Q1 2024 Wyndham Hotels & Resorts Inc Earnings Call

Operator: Please stand by; we're about to begin. Welcome to the Wyndham Hotels and Resorts first quarter 2024 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.

Please standby we're about to begin.

Welcome to the Wyndham hotels and resorts first quarter 2024 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 to.

Operator: Lastly, if you should require operator assistance, please press star 1. I would now like to turn the call over to Mr. Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead, sir.

Lastly, if you should require operator assistance. Please press star one.

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

Matt Capuzzi: Thank you, operator. Good morning, and thank you for joining us. With me today are Geoff Ballotti, our CEO, and Michele Allen, our CFO and head of strategy. 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.

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 and head of strategy.

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

Matt: And any subsequent reports filed with the SEC.

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

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 that Wyndham hotels Dot com.

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

Matt Capuzzi: 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 and on our social media channels in the future. Accordingly, we encourage our investors to monitor our website and our social media channels in addition to our press releases, filings submitted with the SEC, and any public conference calls or webcasts. With that, I will turn the call over to Geoff.

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

Matt: We may continue to provide supplemental information on our website and on our social media channels and the future.

Matt: Accordingly, we encourage our investors to monitor our website at <unk>.

Matt: Our social media channels. In addition to our press releases filings submitted with the S. E. T and then he public conference calls our webcast.

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

Geoffrey A. Ballotti: Thanks, Matt, and thanks, everyone, for joining us this morning. Despite a challenging RevPAR environment here in the United States, we're pleased to report another strong quarter of progress on our executions, openings, retention, and net room growth around the world. In addition, late last week, our board increased our share repurchase authorization by $400 million, demonstrating its confidence in our ability to generate significant cash flow and its commitment to continued shareholder returns in the year ahead.

Jeff: Thanks, Matt and thanks, everyone for joining us this morning, despite a challenging revpar environment here in the United States. We're pleased to report another strong quarter of progress on our executions openings retention and net room growth around the world in.

Jeff: In addition, late last week, our board increased our share repurchase authorization by $400 million demonstrating its confidence in our ability to generate significant cash flow and its commitment to continued shareholder returns in the year ahead.

Geoffrey A. Ballotti: We opened over 13,000 rooms globally, 27% more rooms than we opened last year, our largest first quarter of room openings since going public nearly six years ago. We increased our franchisee retention rate by 30 basis points versus the same time last year to 95.6%, we delivered a record 3.7% increase in net room growth, and most importantly, for the 15th consecutive quarter, we grew our development pipeline by 8% to a record 243,000 rooms.

Jeff: We opened over 13000 rooms globally, 27% more rooms than we opened last year, our largest first quarter room openings since going public nearly six years ago.

Jeff: We increased our franchisee retention rate by 30 basis points versus the same time last year.

Jeff: 95, 6%.

Jeff: We delivered a record 3.7% increase in net room growth.

Jeff: And most importantly for the 15th consecutive quarter, we grew our development pipeline by 8% to a record 243000 runs.

Geoffrey A. Ballotti: Here in the United States, we again saw both sequential and year-on-year improvement, driven by 3.3% system growth and a more revenue-intense mid-scale and above segments. We added 50 hotels domestically, including 11 hotel conversions under the newly created Waterwalk Extended Stay by Wyndham Brandt, located in key markets such as Charlotte, Raleigh, Tucson, and Jacksonville. Water Walk by Wyndham adds higher-fee hotels to our system while expanding our portfolio into the upscale extended stay segment, complementing our new construction Echo Suites and mid-scale Hawthorne Suites extended stay brands.

Jeff: Here in the United States, we again saw both sequential and year on year improvement driven by 3.3% system growth and the more revenue intense midscale and above segments. We added 50 hotels domestically, including 11 hotel conversions under the newly created water work extended stay by wind.

Jeff: <unk> brand located in key markets, such as Charlotte Raleigh, Tucson in Jacksonville.

Jeff: Water walked by Wyndham adds higher D par hotels to our system, while expanding our portfolio into the upscale extended stay segment complementing our new construction echo suites, and Midscale Hawthorn suites extended stay brands.

Geoffrey A. Ballotti: Internationally, we increased net rooms by 1% sequentially and by 8% versus prior year. Our Latin America team drove over 2% of sequential net room growth and 6% of net room growth versus prior year, adding significant conversions from competitive brands like the 600-room Wyndham San Paolo Convention Center Hotel in the financial capital of Brazil, along with a new Wyndham Steps from the renowned shopping centers of Paraguay's capital city. Our EMEA team, which added 49% more rooms to its development pipeline than they did in the first quarter of 2023, once again grew net rooms sequentially and by 12% versus the prior year, adding aspirational hotels like the Ramadas Apaka Thermal Resort in Turkey and the new Wyndham H2 Hotel in downtown Vienna, Austria.

Jeff: Internationally, we increased net rooms by 1% sequentially and by 8% versus prior year.

Jeff: Our Latin America team drove over 2% of sequential net room growth and 6% of net room growth versus prior year, adding significant conversions from competitive brands like the 600 room Wyndham San Paolo Convention Center Hotel and the financial capital of Brazil, along with the new trip by Wyndham I assume.

Jeff: Phone steps from the renowned shopping centers are Paraguay as capital city.

Jeff: Our EMEA team, which added 49% more rooms to its development pipeline than they did in the first quarter of 2023. Once again grew net rooms sequentially and by 12% versus prior year, adding aspirational hotels like there are modest the pocket thermal resort in Turkey, and the new trademark by Wyndham H two O.

Jeff: Gel in downtown Vienna, Austria.

Geoffrey A. Ballotti: Last month, I had the opportunity to visit with our teams in Singapore and Shanghai and join the signing ceremonies for 27 of the over 60 hotel contracts awarded to owners this quarter across Asia-Pacific. Our Southeast Asia and Pacific Rim region, which increased rooms by 2% sequentially and by 16% versus last year, entered several new markets, including Pattaya, a growing leisure destination in Thailand. In January, we opened the Wyndham Jontien, an upscale new construction hotel and the first of another eight hotels we expect to open in the Pattaya market over the next five years. And our direct franchising team in China, which grew net rooms 1% sequentially and by 13% versus the prior year, also had another strong quarter of openings and executions, awarding 38 new contracts to owners, over three times what they awarded last year Globally, our teams awarded 171 contracts for approximately 24,000 room additions.

Jeff: Last month I had the opportunity to visit with our teams in Singapore, and Shanghai and joined the signing ceremony for 27 of the older 60 hotel contracts awarded to owners this quarter across Asia Pacific.

Jeff: Our South East Asia, and Pacific Rim region, which increased rooms by 2% sequentially and by 16% versus last year entered several new markets, including the tire.

Jeff: Growing leisure destination in Thailand in January we opened the Wyndham John T N and upscale new construction hotel and the first of another eight hotels, we expect to open end up Italian market over the next five years and her direct franchising team in China, which grew net rooms, 1% sequentially and by third.

Jeff: 14% versus prior year also had another strong quarter of openings and executions awarding 38, new contracts to owners over three times, what they awarded last year in the first quarter and opening new construction and conversion hotels across the country like the Wyndham Dalian Gen two and upper ups.

Jeff: Gail five Star Hotel in the City Center of Hainan Province.

Jeff: Globally, our teams awarded 171 contracts for approximately 24000 room additions.

Geoffrey A. Ballotti: Domestic contracts signed in the first quarter were 50% higher than last year for our mid-scale and above segments, and international Q1 signings increased by 80% year over year. This acceleration of our development activity grew our pipeline to a record 243,000 rooms and nearly 2,000 hotels. Mid-scale and above brands in the pipeline increased 4% to a record 168,000 rooms and now represent nearly 70% of our pipeline. Our domestic pipeline for mid-scale and above brands increased by 4%, and the pipeline for our highest international REVPAR regions of EMEA and Latin America increased by 21%. In the toughest quarterly comp we will face all year, domestic REV PAR finished down 5% compared with 2023.

Jeff: Yes, <expletive> contract signed in the first quarter were 50% higher than last year for our Midscale and above segments and international Q1 signings increased by 80% year over year.

Jeff: This acceleration of our development activity grew our pipeline to a record 243000 rooms, and nearly 2000 hotels mid.

Jeff: Midscale and above brands in the pipeline increased 4% to a record 168000 rooms, and now represent nearly 70% of our pipeline.

Jeff: Our domestic pipeline for Midscale and above brands increased by 4% and the pipeline for our highest international Revpar regions of EMEA and Latin America increased by 21%.

Jeff: And the toughest quarterly comp, we will face all year domestic revpar finished down 5% compared with 2023 domestic.

