. We're seeing savings still elevated, probably about 30% versus their pre-pandemic levels, and unemployment still remains really low.

Michele Allen: That's one of the 300 work streams multiple parts.

Michele Allen: And that one request, though as Jeff Mike.

Jeff: It's a tremendous effort.

Speaker Change: That's helpful. And then just my follow up maybe a clarification on the <unk>.

Speaker Change: Pending commentary.

Speaker Change: Are you putting more.

Speaker Change: More dollars into the same number of deals or are you.

Speaker Change: Having to put.

Michelle Allen: And very importantly, I'd say the intent to travel and the prioritization of travel spend continues to increase. And we were just looking at a recent survey by iSeats that showed 60% of our respondents are expecting to take one to four additional trips this year. So that's pretty meaningful. Of course, we're not seeing any of that in the January results, but like I said, that is the toughest comp we have year over year.

Speaker Change: More dollars into more deals and then is it really just echo or is that across the brand portfolio. Thank you.

Speaker Change: Sure when we look at the 'twenty 'twenty four budget versus 2023, it really is echo.

Speaker Change: And and.

Speaker Change: We did see the increase in 2023 versus our budget and that's where that's where we saw an opportunity to invest more heavily in the business.

Speaker Change: We did have.

Speaker Change: We did have over 500 hotels that we opened opened this year, but I would say more importantly, it's the type of hotels, we're bringing into the system and the type of hotels that were bringing into the pipeline.

Michelle Allen: So when we put it all together and with the international data, we see multiple paths to that 2% to 3% full-year assumption. Okay, Michelle, thank you for the detail. I'm all set.

Michelle Allen: Thank you. Thank you. Our next question comes from Michael Bellisario with Bayard. Please go ahead. Thanks, everyone. Good morning.

Speaker Change: We grew our myths about pipeline and another 6%. This year a good part of that is the ability to use key money to attract those hotel owners into the system. We're also gaining more exposure to top 25 msas in la.

Jeff Vellati: First question, just to help us understand what the FTC is asking for, how long is the list? Maybe any examples of customer-facing or franchisee-facing type questions and requests would be helpful. Sure. The list is long, Michael.

Line with our strategy of increasing our footprint.

And higher Revpar and fee par markets and brands until this year we added.

Jeff Vellati: We are complying expeditiously with this second request, which we predicted all along would occur and which happens in less than, as we said, 1% of FTC reviews. And, of course, we're also working with four state attorney generals who we mentioned who are also now investigating it. It is a tremendous effort. It has over 300 different work streams and data requests generated by a 44-page letter that we received from them. Boy, in terms of examples, Michelle, can you think of a good one from your side? Yeah, I most certainly can. I'm living it every day.

Speaker Change: We added cities like Chicago, San Diego Phoenix for example, and we're able to do that because we are deploying more more more dollars per key and those high revpar markets.

Speaker Change: And then and then I'd also say, we are putting a little bit of money to work.

Speaker Change: And in the existing system to improve the quality of the product and franchisee engagement and franchisee retention. One example, if we doubled the number of renovated rooms through our capital support programs, including David where we renovated nearly 5000 rounds. So.

Speaker Change: So we're doing all of this while targeting above whack returns, so more hotels, but but probably more impactful would be the higher higher fee part hotels coming into the system.

Michelle Allen: Maybe just to give some flavor, one of the 300 work streams is asking for a listing of every bid we've ever provided for any franchise, the franchise service. And that would be, they want it for the past five years. They want it by brand.

Speaker Change: Helpful. Thank you.

Speaker Change: Thank you thanks, Mike.

Speaker Change: Thank you. Our next question comes from Danny Assad with Bank of America. Please go ahead.

Danny Assad: Hi, good morning, Jeff and Michelle.

Danny Assad: I just wanted to touch on the.

Danny Assad: The three year EBITDA CAGR target of seven to 10 through 2026.

Michelle Allen: It must include a bunch of details, including whether there was prior brand affiliation across the industry, and the details of each stage of the negotiation, such as the initial, interim, and final bids for each deal. It's so broad, it's asking for all factors considered in establishing the pricing for those bids, and then our costs around those negotiating activities, whether those costs are fixed or variable, the part of the chain scale that the hotel switched to, who we were competing against, on and on and on. That's just one of the 300 work streams.