Geoffrey A. Ballotti: Domestic occupancy finished at 90% of 2019 levels, down 440 basis points from Q1 of 2023, while pricing power remains strong, with ADRs 14% higher than pre-COVID levels, yet still trailing inflation, which has increased 23% over this same period. RevPAR improved 240 basis points from February into March and accelerated into April. Month-to-date through the 20th of April, domestic REV PAR ran 4% ahead of the prior year, benefiting from both the Easter shift to Q1 and weekend demand around the solar eclipse on April 8th.

Jeff: Occupancy finished at 90% of 2019 levels down 440 basis points from Q1 of 2023, while pricing power remains strong with ADR is 14% higher than pre COVID-19 levels, yet still trailing inflation, which has increased 23% over the same period.

Jeff: Revpar improved 240 basis points from February into March and accelerated into April.

Jeff: To date through the 20th of April domestic Revpar ran 4% ahead of prior year benefiting from both the Easter shift to Q1 and weekend demand around the solar eclipse on April eight.

Geoffrey A. Ballotti: And May revenue on the books is pacing 7% higher than it was at the same time last year. International REVPAR increased 14% to the prior year in constant currency, driven by strength in Latin America, where REVPAR increased by 41%, and across EMEA, where REVPAR increased by over 10%.

Jeff: And may revenue on the books is pacing, 7% higher than it was at the same time last year.

Jeff: International Revpar increased 14% to prior year in constant currency driven by strength in Latin America, where revpar increased by 41% and across EMEA, where revpar increased by over 10% and in China, which continues to face deflationary pressures Revpar also increased by over 10.

Geoffrey A. Ballotti: And in China, which continues to face deflationary pressures, REVPAR also increased by over 10% year-over-year, driven by both ADR and occupancy, outpacing STR China REVPAR growth by 700 basis points. Ancillary revenues increased 8% during the first quarter, driven by success from our Blue Thread licensing agreement with Travel and Leisure Group, along with several new product offerings like our paid $95 Wyndham Rewards earner business card, which has garnered acclaim as Forbes Best Business Card for Road Warriors thanks to its automatic diamond status and its ability to earn a best in class eight points for every $1 spent on hotel stays and gas purchases.

Jeff: 10% year over year, driven by both ADR and occupancy outpacing STR, China Revpar growth by 700 basis points.

Jeff: Ancillary revenues increased 8% during the first quarter driven by success from our Blue thread licensing agreement with travel and leisure group along with several new product offerings like our paid 95 dollar Wyndham rewards earned her business card, which has garnered a claim as Forbes best business card for road warriors. Thanks to its.

Jeff: Automatic diamond status and its ability to earn a best in class eight points for every $1 spent on hotel stays and gas purchases.

Geoffrey A. Ballotti: And last week, we launched Wyndham Business to streamline the direct booking process for businesses of all types and all sizes, along with travel planners who are contracting hotel nights for our nation's 15 million infrastructure workers across the United States of America, offering these planners a comprehensive suite of free tools that guarantee their companies a minimum 10% room discount, easy direct billing, and instant group bookings with tailored Wyndham Rewards business to ensure a smooth travel planning process with personalized We anticipate that Wyndham Business will not only drive additional bookings to our select service hotels, but it will also drive additional membership to Wyndham Rewards, USA Today's number one loyalty program for six years running, along with additional cardholders to our suite of co-branded credit card products, providing us a new channel for ancillary fee growth.

Jeff: And last week, we launched Wyndham business to streamline the direct booking process for businesses of all types and all sizes, along with travel planners, who are contracting hotel nights for our nation's 15 million infrastructure workers across the United States of America.

Jeff: Offering these planners a comprehensive suite of free tools that guarantee their company as a minimum 10% room discount.

Jeff: Easy direct billing and instant group bookings with tailored Wyndham rewards business to ensure a smooth travel planning process with personalized support from dedicated sales professionals.

Jeff: We anticipate that Wyndham business will not only drive additional bookings to our select service hotels. It will also drive additional membership to Wyndham rewards USA today's number one loyalty program for six years running along with additional cardholders to our suite of co branded credit card products, providing us a new channel.

Jeff: For ancillary fee growth.

Jeff: Currently offering four distinct credit card products tied to Wyndham rewards in the U S and we see significant opportunities to expand these products globally as Wyndham rewards continues to grow in importance, both domestically and internationally up over 40% since 2019 and up 7% year over year to 100.

Geoffrey A. Ballotti: We're currently offering four distinct credit card products tied to Wyndham Rewards in the U.S., and we see significant opportunities to expand these products globally as Wyndham Rewards continues to grow in importance both domestically and internationally, up over 40% since 2019, and up 7% year over year to 108 million members strong.

Jeff: <unk> and 8 million members strong.

Jeff: Finally, we'd like to thank our franchisees and team members for their unwavering commitment and support over the past months throughout choices failed takeover attempt of our company.

Jeff: Through it all it was no surprise to see Wyndham hotels and resorts selected by Newsweek as one of the 'twenty 'twenty four most trustworthy companies in America.

Geoffrey A. Ballotti: Finally, we'd like to thank our franchisees and team members for their unwavering commitment and support over the past months throughout Choices' failed takeover attempt of our company. Through it all, it was no surprise to see Wyndham Hotels and Resorts selected by Newsweek as one of the 2024 Most Trustworthy Companies in America and as a four-time honoree as one of the 2024 World's Most Ethical Companies by Etho On behalf of our board, we also want to thank our shareholders for their overwhelming support. We're confident in our growth strategy and in our ability to create substantial value both in the short term and in the long term. And with that, I'll now turn the call over to Michele. Okay?

Jeff: And as a four time honoree is one of the 2024 world's most ethical companies by Ethisphere.

Jeff: On behalf of our board, we also want to thank our shareholders for their overwhelming support we're confident in our growth strategy and in our ability to create substantial value both in the short term.

Jeff: And in the long term.

Jeff: And with that 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 first quarter results. I will then review our cash flows and balance sheet, followed by our outlook.

Michelle: Before we begin let me remind everyone that the comparability of our quarterly result is impacted by the timing of our marketing spend as discussed back on our February call.

Michelle: In the first quarter this year marketing fund expenses exceeded revenues by $14 million as expected.

Michele Allen: Thanks, Geoff, and good morning, everyone. I'll begin my remarks today with a detailed review of our first quarter results. I'll then review our cash flows and balance sheet, followed by our outlook. Before we begin, let me remind everyone that the comparability of our quarterly results is impacted by the timing of our marketing fund spend, as discussed back on our February call. In the first quarter of this year, marketing fund expenses exceeded revenues by $14 million, as expected, compared to expenses exceeding revenues by $4 million in the first quarter. To enhance transparency and provide a better understanding of the results of our ongoing operations, I will be highlighting our results on a comparable basis, which neutralizes the marketing fund impact.

Michelle: <unk> expenses exceeding revenues by $4 million in the first quarter of last year.

Michelle: To enhance transparency and provide a better understanding of the results of our ongoing operations I will be highlighting our results on a comparable basis, which neutralizes the marketing fund impact.

Michelle: In the first quarter, we generated $304 million of fee related and other revenues and 141 million of adjusted EBITDA.

Michelle: Fee related and other revenues declined $4 million year over year, reflecting a 4% decline in royalties and franchise fees and a 3% decline in marketing revenues.

Michelle: These declines were partially offset by an 8% increase in ancillary fee streams.

Michelle: <unk> royalties and franchise fees, primarily reflects lower revpar in the U S and the <unk>.

Michelle: Wrapping up our highest quarter of other franchisees both of which were partially offset by a larger global system and international Revpar growth.

Michelle: Ancillary revenues reflect higher license fees and credit card revenues as well as the effects of strategic marketing partnerships driven by initiatives that harness the power of our Wyndham rewards loyalty program.

Michele Allen: In the first quarter, we generated $304 million of fee-related and other revenues and $141 million of adjusted EBITDA. Fee-related and other revenues declined $4 million year-over-year, reflecting a 4% decline in royalties and franchise fees and a 3% decline in marketing revenues.

Michelle: Adjusted EBITDA grew 3% on a comparable basis and our adjusted EBITDA margin improved 250 basis points to 83%.

Michelle: First quarter adjusted diluted EPS was <unk> 78 up.

Michelle: 1% on a comparable basis, reflecting adjusted EBITDA growth as well as benefits from our share repurchase activity, which were partially offset by higher interest expense.

Michele Allen: These declines were partially offset by an 8% increase in ancillary fees. The decline in royalties and franchise fees primarily reflects lower REBPAR in the U.S. and the lapping of our highest quarter of other franchise fees, both of which were partially offset by a larger global system and international REBPAR growth. Ancillary revenues reflect higher license fees and credit card revenues, as well as the effects of strategic marketing partnerships driven by initiatives that harness the power of our Wyndham Rewards Loyalty Program.

Michelle: During the first quarter, we executed $275 million of Nu.

Michelle: Forward, starting interest rate swaps on our term loan B facility, which will begin in fourth quarter 2024, and expire in fourth quarter 2027 at just under three 4%.

Michelle: As a result, nearly all of our term lumpy is now swapped through the end of 2027 at a blended fixed rate of 3.3% more than 200 basis points lower than current sulfur levels.

Michelle: Free cash flow before development advances and transaction costs was $102 million up 5% year over year, primarily reflecting adjusted EBITDA growth.

Michele Allen: Adjusted EBITDA grew 3% on a comparable basis, and our adjusted EBITDA margin improved 250 basis points to 83%. First quarter adjusted diluted EPS was $0.78, up 1% on a comparable basis, reflecting adjusted EBITDA growth, as well as benefits from our share repurchase activity, which were partially offset by higher interest expense.

Michelle: <unk> spend increased $18 million year over year, reflecting our ongoing efforts to capitalize on opportunities in the competitive landscape, particularly in attracting higher fee part properties to our system across the globe.

Michelle: We returned $89 million to our shareholders in the first quarter grew $57 million of share repurchases and $32 million of common stock dividend.

Michelle: We ended the quarter with over $580 million in total liquidity and our net leverage ratio of three four times within the lower half of our target range. We are planning to finish the year at a net leverage ratio of at least three five times, which provides over $400 million of capital available for share repurchases this year or seven.

Michele Allen: During the first quarter, we executed $275 million of new forward starting interest rate swaps on our Term Loan B facility, which will begin in the fourth quarter 2024 and expire in the fourth quarter 2027 at just under 3.4%. As a result, nearly all of our Term Loan B is now swapped through the end of 2027 at a blended fixed rate of 3.3%, more than 200 basis points lower than the current SOFR level. Pre-cash flow before development advances and transaction costs was $102 million, up 5% year-over-year, primarily reflecting adjusted EBITDA growth.

Michelle: Of our outstanding shares at recent price level.

Michelle: Additionally, depending upon the availability and action ability of M&A opportunities, we could increase our leverage to four times, which would provide us with over $750 million of available capital, which would equate to 30% of our outstanding shares and with the boards recent approval of an additional $400 million share repurchase authorization.

Michelle: We now have nearly $800 million available under the program.

Michelle: Turning now to outlook, we're increasing our adjusted diluted EPS projection by seven to a range of $4 18 to $4 30 to account for our first quarter share repurchase activity.

Michele Allen: Development advance spend increased $18 million year-over-year, reflecting our ongoing efforts to capitalize on opportunities in the competitive landscape, particularly in attracting higher fee-per-properties to our system across the globe. We returned $89 million to our shareholders in the first quarter through $57 million of share repurchases and $32 million of common stock dividends. We ended the quarter with over $580 million in total liquidity, and our net leverage ratio of 3.4 times was within the lower half of our target range.

Michelle: This outlook is based on a lower diluted share count of 81 6 million shares and as usual excludes any future potential share repurchase activity.

Michelle: Our outlook for Revpar remains unchanged Youll recall from our February call that we expected a challenging comp in the first quarter with gradual improvement moving throughout the remainder of 2024 last year in the second quarter, we began to see a shift in travel patterns as COVID-19 restrictions were lifted Bruce and inexpensive air travel to destinations like Max.

Michelle: And the Caribbean opened back up while domestic leisure and drive two hotels experienced demand declines, especially along the coast.

Michele Allen: We are planning to finish the year at a net leverage ratio of at least 3.5 times, which will provide over $400 million of capital available for share repurchases this year, or 7% of our outstanding shares at recent price levels. Additionally, depending upon the availability and actionability of M&A opportunities, we could increase our leverage to four times, which would provide us with over $750 million of available capital, which would equate to 13% of our outstanding shares. And with the board's recent approval of an additional $400 million in share repurchase authorization, we now have nearly $800 million available under the program.

Michelle: We saw domestic Revpar gratulate deteriorate in 2023, starting modestly down 1% in the second quarter, and then deepening to down 4% by year end. We are now beginning to lap these attacks.

Michelle: Jeff already touched on some of the improving trend that we began seeing in March April and May.

Michelle: When combining these recent trends with our expectation of incremental infrastructure capture as we move into the second half of the year and strong positive growth internationally. We continue to expect full year global revpar growth of 2% to 3% this year.

Michelle: There are also no changes to our expectations for the marketing funds for Q2, we expect our funds to overspend by $5 million to $10 million, bringing the first half overspend to approximately $20 million, which we then expect will reverse in the back half of this year.

Michele Allen: Turning now to Outlook, we're increasing our adjusted diluted EPS projection by 7 cents to a range of $4.18 to $4.30 to account for our first quarter share repurchase activity. This forecast is based on a lower diluted share count of 81.6 million shares and, as usual, excludes any future potential share repurchase activity. Our outlook for REDPAR remains unchanged.

Michelle: Combined with a $7 million. He recorded during 2023, we now expect costs relating to choices Bell takeover attempt.

Michelle: Roxanne a $50 million in total down from the previous $75 million estimate.

Michelle: The vast majority of this amount will be paid out in the second quarter and remember that these costs are excluded from our 2020 for outlook.

Michele Allen: You'll recall from our February call that we expected a challenging comp in the first quarter with gradual improvement throughout the remainder of 2024. Last year in the second quarter, we began to see a shift in travel patterns as COVID restrictions were lifted. Cruise and inexpensive air travel to destinations like Mexico and the Caribbean opened back up, while domestic leisure and drive-to hotels experienced demand declines, especially along the coast.

Michelle: In closing our first quarter results reflect strong execution on our growth strategy, despite softer industry wide revpar in the U S.

Michelle: We continue to accelerate net room growth and pipeline growth, we generated significant ancillary fee growth and improved operating margins driving incremental earnings growth and we continue to generate significant cash while maintaining a strong balance sheet with ample leverage capacity to further enhance shareholder returns over the remainder of the year.

Speaker Change: With that Jeff and I would be happy to take your questions operator.

Michele Allen: We saw domestic REB PAR gradually deteriorate in 2023, starting modestly at down 1% in the second quarter and then deepening to down 4% by year-end. We are now beginning to feel these effects. Geoff already touched on some of the improving trends that we began seeing in March, April, and May. When combining these recent trends with our expectation of incremental infrastructure capture as we move into the second half of the year and strong positive growth internationally, we continue to expect full-year global REBPAR growth of 2 to 3 percent this year.

Speaker Change: Thank you Ms. Allen the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star too again, we do ask that you limit yourself to one question and one follow up question. Thank you.

Speaker Change: Well go first this morning to Joe Greff of J P. Morgan.

Speaker Change: Yes.

Speaker Change:

Joseph Richard Greff: Jeff Michelle I know you talked to you.

Joseph Richard Greff: Your developers and developer community frequently.

Joseph Richard Greff: I would love to hear from you.

Joseph Richard Greff: Some of your recent conversations that you've had with them, particularly after March 11.

Joseph Richard Greff: You know the teeth of choice decided to stop the pursuit of a buying U S are.

Joseph Richard Greff: Are you seeing or are they communicating to you an acceleration or a pivot with respect to development. So whatever pause you may have seen has that reversed and is there anything within these conversations that may be more brand specific or conversion.

Michele Allen: There are also no changes to our expectations for the marketing funds. For Q2, we expect the funds to overspend by $5 to $10 million, bringing the first half overspend to approximately $20 million, which we then expect will reverse in the back half of this year. Combined with the $7 million we recorded during 2023, we now expect costs relating to Choices' failed takeover attempts to approximate $50 million in total, down from the previous $75 million estimate.

Joseph Richard Greff: Specific that you would call out and then just my last follow up question with respect to this topic is is it fair to think.

Joseph Richard Greff: You know that starts start to really pick up and accelerate now and if you are kind of closer to the 4% the higher end of your net rooms growth.

Michele Allen: The vast majority of this amount will be paid out in the second quarter, and remember that these costs are excluded from our 2024 outlook. In closing, our first quarter results reflect strong execution on our growth strategy, despite softer industry-wide REBPAR in the U.S. We continued to accelerate net room growth and pipeline growth. We generated significant ancillary fee growth and improved operating margins, driving incremental earnings growth. And we continue to generate significant cash while maintaining a strong balance sheet with ample leverage capacity to further enhance shareholder returns over the remainder of the year. With that, Geoff and I would be happy to take your questions. Operator?

Joseph Richard Greff: Target for the year versus the midpoint and that's all for me. Thanks.

Speaker Change: Yeah, Thanks, Joe absolutely.