Danny Assad: So if EBITDA is going to grow lets call it 5% to 6% for this year can you help us piece the parts of the business that would help drive the acceleration from the $5 to six to seven to 10 kind of for the full three year.

Danny Assad: Period.

Danny Assad: Yes.

Danny Assad: Sure.

Speaker Change: So we ended 2023 with 6% I think where we're expecting to get the 6% to 8% in 'twenty 'twenty four and then and then that six to eight moves the 7% to 10%.

Speaker Change: Over the plan period.

Speaker Change: So if you just think about where we ended in.

Speaker Change: 2023, it's really only one additional point at the low end, 6% to 7% and then.

Jeff Vellati: So multiple parts in that one request. So, as Jeff points out, it's a tremendous effort, and very helpful. And then, just my follow up, maybe a clarification on the spending commentary. Are you putting more dollars into the same number of deals, or are you having to put more dollars into more deals? And then, is it really just Echo, or is it across the brand portfolio?

Speaker Change: Q and have probably at the mid point moving from six inch.

Speaker Change: In 2023 two.

Speaker Change: Okay.

Speaker Change: At the midpoint of the 7% to 10% growth again, three three categories. Danny just the first one will start with us.

Michelle Allen: Thank you. Sure. When we look at the 2024 budget versus 2023, it really is ECHO, but we did see an increase in 2023 versus our budget, and that's where we saw an opportunity to invest more heavily in the business. We did have over 500 hotels that we opened this year, but I would say, more importantly, it's the type of hotels we're bringing into the system and the type of hotels that we're bringing into the pipeline. You know that we grew our miscount above pipeline by another 6% this year. A good part of that is the ability to use key money to attract those hotel owners into the system. We're also getting more exposure in the top 25, in line with our strategy of increasing our footprint in higher rep par and fee par markets and brands.

Speaker Change: Net room growth, we have a high degree of visibility into this number we know the pipeline has been expanding up 10% year over year, we've got echo starting to come into the system. This year you can see in our IP some of the progress that we're making there.

Speaker Change: And we've got momentum now for three consecutive years on the retention rate has improved to a total of 80 basis points over those three years. So we feel confident that we're going to continue to be able to improve.

Speaker Change: Retention, yet we're only assuming another half a point of net room growth at the midpoint of the CAGR right. So net room growth in 2023, with three 5% and 7% to 10% CAGR, it's moving to 4% at the midpoint right is a 3% to 5%. So that's a pretty conservative estimate given the multiple avenues.

Speaker Change: Our growth I, just laid out there on the Revpar side, our assumption is.

Michelle Allen: This year, we added cities like Chicago, San Diego, and Phoenix, for example, and we're able to do that because we're deploying more dollars per key in those high rep par markets. Then I'd also say we are putting a little bit of money to work in the existing system to improve the quality of the product and franchisee engagement and franchisee retention. One example is that we doubled the number of renovated rooms through our capital support programs, including Phase In, where we renovated nearly 5,000 rooms.

Speaker Change: Is 2% to 3% growth over the plan period, that's consistent with industry projections and with historical performance, but that growth might not be linear over the years.

Speaker Change: Well, we are expecting it would average out over the plan period.

Speaker Change: And then there is additional opportunity when you put that assumption into the context of nine points of occupancy still to be recovered versus pre COVID-19 levels. The fact that ADR and our segments lagged the rate of inflation. The fact that our segments had limited new supply coming in and that generally favor today.

Michelle Allen: So we're doing all of this while targeting above WAC returns. So more hotels, but probably more impactful, the higher fee par hotels. Helpful.

Speaker Change: Good pricing power and.

Speaker Change: And then at the 2% to 3% assumption you can see that not all of that upside is reflected again, a pretty conservative approach that built in cushion and then libre next our pipeline to concentrate more heavily on the higher chain scale. So those properties are coming in at higher Revpar growth both in the U S and internationally and then third apart.