Speaker Change: We are seeing a lot less uncertainty out there in the development community. We are talking to our franchisees, obviously daily our teams had great successes I think it was your question last quarter on the first on the first question in terms of could last quarter have been better we had a we had a great fourth quarter.

Speaker Change: Our record full year of openings and we've had again, our largest first quarter of openings since going public six years ago, but certainly to your question with the with the deal noise dissipating owners, who are uncertain on committing to deals with us those who did not want to wind up in the choice system have agreed to sign and I think there's no better example.

Joseph Richard Greff: Of that then that doesn't water walk conversions that we that we did this month.

Joseph Richard Greff: Oh, yes, I mean, the the conversations the trend the pause if there was one out there has reversed and we're certainly seeing a lot more activity on both the conversion and the new construction signing front. Our teams had a had a really good quarter not only on the conversion side our conversion from opening.

Operator: Thank you, Ms. Allen. The floor is now open for questions at this time if you have a question or comment. Press 1 on your telephone keypad.

Operator: If at any point your question has been answered, remove yourself from the queue by... Again, we do ask that you limit yourself to one question. We'll go first this morning to Joe Greff of J.P. Morgan. Geoff, Michele, I know you talk to your developers and developer community frequently. I would love to hear from you about some of your recent conversations that you've had with them, particularly after March 11th. You know, the date that choice decided to stop its pursuit of buying you. Are you seeing, or are they communicating to you, an acceleration or a pivot with respect to development? So whatever pause you may have seen, has that been reversed?

Joseph Richard Greff: From a signing standpoint, we're up over 20% I believe in the quarter, but new construction executions were also up they were up.

Joseph Richard Greff: Digits up over 20% are I think versus the first quarter or even back before.

Joseph Richard Greff: Covid and so yeah, where we're at we're really positive with the tenor of conversations that are going out there going on out there with our franchise development teams and any uncertainty that was out there in terms of doing business with US has certainly gone away.

Joseph Richard Greff: And then with respect to maybe the higher end of net rooms growth is more.

Geoffrey A. Ballotti: And is there anything within these conversations that may be more brand-specific or conversion-specific that you would call out? And just my last follow-up question with respect to this topic. Is it fair to think, you know, that starts to really pick up and accelerate now, and if you're kind of closer to the 4%, the higher end of your net room growth target for the year versus the midpoint, and that's, Yeah, thanks, Joe.

Joseph Richard Greff:

Joseph Richard Greff: Reasonable than sort of the midpoint.

Joseph Richard Greff: Sure looking on that where we're really feeling good right now about we've taken our two to four up two to.

Joseph Richard Greff: To three to four as you've seen and we've just finished the first quarter with a three 7% net room growth and believe.

Joseph Richard Greff: [noise] believe are.

Joseph Richard Greff: Firing on all cylinders the other piece of that of course is.

Joseph Richard Greff: As retention and we're making just great progress I mean, we've always said that moving our attention up a point moves are our net room growth up a point and a retention continues to improve both domestically and internationally. We've moved over the last few years since going public from 93 to over 95, and we had this quarter.

Geoffrey A. Ballotti: Absolutely. We are seeing a lot less uncertainty out there in the development community. We are talking to our franchisees, obviously, daily. Our team's had great success, as I think it was your question last quarter on the question off.

Joseph Richard Greff: Domestically our retention improvement of I believe it was 20 basis points year over year.

Joseph Richard Greff: And internationally our attention.

Joseph Richard Greff: Improved 30 basis points, so that 2% to 4% net room growth target that's been increased to $3 to 4% with the first quarter at.

Joseph Richard Greff: 3.7% are our highest quarter ever gives us confidence to continue to move that number higher.

Operator: And we're going to wrap up the Q&A. So, thank you all for joining us. And we'll see you next time.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Joe.

Speaker Change: Yeah.

Speaker Change: Thank you well go next now to David Katz of Jefferies.

Operator: Bye-bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye, of Could Last Quarter Have Been Better?

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

David Brian Katz: Pursuant to the subject of Nug I wanted to just go just a little bit farther one of the things we've been seeing in and I think the deal that you included in your announcement exemplifies it where we're seeing some affiliate type deals.

Geoffrey A. Ballotti: We had a great fourth quarter, a record full year of openings, and we've had again our largest first quarter since years ago. But certainly, thanks to your participation, owners who are uncertain about committing to deals with us, did not want to wind up... have agreed to sign. And I think there's no better example of that than the dozen water wells that we did this month.

David Brian Katz: Okay can we just talk more about the nug environment generally should we be seeing more of those kinds of deals and give us a little bit of understanding about the revenue intensity of those kinds of deals.

David Brian Katz: Because it seems to be more than just yourselves more and more of an industry trend. Thank you.

Speaker Change: Sure I mean, I think if you look at our pipeline would you continue to see David is it would be weighted more to upscale and higher revpar brands like our water work, which I'll talk about in a second I mean, if you look at our our openings this quarter.

Geoffrey A. Ballotti: So, yes, I mean, the conversations, the trend, the pause, if there was one out, has reversed, and on both the conversion and the new construction signing front, our teams had a really good quarter, not only on the conversion side, our conversion room opening from a signing. We're up over 20%, I believe, in the quarter. But new construction, we were also up. They were up double digits, up over 20%. The first quarter, you've been back. COVID.

David Brian Katz: We'll always be leading in the in the economy segment, but when it comes to the Midscale and above segments. Our opens in the first quarter.

David Brian Katz: Midscale and upper Midscale upscale they were up 30% our executions in terms of what what our teams are selling was more in that revenue intense segment. It was up 70% year over year in terms of executions and you're seeing that reflected certainly as we've laid out in our IP and our pipeline, our midscale and above pipeline animal.

Geoffrey A. Ballotti: And so, yeah, we're really positive. The Tenor of Conversations that are going on right now is going on out there with our franchise development teams and any uncertainty that was out there. And then with respect to maybe the higher end of net room growth is more. Sure, look, I mean, we're really feeling good right now about, we've taken our two to four, to 3 to 4, as you've seen, and we've just finished the first quarter with a 3.7% net room growth, and on all cylinders, is retention, and we're making just great progress.

David Brian Katz: Revenue intense segments, which which not only have a higher fee par attached to them, but they also have a higher royalty fee.

David Brian Katz: Our ability to drive that royalty fee higher has gone up in terms of water work. There. That's a that's a conversion straight franchise agreement with <unk> that we're very very excited about it. It's a it's a it's a relationship with it with a really strong upscale brand and the more revenue intense segments with a.

Geoffrey A. Ballotti: I mean, we've always been moving our attention up, is our net room growth, and our attention continues to improve both the domestically and internationally. We've moved over the last..., over 95, and we had... And internationally, our attention improved 30%. 2-4% net room growth target that's been increased to 3-4% with the first quarter at 7%, our highest quarter ever. Great, thank you. Thank you. Morning, everybody.

David Brian Katz: Right pedigree, it's led by the very motivated granddaughter of the late Jack The Board, who I think many on this call know he was the founder of residents in Summerfield and Candlewood suites, and just are run by a very experienced group of developers.

David Brian Katz: Jim and Hood.

David Brian Katz: 20 year IHT veteran Jim Mirror 35 year Marriott M. G M, a veteran and Jim strong who is the.

David Brian Katz: President of Wood spring these guys have built them.

David Brian Katz: A dozen.

David Brian Katz: Really great upscale hotels in some great markets that we talked about in the script I mean, if you look at the cover of Mats IP. What you put out last night, you see a picture of one of those revenue intense hotels, which.

David Brian Katz: To walk by Wyndham, Boise, which just received nine out of 10 star reviews, and most of the online review site. So.

Geoffrey A. Ballotti: Thanks for taking my question. On the subject of NUG, I wanted to go just a little bit farther. One of the things we've been seeing and, and, you know, I think the deal that you included in your announcement exemplifies it, where, you know, we're seeing some affiliate-type deals. Can we just talk more about the NUG environment generally? Should we be seeing more of those kinds of deals, and give us a little bit of understanding about the revenue intensity of those kinds of deals?

David Brian Katz: You know this is a great upscale complement to our economy and Midscale extended stay product. It it's both new conversion.

David Brian Katz: And convert new construction and conversion opportunities for us and for our teams out there talking to owners of.

David Brian Katz: Older upscale Gen. One extended stay brands that are facing Pip requirements.

David Brian Katz: It does not have a pipeline today, but we expect to build on our extended stay supply is underserved and demand is building. So you know our franchise sales teams will look to grow this brand aggressively.

David Brian Katz: And it it adds an upscale extended stay brand for us to sell that we haven't had to sell previously and.

Geoffrey A. Ballotti: Because it seems to be more than just yourselves, more of an industry trend. Sure, I mean, I think if you look at our pipeline... [inaudible] to upscale and hire RevPAR brands like WaterWalk, which I'll talk about. If you look at our openings this quarter... You know, we'll always be leading in the economy segment, but when it comes to the mid-scale and above segment, our openings in the first quarter. They were up 30% in terms of our executions in terms of what our teams are selling.

David Brian Katz: A final point of your question are there more deals like that out there for us to to do absolutely.

Speaker Change: So as the follow up.

Speaker Change: Right.

David Brian Katz: Michel going back to part of your commentary about the potential of reaching four times leverage.

David Brian Katz: We're always obviously listening with a high degree of scrutiny does that mean that there may.

David Brian Katz: Maybe some things in the offing that we should just keep in mind and prepare ourselves for.

David Brian Katz: Later, this year or was that just setting some boundaries.

David Brian Katz: I think that.

Geoffrey A. Ballotti: It was up 70% year-over-year, and you're seeing that reflected, laid out in our IP in our pipe, and more revenue-intensive segments which not only have a higher fee par attached to them, but they also have a higher royalty fee ability to drive that. In terms of Waterwalk, that's a conversion, straight franchise agreement, very, very. It's a relationship with a really strong upscale brand in the more revenue-intensive segments. It has a great pedigree. It's led by the very motivated granddaughter of the late Jack DeBoer, who I think is a great example of that. It has a great pedigree.

David Brian Katz: I think its setting some boundaries, maybe a floor and a ceiling with respect to share repurchases David but.

David Brian Katz: But our first priority and we've always bad for capital allocation is to invest in.

David Brian Katz: In our business for future growth and that can be through organic or inorganic opportunities and that would that would include M&A you know, where we're delighted with the progress we've made toward our net room growth and pipeline growth objectives. This quarter and so our strategy is.

Geoffrey A. Ballotti: It's led by the very motivated granddaughter of the late Jack DeBoer, who I think is a Residence Inn and some others, and it's run by a very experienced group of developers, Jim Anhut, a 20-year IHG veteran, Jim Mara, a 35-year IHG veteran, and Wood Spring. These guys really do great upscale hotels and some great..., cover of Matt's IP, which he put out the last picture of one of those revenue-intense hotels, which and the Waterwalk by Wyndham. So, you know, this is a great upscale complement to our economy and mid-scale extended stay product. New Construction and Conversion Operations for us and for our teams out there. Older Upscale Gen 1 Extended Stay Brandt

David Brian Katz: It is working and where we're able to secure some really great revenue accretive long term franchise agreement from I think water work is a good example.

David Brian Katz: Executing on that strategy, but.

David Brian Katz: When we think about the share repurchase I would think about it we're probably going to do a minimum of that $400 million and then we could potentially go above the $400 million.

David Brian Katz: Depending upon.

David Brian Katz: Pending upon the availability and action ability of those investment opportunities.

Speaker Change: Yeah. The only other thing I, probably would say is we believe that the stock is significantly undervalued.

Michele Allen: It does not have a pipeline today, but we expect to build one. Our extended stay supply is underserved. Demand is building, so our franchise sales teams will look to grow this brand aggressively. And it adds an upscale extended stay brand for us to sell that we haven't had to sell previously. Final point of your question: are there more deals like that out there for us to do? So, as a follow-up, right, just, Michele, going back to part of your commentary about the potential of, you know, reaching four times leverage, you know, we're always obviously listening with a high degree of scrutiny.

David Brian Katz: At the current trading levels until that represents.

David Brian Katz: A compelling investment opportunity, which is why our board recently authorized another $400 million and and share repurchase that which then gives us the ability to go above and beyond that $400 million.

Speaker Change: Got you. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: We'll go next now to Danny Assad Bank of America.

Dany Asad: Hi, good morning, gentlemen, Michelle.

Dany Asad: In your prepared remarks, you guys called out domestic occupancy wrapped like finishing at 90% of 2019.

Dany Asad: Can you maybe help us just.

Dany Asad: Get a sense for the remaining 10 points, where are they coming from whether it's geographies or segments.

Dany Asad: Okay.

Dany Asad: Okay.

Michele Allen: Does that mean that there are, you know, maybe some things in the offing that we should just keep in mind and prepare ourselves for, you know, the remainder of this year, or was that just setting some boundaries?

Speaker Change: Hey, good morning, Dani <unk> at the remaining 10 points of occupancy are going to come from really all over all over.

Dani: All over the United States and and then the.

Speaker Change: Southeast Asia, China region, both of which in the U S and in Asia Pac We continue to index below the 2019 levels, we see it not just in midweek, but also and weekend today. So we really think that there is opportunity across the globe.

Michele Allen: I think it's setting some boundaries, maybe a floor and a ceiling with respect to share repurchases, David, but our first priority, as we've always said, for capital allocation is to invest in our business for future growth, and that can be through organic or inorganic opportunities, and that would include M&A. We're delighted with the progress we've made toward our net room growth and pipeline growth objectives this quarter, and so our strategy is working, and we were able to secure some really great revenue-accretive long-term franchise agreements.

Speaker Change: To improve the occupancy I think you'll see the rest of the year Revpar forecast assumes that we're going to pick up another point of occupancy I don't think it's specific to any one.

Michele Allen: I think Waterwalk is a good example of us executing on that strategy, but when we think about the share repurchase, I would think we're probably going to do a minimum of that $400 million, and then we could potentially go above that $400 million, depending upon the availability and actionability of those investment opportunities. The only other thing I probably would say is that we believe that the stock is significantly undervalued at the current trading levels, and so that represents a compelling investment opportunity, which is why our board recently authorized another $400 million in share repurchases, which then gives us the ability to go above and beyond that $400 million. Gotcha.

Speaker Change: Any one particular region.

Speaker Change: Got it Okay and then.

Speaker Change: And just as a.

Speaker Change: Follow up maybe a little bit higher level, just looking at your unit growth, it's accelerated over the years quite nicely, we're right in that 3% to 4% rooms growth range that we've guided to but when we parse out where you're growing domestically. It looks like a lot of that incremental growth is coming from your higher end chain scales and at the same time. If you go back to you know what.

Speaker Change: The the your footprint look like in 2018, 2019, and you have about 12 or 13% less economy rooms than you did back then so can you maybe just help us understand what's driving this dynamic and whether you would consider this from a strategy perspective.

Speaker Change: This is wyndham actively pushing into higher chain scales.

Speaker Change: Yeah, Danny I would say actively we are certainly pushing into a higher chain scales as I said on.

Speaker Change: On the previous question, but where we will always be looking to lead in the economy segment now to your first part of your question in terms of why the economy decline.

Michele Allen: Thank you. Thank you. We'll go next to Dany Asad now.

Geoffrey A. Ballotti: Hi, good morning, Geoff and Michele. In your prepared remarks, you guys called out domestic occupancy as finishing at 90% of 2019. Can you maybe help us just a little?

Speaker Change: I would say that despite the limited new supply coming into the economy segment.

Speaker Change: Where one third of the exits from our economy system are for non hotel use.

Michele Allen: You know, get a sense for the remaining 10 points. Where are they coming from, whether it's geographies or segments? Good morning, Dany.

Speaker Change: And the second part of that question why are they leaving that majority were older lower quality units, we still experienced this quarter the highest economy AD rate since back in 2017 to your point before we went public.

Michele Allen: The remaining 10 points of occupancy are going to come from really all over the United States and then the Southeast Asia and China region, both of which in the U.S. and in Asia Pac, we continue to index below the 2019 levels. We see it not just in midweek but also in the weekend today. So we really think that there's opportunity across the globe to improve occupancy. I think you'll see from the rest of the year that our REBPAR forecast assumes that we're going to pick up another point of occupancy. I don't think it's specific to any one particular region.

Speaker Change: Our our owner first value proposition is certainly certainly resonate.

Speaker Change: Resonating with franchisees, we had gross additions in the economy space at at 3%.

Speaker Change: And our retention rate I think the STR economy retention rate with several hundred basis points lower than our over 95% retention rate in our economy. So we're pleased that our our economy retention rate continues to improve where we're pleased with the transaction volumes that are that we've been seeing certainly the.

Speaker Change: Potential will increase for us with our with Echo.

Geoffrey A. Ballotti: Got it. Okay. And then, maybe a little bit higher level, just looking at your unit growth, it's accelerated over the years quite nicely. We're right in that 3% to 4% room growth range you've guided us to. But when we parse out where you're growing domestically, it looks like a lot of that incremental growth is coming from your higher-end chain scales. And at the same time, we go back to what your footprint looked like in 2018, 2019, and you have about 12% or 13% fewer economy rooms than you did back then.