Jeff Vellati: Thank you. Thank you. Thanks, Mike.

Operator: Thank you. Our next question comes from Danny Asad with Bank of America. Please go ahead.

Michelle Allen: Hi Jeff and Michelle. I just wanted to touch on the three-year EBITDA CAGR target of seven to 10 through 2026. So if EBITDA is going to grow, you know, let's call it five to 6% for this year, can you help us piece together the parts of the business that would help drive the acceleration from the five to six to seven to 10, kind of for the full three-year period? Sure.

Speaker Change: From the standard drivers, there's upside from royalty rate expansion and thats going to come from Echo from the pipeline. We just talked about it's going to come from scaling our footprint internationally, including.

Speaker Change: Including some COVID-19 fee discounts for on border properties back in the thick of the pandemic that that are start start to expire last year.

Michelle Allen: So, we ended 2023 with 6%. I think we're expecting to get to 6% to 8% in 2024. And then that 6% to 8% moves to 7% to 10% over the planned period. So, if you just think about where we ended up in 2023, it's really only one additional point at the low end, 6% to 7%. And then 2.5%, probably at the midpoint, moving from 6% in 2023 to 8.5% at the midpoint of the 7% to 10% growth. Again, three categories, Danny.

Speaker Change: And you can already see some of that in the 30 basis point improvement, we're seeing internationally in 2023 and the royalty rate and we've also made large investments that Jeff mentioned to capture the infrastructure opportunity that we're already seeing benefits from that category up double digits on the ancillary side of the house, we're coming into the plan, having grown those fee streams, 6% in 2020.

Speaker Change: So there is not too much of a stretch here to get to the 8% we're expecting in the plan and there are multiple opportunities there as well. So all of these initiatives are already underway, but we have a good line of sight into each of them and the costs are so many levers we're really not dependent on one any one single opportunity and therefore, we have a high degree.

Michelle Allen: The first one we'll start with is net room growth. We have a high degree of visibility into this number. We know the pipeline's been expanding by 10% year over year. We've got echoes starting to come into the system this year.

Speaker Change: We are confident that enough will align with our predictions.

Speaker Change: And so that the midpoint is not beyond our reach even if you don't work out as expected.

Speaker Change: That's super helpful. Thank you so much.

Speaker Change: Yes.

Thank you. Our next question comes from in Zaffino with Oppenheimer. Please go ahead.

Michelle Allen: You can see in our IP some of the progress that we're making there. And we've got momentum now for three consecutive years on the retention rate having improved a total of 80 basis points over those three years. So, we feel confident that we're going to continue to be able to improve retention. Yet, we're only assuming another half a point of net room growth at the midpoint of the CAGR, right?

Zaffino: Hi, Thank you.

Zaffino: I picked up a little on the comment on the infrastructure Bill can you maybe tell us how that plays out.

Zaffino: Going to see anything yet.

Ian Zaffino: What areas is it mainly extended is it select where are you seeing that.

Zaffino: And then are you also may be seeing some trends in leisure related to that as well or is it pretty well.

Zaffino: Predominantly midweek.

Speaker Change: It is predominantly midweek.

Speaker Change: And.

Michelle Allen: So, net room growth in 2023 was 3.5%. And in the 7% to 10% range, CAGR is moving to 4% at the midpoint, right, at 3% to 5%. So, that's a pretty conservative estimate, giving me multiple avenues of growth I just laid out there. On the REPPAR side, our assumption is 2% to 3% growth over the planned period. That's consistent with industry projections and with historical performance. But that growth might not be linear over the years. We are expecting it to average out over the planned period, and then there's additional opportunity when you put that assumption into the context of nine points of occupancy still to be recovered versus pre-COVID levels, and the fact that ADR in our segments lags the rate of inflation.

Speaker Change: We're absolutely seeing.

Speaker Change: <unk> benefit and it's not only extended its also transient.

Speaker Change: That is when you look at the top six states of where this infrastructure spending will be spent and you think about a state like Texas, where we have 700 hotels I mean, those are days and those are our super eight so those are <unk>.

Speaker Change: Are really beginning to benefit and gain share when you look at some of the chips acts in terms of how that.

Speaker Change: Spending is being spent I mean, there are dozens of hotels and they're not only extended stay hotels around the Intel site in Chandler, Arizona or the Samsung plant being.

Speaker Change: Bill we've talked about in Tyler, Texas, which is a $17 billion bill with 2000 jobs over the next five or so years, and we're placing millions of dollars of contracted business into.

Michelle Allen: The fact that our segments have limited new supply coming in, and that generally favors pricing power. And then at the two to three percent assumption, you can see that not all of that upside is reflected. Again, a pretty conservative approach that builds in cushion.

Speaker Change: Into both transient hotels in Newbuild hotels, like our Hawthorn suites, which is extended until the key tenant nearby but I mean, the investment that we're making that we're so excited about is is first and foremost we've got we feel the best field sales team out there we've increased our sales force that's selling to these infrastructure accounts.

Michelle Allen: And then we've remixed our pipeline to concentrate more heavily on the higher chain scale, so those properties are coming in at higher rep parcels, both in the U.S. and internationally. And then third, apart from the standard drivers, there's upside from royalty rate expansion. And that's going to come from ECHO, from the pipeline we just talked about. It's going to come from scaling our footprint internationally, including some COVID fee discounts for onboarded properties back in the thick of a pandemic that were starting to expire last year. And you can already see some of that in the 30 basis point improvement we're seeing internationally in 2023 in the royalty rate. And we've also made large investments that Jeff mentioned to capture the infrastructure opportunity that we're already seeing benefits from with that category up double digits.

Speaker Change: By 25%. So that's first and foremost secondly, we are doing a lot on the technology front. We've got we think the best ITT him out there our teams have rolled out some really robust technology. That's identified 3600 projects within 10 miles of markets, which have much.

Speaker Change: <unk> transient and extended stay Wyndham hotels, so far.

Speaker Change: And that's just a sliver of the 40000 infrastructure projects that have been announced to date.

Speaker Change: The federal government, including we're really big on the federal rail infrastructure Bill that we're our teams are following that is estimated at a $26 billion spend dozens of new accounts already and growing both.

Speaker Change: On the East coast and the West Coast.

Michelle Allen: And on the ancillary side of the house, we're coming into the plan having grown those fee streams by 6% in 2023. So there's not too much of a stretch here to get to the 8% we're expecting in the plan. And there are multiple opportunities there as well. So all of these initiatives are already underway. So we have a good line of sight into each of them.

Speaker Change: And we're excited today about the announcement on the airport terminal grants to I think its 40 40 plus states.

Speaker Change: So yes, we're excited it's.

Speaker Change: It's early days and but we are seeing a double digit uptick not only in infrastructure bookings, but more importantly leads from those projects.

Michelle Allen: And because there are so many levers, we're really not dependent on any single opportunity. And therefore, we have a high degree of confidence that enough will align with our predictions. So the midpoint is not beyond our reach, even if things don't work out as expected.

Speaker Change: With a 20% increase in new accounts, so far this year.

Speaker Change: Okay. Thank you mentioned as a follow up maybe a little bit higher level, but we're hearing a lot about echo, but then we're hearing a lot about sort of moving upscale a little bit so.

Jeff Vellati: Super helpful. Thank you. Thank you. Our next question comes from Ian Zuffino with Oppenheimer. Please go ahead.

Speaker Change: If we look out three years or something along those lines.

Speaker Change: Snip portfolio mix look.

Jeff Vellati: Hi, thank you. You know, I picked up a lot of comments on the infrastructure bill. Can you maybe tell us how that plays out? You know, have you started to see anything yet? What areas? Is it mainly extended? Is it selective?

Speaker Change: And what type of either M&A do you need to get there.

Speaker Change: Maybe just broadly speaking thank you.

Speaker Change: Yeah sure. So so echo obviously, we'll we'll make up a bigger portion of the of the system as it comes and remember, though it is coming in at a at an accretive revpar two to where we are today.