Speaker Change: And and and and yes, we're we're really pleased domestically with a 3% net room growth in the midscale and above segments, which to your question. We will continue to focus on.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you well go next now to Michael Bellisario of Baird.

Michael Joseph Bellisario: Thanks, Good morning, everyone.

Michael Joseph Bellisario: Morning, Michael.

Michael Joseph Bellisario: So my first question when I go back to net unit growth, but focused on key money into development advance nodes.

Michael Joseph Bellisario: Can you help us understand what are the returns you're targeting on those investments.

Michael Joseph Bellisario: Secondarily, we can see the dollars going out the door and the cash flow statement, but maybe help us understand what percentage of deals that are either signed or or opening or you're actually putting money into.

Michael Joseph Bellisario: Yeah.

Speaker Change: Good morning.

Michael Joseph Bellisario: From a return perspective, we are we are always targeting to hurdle rates that are well in excess of our cost of capital and that is part of part.

Geoffrey A. Ballotti: So can you maybe just help us understand what's driving this dynamic and whether you'd consider this from a strategy perspective, whether this is Wyndham actively pushing into higher chain scales? Yeah, Dany, I would say actively. We are certainly pushing into higher chain scales, as I said in the previous question, but we are. We will always be looking to lead in the economy segment. Now, to the first part of your question in terms of why the economy declined, I would say that despite the limited new supply coming into the economy segment, where one-third of the exits from our economy system are for non-hotel users. And the second part of that question: why are they leaving that?

Michael Joseph Bellisario: Part of our underwriting processing and Jeff just talked about moving into the higher higher revpar chain scales and over 75% of the deals that we funded in the quarter where were in this category and and then of course, we also are starting to see some of our echo funding.

Michael Joseph Bellisario: Go out the door as well so.

Michael Joseph Bellisario: We are thrilled with the progress that we've made and.

Geoffrey A. Ballotti: The majority were older, lower quality units, still experiencing this quarter the highest economy ad back in 2007, before we went public. Our owner-first value proposition is certainly... is resonating with franchisees. We had gross additions in the economy space at 3%. And our retention rate, I think the STR economy retention rate was several hundred basis points lower than our over 95% retention rate. So, we're pleased that our economy retention rate continues to improve.

Michael Joseph Bellisario: And the strategy of using key money to penetrate into those upper changed scale and higher Revpar markets is is working and and I'd say the amount of key money isn't necessarily tied to a specific percentage fbl's, we're happy to participate in opportunities.

Michael Joseph Bellisario: When when they when they present themselves.

Speaker Change: A second part to that question I think.

Speaker Change: I might have missed that.

Michael Joseph Bellisario: The percentage of deals either signed or are opening that you are putting money into I guess, maybe the better question is yes.

Geoffrey A. Ballotti: We're pleased with the transaction volumes that we're seeing potential for us with ECHO. And, and yes, we're really pleased to deal mid-scale and the above segments, which, to your question, Got it. Thank you very much. Thank you. We go next now to Michael Bellisario of the, Thanks. Good morning, everyone.

Michael Joseph Bellisario: How much has it stepped up versus prior years.

Michael Joseph Bellisario: Or maybe it hasn't.

Michael Joseph Bellisario: No I think it actually has as well as a greater portion of our openings and additions into the system are coming in at that higher.

Michael Joseph Bellisario: Are those higher revpar chain scales in higher Revpar markets. We are we are able to participate and willing to participate more and those fields because they represent better returns.

Michele Allen: This is my first question, I want to go back to net unit growth, but focus on key money in the development advancements. Maybe help us understand what the returns you're targeting on those investments. And then, secondarily, we can see the dollars going out the door in the cash flow statement, but maybe help us understand what percentage of deals that are either signed or opening are you actually putting money into? Good morning.

Michael Joseph Bellisario: It's just from an underwriting perspective.

Speaker Change: Got it understood and then my follow up is on the buyback, but along the same lines understanding what are the sources are what is the source of capital for that incremental buyback is it really just a line of credit borrowings or are there. Other sources of capital that you can use it to find those buybacks to manage interest expense better. Thanks.

Michele Allen: From a return perspective, we are always targeting hurdle rates that are well in excess of our cost of capital, and that is part of our underwriting process. Geoff just talked about moving into the higher REBPAR chain scales, and over 75% of the deals that we funded in the quarter were in this category. And, of course, we are also starting to see some of our ECHO funding go down the drain as well.

Michael Joseph Bellisario: Most of that will come from country leverage capacity this year.

Michael Joseph Bellisario: Yeah.

Michael Joseph Bellisario: Yeah.

Michael Joseph Bellisario: Yeah.

Michael Joseph Bellisario: Thank you well go next now to Patrick Shoals Truest.

Patrick Shoals: Hi, good morning.

Patrick Shoals: Jeff and Michelle.

Patrick Shoals: Okay.

Patrick Shoals: Hey, good morning.

Patrick Shoals: My first question is you know when I look at where the stock is trading I look on the valuation multiple that looks to be about as cheap as it's ever been and certainly the spread.

Patrick Shoals: On the valuation multiples between yourselves and most of the C. Corp's is about as wide as it's ever been what do you think investors are missing here.

Michele Allen: So we're thrilled with the progress that we've made, and the strategy of using key money to penetrate into those upper chain scale and higher REBPAR markets is working. And I'd say the amount of key money isn't necessarily tied to a specific percentage of deals. We're happy to participate in opportunities when they present themselves. Was there a second part to that question? I think that I might have missed it.

Speaker Change: To hear your thoughts on that thank you.

Speaker Change: Yeah, It's a great question Patrick.

Speaker Change: And it's a question we ask ourselves every day I mean, where we're really excited with what's happened to us since we went public six years ago.

Speaker Change: I think.

Speaker Change: In terms of looking.

Speaker Change: Looking at us versus everyone else out there are we we are a completely now a pure play we've sold our owned hotels as our investors wanted to see US do with sold our managed hotels with exited.

Michele Allen: Yeah, just the percentage of deals either signed or opening that you're putting money into. I guess maybe the better question is, how much has it stepped up versus prior years? or maybe it isn't.

Speaker Change: All of the H M. A guarantee deals that we've had and we're now.

Michele Allen: No, I think it actually has. As a greater portion of our openings and additions into the system are coming in those higher REBPAR chain scales and higher REBPAR markets, we are able to participate in and willing to participate more in those fields because they represent better returns just from an underwriting perspective. Got it, understood. And then my follow-up is on the buyback, but along the same lines on the spending front. What are the sources, or what is the source of capital, for that incremental buyback? Is it really just line-of-credit borrowings, or are there other sources of capital that you could use to fund those buybacks to manage the interest expense better?

Speaker Change: We're growing the way our investors.

Speaker Change: Have wanted to see US do so I think investors want to see us continue to deliver as we've been doing with grown the pipeline since we went public 40% too.

Speaker Change: Seeing the pipeline deck nearly 2000 hotels.

Speaker Change: And we need to continue to deliver it's been 13 consecutive quarters, beating consensus EPS and adjusted EBITDA in and we've got an industry, leading EBITDA margin out there. So we need to continue to tell our story about shareholder return, we've returned $2 billion of capital to our shareholders and continue to execute with we opened more hotels last year I believe.

Speaker Change: And any other public company with over 500 openings in 66000 rooms.

Michele Allen: Thanks. No, I think most of it will come through leveraged capacity this year. Thank you. We go next to Patrick Scholes.

Speaker Change: And.

Speaker Change: While there might be concern out there and we hear that every day in terms of the macro rep Revpar environment.

Geoffrey A. Ballotti: Hi, good morning, Geoff and Michele. Good morning. My first question is, you know, when I look at where the stock is trading, you know, I look at the valuation multiple, and it looks to be about as cheap as it's ever been, and certainly, the spread on the valuation multiple between yourselves and most of the C-Corps is about as wide as it's ever been. What do you think investors are missing here? I'd like to hear your thoughts on that. Thank you. Yeah, it's a great question, Patrick, and it's a question we ask ourselves every day.

Speaker Change: Which is certainly weighing on us.

Speaker Change: We believe we just need to continue to keep doing.

Speaker Change: What we're doing and we're really happy with the with everything that we're doing on the retention side on on growing our business.

Speaker Change: Continuing to add to the pipeline revenue accretive rooms, and continuing to improve our retention rates.

Speaker Change: And and we need to continue to show investors that there is a huge ancillary fee opportunity out there that we're beginning to deliver on your thought you began to see that this quarter.

Speaker Change: And I think finally, we need to continue to show investors that we we are very disciplined when it comes to capital allocation in terms of.

Speaker Change: The accretive deals that we've been doing like Vienna House, and seeding, new new brand launches such as Echo and.