Jeff Vellati: You know, where are you seeing that? And then are you also maybe seeing some trends in leisure related to that as well, or is it pretty predominantly midweek? It is predominantly midweek, and we're absolutely seeing a benefit. And it's not only extended; it's also transient. I mean, that is, when you look at the top six states where this infrastructure spending will be spent, and you think about a state like Texas, where we have 700 hotels, those are our Days Inns, those are our Super 8s, those are our La Quintas, that are really beginning to benefit and gain share when you look at some of the chip sacks in terms of how that spending is being spent.

Speaker Change: So when we think about our 70% pipeline in the Midscale and above and how that's going to come into the system.

Speaker Change: And then how echo confidence system, obviously will be a lot less dependent on just the economy itself, which has been in a very limited new supply environment for quite a long time.

Speaker Change: Okay.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thanks, Dan.

Speaker Change: Thank you our last question comes from Meredith Jensen with HSBC.

Jeff Vellati: I mean, there are dozens of hotels, and they're not only extended stay hotels around the Intel site in Chandler, Arizona, or the Samsung plant being built we've talked about in Taylor, Texas, which is a $17 billion project with 2000 jobs over the next five or so years. And you know, we're placing millions of dollars of contracted business into both transient hotels and new build hotels like our Hawthorne Suites, which is extended, and the La Quinta nearby. But I mean, the investment that we're making that we're so excited about is, first and foremost, we've got, we feel, the best field sales team out there. We've increased our sales force that's selling to these infrastructure accounts by 25%. So that's first and foremost. Secondly, we are doing a lot on the technology front. We've got, we think, the best IT team out there.

Meredith Jensen: Good morning, Thanks for taking my question.

Meredith Jensen: I'm wondering I know you've spoken about the growth possibilities and.

Meredith Jensen: And the ancillary fee streams I think on page 19, Theres, a nice discussion of it could you talk just a little bit more about the co brand credit card opportunity and some of the other partnerships you're looking into so maybe we can.

Speaker Change: <unk> build that out a little bit more because I know, there's a lot a lot there. Thanks.

Speaker Change: Sure.

Speaker Change: Meredith, we see multiple opportunities.

Speaker Change: That are currently underway for which again, we have a really good line of sight for ancillary fee stream to name a few we're working working to tap the significant potential in the credit card suite of products. That's going to include new products, it's going to include.

Speaker Change: Expansion internationally right now the card is U S centric, so theres a lot of opportunity as we think about the potential to leverage Wyndham rewards and the Wyndham rewards loyalty across.

Jeff Vellati: Our teams have rolled out some really robust technology that's identified 3,600 projects within 10 miles of markets, which have multiple transient and extended stay Wyndham Hotels so far. And that's just a sliver of the 40,000 infrastructure projects that have been announced to date by the federal government, including We're really big on the federal rail infrastructure bill that our teams are following. That's estimated at a $26 billion spend.

Speaker Change: Across the 95 countries and with me in which we operate on the partnership opportunity side I won't get into specifics for competitive reasons, but again, we're working to leverage our global footprint and expand beyond just again the U S centric.

Speaker Change: Partnerships that we have and the house today and then of course, we're going to continue to focus on our relationship with P&L and helping them grow their business.

Jeff Vellati: Dozens of new accounts are already open and growing both on the East Coast and the West Coast. And, you know, we're excited today about the announcement on the airport terminal grants to, I think, 40-plus states. So yeah, we're excited. It's early days, but we are seeing a double-digit uptick, not only in infrastructure bookings, but more importantly, leads from those projects, with a 20% increase in new accounts so far this year. Okay, thank you.

Speaker Change: Clothing through the use of the Wyndham rewards.

Speaker Change: <unk> currency. So there's there's many levers here on the ancillary side.

Speaker Change: Super Thanks Juan.

Speaker Change: Quick expansion on the international side in terms of the direct franchise business, which I see again the presentations great on page 13. It talks about the increase in the direct franchise business you know rising again.

Jeff Vellati: And then just as a follow-up, maybe a little bit higher level, but you know, we're hearing a lot about Echo, but then we're hearing a lot about sort of moving upscale a little bit. So, you know, if we look out about three years or something along those lines, you know, how does the portfolio mix look? You know, and what type of either M&A that you need to get there? Maybe just broadly speaking.