Speaker Change: And now are not water walk as we as we continue to pay out a dividend.

Geoffrey A. Ballotti: I mean, we're really excited about what's happened to us since we went public six years ago. In terms of looking at us versus everyone else out there, we are a completely pure play now. We've sold our own hotels as investors wanted to see us do. We've sold our managed hotels, all of the HMA Guarantee deals that we've had.

Speaker Change: Right in the thirties and return excess cash to shareholders.

Speaker Change: Okay. Thank you.

Speaker Change: I do think something that might be helpful would be to have a you know a.

Speaker Change: Investor Day, I don't think we've had one from you and you folks and a number of yourself that's my thoughts.

Speaker Change: So what.

Speaker Change: Opinion of something that might help moving on to <unk>.

Geoffrey A. Ballotti: We're now growing the way investors have wanted to see us do. So I think investors want to see us continue to deliver. We've grown the pipeline.

Speaker Change: My follow up question.

Speaker Change: Is there anything.

Speaker Change: You folks and the executive management team. Thank you could be doing.

Geoffrey A. Ballotti: Since we went public, 40% As you see in the pipeline deck, nearly 2,000 hotels, and we need to continue to deliver. It's been 13 consecutive quarters beating consensus EPS at Justity, but I... And we've got an industry-leading EBITDA margin out there. So we need to continue to tell our story about shareholder return. We've returned $2 billion of capital to our shareholders and continue to execute.

Speaker Change: The better at this point thank you.

Speaker Change: Well when you think about that every day, Patrick I mean, I think the one thing that.

Speaker Change: You know the last 10 months says has proven to us is that we could always.

Speaker Change: Continually.

Speaker Change: Improve when it comes to our our communications with our with with everyone.

Speaker Change: Throughout these last 10 months I think the one thing that we learned what is it that more communication is better with our with our team members are certainly to your point with our with our shareholders and investors and with our franchisees.

Speaker Change: We're feeling right now that we have a franchisee.

Geoffrey A. Ballotti: We opened more hotels last year, I believe, than any other public company, with over 500 openings and 66,000. While there might be concern out there, and we hear that every day in terms of the macro rep par environment, which is certainly weighing on us, we believe we just need to continue to keep doing what we're doing. We're really happy with uh... everything that we're doing on the retention side, on growing our business, continuing to add to the pipeline revenue of Creative Rooms, and continuing to improve our attention.

Speaker Change: <unk> level, that's never been higher as the best measure of that is certainly our attention rates and Oh, we need to continue to work on that.

Speaker Change: Great.

Speaker Change: I have a couple more questions, but I'll hop into queue. Thank you. Thanks Patrick.

Speaker Change: Thank you we'll go next now to Brent on tour.

Speaker Change: <unk>.

Brent: Hi, everybody. Thanks for taking my question.

Brent: So the infrastructure spend and the implied lift that youre looking for in the rest of the year from that segment can you just give us a sense. What you think that you did in the <unk> or what sort of delta or lift you got in the <unk> from that from that segment and then just broadly on this piece of your business is there.

Brent: This business already booked or what kind of dynamics are there around your visibility for this specific business.

Geoffrey A. Ballotti: We need to continue to show investors that there is a huge ancillary fee opportunity out there that we're beginning to deliver on. You saw, you began to see that this quarter. And I think, finally, we need to continue to show investors that we... We are very different from Capital Allocation, the accretive deals that we've been doing like Vienna House and seeding new brand launches such as Echo. And now, Water Walk is, payout rate in the 30s, and return excess cash.

Speaker Change: That gives you that confidence.

Speaker Change: It is a great question Brent in terms of visibility, there's just there's a slide in our investor presentation.

Speaker Change: We we have seen an uptick in federal government allocations from 15% last year to nearly 40% of the incremental 640 billion dollar spend of the 1.5 trillion dollar bill and it's mostly to the states, but only a fraction of that has been spent from a visibility standpoint, I mean when you.

Geoffrey A. Ballotti: Okay, thank you. I do think something that might be helpful would be to have a, you know, big Investor Day. I don't think we've had one from you and you folks in a number of years, so that's my unsolicited opinion of something that might help.

Speaker Change: When you think about those big Bridge and road and train projects and airport projects. The shovels haven't hit the ground, but since we've been investing in our capabilities, we have been able to track an 11% increase in infrastructure revenues for our franchisees.

Geoffrey A. Ballotti: Moving on to my follow-up question, is there anything you folks in the executive management team think you could be doing better at this point? Thank you. Well, we think about that every day, Patrick.

Speaker Change: And you know everything that we're doing around that last week, we launched Wyndham business to help manage our company's travel needs, providing discounts and allowing planners to instantly book without needing to RFP are contracted in one of our franchised hotels and a P.

Geoffrey A. Ballotti: I mean, I think the one thing that... You know, the last 10 months have proven to us that we can always continually improve when our communications with everyone throughout these last..., was that more communication is better with our team members. Certainly, to your point, with our shareholders and investors and with our franchise. We feel right now that we have a franchisee engagement level that's never been higher, our attention rates, and. Great. I have a couple more questions. I'll hop in the queue.

Speaker Change: Of applications immediately doubled and we think that will that will help lead that double digit uptick that we're seeing in leads from from those projects.

Speaker Change: A 20% increase in new accounts.

Speaker Change: So we think there is a tremendous amount of potential for us out there and and are in the quarters ahead. We think it will translate into I believe Michelle about $5 million of royalty revenues to us this year and.

Speaker Change: We've put out what we think it means for us once those projects get underway.

Geoffrey A. Ballotti: Thank you. Thank you. Hi everybody.

Geoffrey A. Ballotti: Thanks for taking my question. So, the infrastructure spend and the implied lift that you're looking for in the rest of the year from that segment, can you just give us a sense of what you think that you did in the 1Q or what sort of delta or lift you got in the 1Q from that segment? And then when you just broadly look at this piece of your business, is this business already booked, or what kind of dynamics are there around your visibility for this specific business that gives you that confidence?

Speaker Change: Stock.

Michelle: Maybe there well I would say finally, one thing I think an opportunity that we believe is also out there that we're starting to see it.

Speaker Change: Is is a pick up in the oil and gas markets. I mean, when you think about Brent the nation's power demand growth from data center build outs or AI booms.

Speaker Change: EV charging stations that are driving the electrification of America natural gas is coming back in and some of our nations largest oil and gas states are seeing a steady pick up they are increasingly excited about the chance to talk to the CEO of one of our large owners last night, who has a lot of properties a lot of Microsoft's <unk>.

Geoffrey A. Ballotti: It is a great question, Brandt, in terms of visibility. There's a slide in our investor presentation that we have seen an uptick in federal government allocations from 15% last year to nearly 40% of the incremental $640 billion spend of the $1.5 trillion bill. And it's mostly to the states, but only a fraction of that has been spent from a visibility standpoint. I mean, when you think about those big bridges, road, and train projects, and airport projects, the shovels haven't hit the ground yet.

Speaker Change: And.

Speaker Change: And Hawthorn suites in West, Virginia, He's seeing trucks back in his parking lot. He he said that occupancy is slowly coming back.

Speaker Change: It's still not there yet, but he's very optimistic and when we look at states that did perform well above last year in some of those oil and gas States West Virginia was up I think about 5% over prior year and up.

Geoffrey A. Ballotti: But since we've been investing in our capabilities, we have been able to track an 11 percent increase for our franchisees. And, you know, everything that we're doing around that. Last week, we launched Wyndham Business to help manage a company's travel needs, providing planners to instantly book without needing to RFP or contract at one of our franchised hotels.

Speaker Change: In Louisiana, Similarly, Alaska was up double digits, so with over 10% of our system positioned in oil and gas markets.

Speaker Change: We're also feeling an addition of infrastructure looking ahead, very well positioned to capture a to capture that come back as a tailwind as well.

Geoffrey A. Ballotti: And the pace of applications immediately doubled, and we think that will help lead that double-digit uptick that we're seeing in leads from those projects. 20 Presenting, accounts So we think there is a tremendous amount of potential for us, and in the quarters ahead, we think it will translate into. I believe, Michele, about $5 million of royalty revenues for us this year. Let me know what we think it means for us once those projects get underway. I'd stop.

Speaker Change: Okay. That's that's that's great. Thanks for that and then maybe on the other side of things on the leisure domestic travel side I think we sort of got a good sense for.

Speaker Change: The easing comps.

Speaker Change: But sort of in light of.

Speaker Change: What we're all seeing away from you and the macro in the lower end and middle income consumer I guess, we are heading into the leisure the big leisure travel period. This summer Thats generally has a strong period as the calendar for you what are the indicators you could point to or what do you look at year over year that kind of gives you.