Speaker Change: Is there more to.

Speaker Change: To be done there or how much how much left of the transition from them Master franchise to direct.

Speaker Change: And should we build in any particular changes to fees, they are and and maybe just a little on China too. If you don't mind. Thanks, so much.

Speaker Change: Yes, I'll start with China, and then maybe you could talk about how to model. It Michelle I mean, we are going to continue Meredith to be seeing more direct franchising in terms of percentage growth I remember it is a.

Jeff Vellati: Thank you. Yeah, sure. So ECHO obviously will make up a bigger portion of the system as it comes in. But remember, though, it is coming in at an accretive rev par to where we are today.

It is I think Michel can correct me here, but it's a it's about a third of our China system, but it has been growing.

Michelle Allen: So when we think about our 70% pipeline in the mid-scale and above, and how that's going to come into the system, and then how ECHO comes into the system, obviously, it will be a lot less dependent on just the economy itself, which has been in a very limited new supply environment for quite a long time. All right, thank you very much. Thanks, Ian. Thank you. Our last question comes from Meredith Jensen with HSBC. Good morning.

Speaker Change: Double digit as it did this quarter as it did this year and it's growing as.

Speaker Change: Michelle has pointed out at three times the license fees.

Speaker Change: Our master.

Speaker Change: So going forward I think we'll continue we're not selling master license agreements any longer I mean that was something that we did.

Speaker Change: 20 years ago, our growth and if you take China as an example is much faster on the direct franchising basis than it is on the master.

Michelle Allen: Thanks for taking my question. I wondered, I know you've spoken about the growth possibilities and the ancillary fee streams. I think on page 19, there's a nice discussion of that.

Speaker Change: I think our overall net room growth in China was 6% it was something like 2% from the master and 13%.

Michelle Allen: Could you talk to us a little bit more about the co-brand credit card opportunity and some of the other partnerships you're looking into? So maybe we can build that out a little bit more because I know there's a lot, a lot there. Thanks.

Speaker Change: The direct and.

Speaker Change: Consistent elsewhere, and we don't have a lot of masters left but our focus is really.

Speaker Change: Direct what would you add to that Michele.

Yes, Jeff I think you've covered it all I mean at three times, the royalty rate coming coming out of the direct franchising business versus the master franchising business and.

Michelle Allen: Meredith, we see multiple opportunities that are currently underway for which, again, we have a really good line of sight for the ancillary fee stream. To name a few, we're working to tap the significant potential in the credit card suite of products. That's going to include new products and expansion internationally. Right now, the card is U.S.-centric, so there's a lot of opportunity as we think about the potential to leverage Wyndham Rewards and the Wyndham Rewards loyalty program across the 95 countries in which we operate.

Michele Allen: The vast majority of the growth in China coming out of that direct franchising business, we're going to see royalty rate expansion for sure you could see that already showing up in some of the 30 basis point improvement in 2023, and we will continue to see that.

Speaker Change: <unk> as we as we move forward.

Speaker Change: Overall I would say in addition to moving from Masters to direct the other thing we're been as benefiting from international is just that is just scaling the footprint. So that we can continue to keep.

Michelle Allen: On the partnership opportunity side, I won't get into specifics for competitive reasons, but again, we're working to leverage our global footprint and expand beyond just the U.S.-centric partnerships that we have in the house today. And then, of course, we're going to continue to focus on our relationship with T&L and helping them grow their business, including through the use of the Wyndham Rewards points currency. So, there are many levers here on the ancillary side.

Speaker Change: To take advantage of pricing opportunity for brands that have scale in specific regions.

Speaker Change: That's super helpful. Thanks, again for the color.

Speaker Change: Thanks Meredith Meredith.

Meredith Jensen: Thank you at this time I will turn the floor back over to Jeff <unk> for closing remarks.

Jeff: Thank you Todd and thanks, everyone for your questions for your interest in Wyndham hotels and resorts.

Jeff: Most importantly, your support and our ability to realize our future growth potential.

Michelle Allen: Super. Thanks. One quick expansion on the international side in terms of the direct franchise business, which I see, again, the presentation's great. On page 13, it talks about the increase in the direct franchise business, you know, rising again. Is there more to be done there? Or how much left of the transition from the master franchise to direct? And should we build in any particular changes, increases to fees there?

Jeff: Michele Matt and I look forward to talking to and seeing many of you in the weeks and months ahead, we wish everyone. A happy Presidents' day weekend coming up and we look forward to seeing you soon.

Thank you. This does conclude today's Wyndham hotels, <unk> resorts fourth quarter and full year 2023 earnings conference call.

Speaker Change: Please disconnect. Your line at this time and have a wonderful day.

Jeff Vellati: And maybe just a little on China, too, if you don't mind. Thanks so much. Yeah, I'll start with China, and then maybe you could talk about how to model it, Michelle.

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Jeff Vellati: I mean, we are going to continue, Meredith, to be seeing more direct franchising in terms of percentage growth. Now, remember, it is, I think Michelle could correct me here, but it's about a third of our China system, but it has been growing double digits, as it did this quarter, as it did this year. And it's growing, as Michelle has pointed out, at three times the license fees of our master. So, you know, going forward, I think we'll continue. We're not selling master license agreements any longer. I mean, that was something that we did.

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Jeff Vellati: 15-20 years ago, our growth, and if you take China as an example, is much faster on the direct franchising basis than it is on the master. I think our overall net room growth in China was 6%; it was something like 2% from the master and 13% from the direct, and that's consistent elsewhere. We don't have a lot of masters left, but our focus is really... Direct.

Speaker Change: Oh.

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Michelle Allen: What would you add to that, Michelle? Yeah, Jeff, I think you've covered it all. I mean, at three times the royalty rate coming out of the direct franchising business versus the master franchising business, and the vast majority of the growth in China coming out of that direct franchising business, we are going to see royalty rate expansion for sure. You can see that already showing up in some of the 30 basis point improvement in 2023, and we'll continue to see that show up as we move forward. Overall, I'd say in addition to moving from masters to direct, the other thing we're benefiting from international is just scaling the footprint so that we can continue to take advantage of pricing opportunities for brands that have scale in specific.

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Michelle Allen: That's super helpful. Thanks again for the color. Thanks, Meredith. Thank you. At this time, I will turn the floor back over to Jeff Belotti for closing remarks. Thank you, Todd, and thanks, everyone, for your questions, for your interest in Wyndham Hotels and Resorts, and, most importantly, for your support and our ability to realize our future growth potential. Michelle, Matt, and I look forward to talking to and seeing many of you in the weeks and the months ahead. We wish everyone a happy President's Day weekend, and we look forward to seeing you soon. Thank you. This does conclude today's Wyndham Hotels and Resorts fourth quarter and full year 2023 earnings conference call. Please disconnect your line at this time and have a wonderful day.

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Speaker Change: [music].

Michelle Allen: Thank you for watching! www.thevenusproject.com and ["Solitude in the Heheh Banner"] Beverly Hills Criminal Court A definition of Office A definition of an Office, Athens, Santa Catrina Office, and more. I'm your host, Steve Bell. Thanks for watching and The Hollywood Reporter, and more. I'm Stephen Grambling, and I'll see you next time. I'm Anthony Powell, and I'll see you next time. I'm Stephen Grambling, and I'll see you next time, www. WyndhamHotels.com. Thanks for watching! www.wyndhamhotels.com Outro Music Diane Ambrose, office staff, and Christinecular, Robert Drummond, and Evanna Wilson Thank you for joining us. London. Goodbye, and Stephen Grambling, Michael Bellisario, Anthony Powell, Wyndham Hotels, and Anthony Powell, Michael Bellisario, Anthony Powell, and Stephen Grambling, mehhh Spooky music, Written and Directed by Zachary Katz and many, much more, and Stephen Grambling, Michael Bellisario, Anthony Powell, Wyndham Hotels.

Hum.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Mhm.

Speaker Change: [music].

Speaker Change: Hmm.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Uh-huh.

Speaker Change: [music].

Speaker Change: Mhm.