Geoffrey A. Ballotti: Maybe there, well, I'd say finally one thing, an opportunity that we believe is also out there that we're starting, is a pickup in the oil and gas markets. I mean, when you think about Brandt, the nation's power to man growth from data center build outs or AI or EV charging stations that are driving the electrification of America, natural gas is coming back. And some of our nation's largest oil and gas companies are seeing a steady pickup they're increasingly excited about.

Speaker Change: A sense of how that consumer is gearing up for this summer.

Speaker Change: Sure.

Speaker Change: Back to Patrick's.

Speaker Change: <unk> question earlier in terms of what's weighing on our our stock it's that concern of that middle income guests, but what we're seeing is that that middle income guest is more employed both and we look at their wages and their savings, it's they're higher than they were back in pre.

Speaker Change: Pre COVID-19 levels their home prices are up their stocks are up their deposit levels are stable and they are in good shape.

Geoffrey A. Ballotti: I had the chance to talk to the CEO of one of our large owners last night, who has a lot of properties, a lot of micro-tel super 8s and Hawthorne Suites in West Virginia, seeing trucks back in his parking lot said that occupancy is slowly coming back. ADR is still not there yet, but he's very optimistic when we look at states that did form well above last year in some of those oil and gas states.

Speaker Change: We look at consumer confidence, that's obviously growing if you look at the monthly insight report.

Speaker Change: Consumer sentiment is up significantly from like $65 to close to 80% from last March to this March.

Speaker Change: We look at length of stay and we are continuing to see longer lengths of stay by a couple of hundred basis points versus where they were before before things slowed.

Speaker Change: Booking windows, we look at our daily and they continue to tick up we talked about our trends looking out to memorial day weekend and into a into may.

Geoffrey A. Ballotti: West Virginia is up, I think, about 5% over the prior year and up in Louisiana. Similarly, Alaska was up double digits. So, with over 10% of our system positioned in oil and gas markets, we're also feeling, in addition to infrastructure looking ahead, very well positioned to capture that comeback.

Speaker Change: But our booking windows are are similarly up 7% to last year from 19 to 21 days now cancellation rates are steady and drive two which is about 90% of our domestic demand continues to to.

Speaker Change: To chug along people are driving a further than they were pre COVID-19 and we think it'll continue to be the number one vacation preferences. This summer.

Geoffrey A. Ballotti: Okay, that's great. Thanks for that. And then maybe on the other side of things, on the leisure domestic travel side, you know, I think we've got a good sense for the easing comps. But, sort of, in light of what we're all seeing away from you in the macro and the lower end and middle income consumer, I guess, you know, we're heading into the big leisure travel period this summer. That's generally a good period of the calendar for you.

al: Excellent thanks al.

Speaker Change: Thanks Brent.

Speaker Change: Yeah.

Speaker Change: We'll go next now to Stephen Grambling of Morgan Stanley.

Stephen White Grambling: Hi, Thanks, I guess following up on on shareholder feedback I guess, one area. We get questions on is just how the pipeline and net unit growth translates to fees. So so looking at the pipeline you did give some stats on the growth in Midscale and above can you help quantify or provide color on how the royalty rates and revpar.

Stephen White Grambling: For the pipeline compares to the existing base, especially as we think about some of the new brand launches and how the pipeline has evolved over the past few years.

Geoffrey A. Ballotti: What are the indicators you could point to, or what do you look at year over year that kind of gives you a sense of how that consumer is gearing up for this summer? Sure. Kind of back to Patrick, a question earlier.

Speaker Change: Yes, sure if we did.

Speaker Change: If you think about.

Speaker Change: Our development focus on the more revenue accretive deals.

Speaker Change: Our domestic pipeline right now carries a revpar premium in excess of 15% compared to our existing system and an average royalty rate that is at least five basis points higher than our current system and.

Geoffrey A. Ballotti: What's weighing on our stock is that concern for that middle-income guest, but what we're seeing is that that middle-income guest is more employed, both, and we look at their wages and their savings. They're hired, and they were back. Pre-COVID levels, their home prices are up, their stocks are up, their deposit levels are stable, and they're in good shape.

Geoffrey A. Ballotti: We look at consumer confidence, and that's obviously growing. If you look at the monthly insight report, I think consumer sentiment is up significantly. 85% to close to 80% from last March to this year. We look at length of stay, and we are continuing to see longer lengths of stay by a couple hundred basis points versus where they were before things slowed. We look at the booking windows we look at daily, and they continue to tick up. We talked about our... plans for the Memorial Day weekend. [inaudible] Cancellation rates are steady, and drive-to.

Speaker Change: And specifically double clicking into the Midscale and above segments, we see a 30% revpar premium for those hotels compare to our existing system, but it's not just in the U S that work that we're driving toward this objective by the increasing.

Speaker Change: Increasing royalty rate and bringing in higher fee par rooms, we see it.

Speaker Change: We see it internationally and as we focus on growing our direct franchising business and and and there we're seeing royalty rates.

Geoffrey A. Ballotti: About 90% of our domestic demand continues to... chug along. People are driving further than they were pre-COVID, and we think it will continue to be the number one vacation. Excellent. Thanks all. We'll go next to Stephen Grambling of Morgan.

Speaker Change: That are 15% higher on average than our current international system.

Speaker Change: I think that nailed it. Thank you. Thanks, Stephen Thank you.

Speaker Change: A little Grambling in the background.

Speaker Change: Thank you. We'll go next now to Steve <unk> of Deutsche Bank.

Steve: Thanks, Good morning, everyone.

Steve: Good morning, Steven does February to March Revpar improvement noted was pretty impressive, especially in the context of STR Limited service Revpar decelerating from February to March.

Geoffrey A. Ballotti: Hi, thanks. Following up on shareholder feedback, I guess one area we get questions on is just how the pipeline and net unit growth translates to fees. So, looking at the pipeline, you did get some stats on the growth in mid-scale and above; can you help quantify or provide color on how the royalty rates and REBPAR for the pipeline compares to the existing base, especially as we think about some of the new brand launches and how the pipeline has evolved over the past few years? Yeah, sure.

Steve: Buying some share gains for you what do you think is driving that for you and how should we think about that moving forward.

Steven: Yeah, we really did Stephen see that pick up in into March I think we saw you know them well over 100 basis points of share gain in March as leisure ramped back up in.

Steven: So much of our business is leisure focused I.

Steven: I think we're also seeing travelers, whose government and corporate per Dms have been tapped out they're beginning to try us. So our brands have always outperformed the broader lodging market segments. When there's a you know any any pressure out there on the macro side and we think we could continue to do it in and certainly are.

Michele Allen: If you think about our development focus on the more revenue-accretive deals, our domestic pipeline right now carries a REPPAR premium in excess of 15% compared to our existing system, and an average royalty rate that is at least five basis points higher than our current system. And specifically, double-clicking into the mid-scale and above segments, we see a 30% REPPAR premium for those hotels compared to our existing system. But it's not just in the U.S. that we're driving towards this objective of increasing royalty rates and bringing in higher REPPAR rooms. We see it internationally, and as we focus on growing our direct franchising business, we're seeing royalty rates that are 15% higher on average than our current international system. I think that nailed it.

Steven: Our brands our large brands continue to over index from a share standpoint are our most recent April a D D. Our largest brands la Quinta Hawthorn suites, well over fair share microtel as well days in again I'm very proud of the team with the and all the great work, we're doing with days Inn Super eight days in as.

Steven: His jumped from 117% to 120% fair market share and our latest filing in and it's it's really being driven by all the great work. Our marketing teams are doing on the Wyndham rewards side, our share of occupancy continues to grow it's up I think it's up over 700 basis points domestically versus where it was pre COVID-19.

Michele Allen: Thank you. Thanks, Stephen. Thank you. Thank you! Thank you. We go next now to Steve Pizzella. Good morning, everyone.

Geoffrey A. Ballotti: The February to March RUGPAR improvement noted was pretty impressive, especially in the context of STR limited service RUGPAR decelerating from February to March, implying some share gains for you. What do you think is driving that for you and how should we think about that moving forward? Yeah, we really did, Stephen, see that pick up into March. I think we saw well over 100 basis points of share gain in March as leisure ramped back up. So much of our business is leisure-focused, but I think we're also seeing travelers whose government and corporate per diems have been tapped out. They're beginning to try us.

Steven: And so we're going to continue to promote into that and look to continue to grow share, becoming a more and more competitive certainly on ADR further out and and looking for that base business that infrastructure business to put on the books.

Steven: As is often as frequently as we can as our global sales teams could could get that contracted business and that allows franchisees to drive rate closer to her arrival date on the weekends and and that's where we're getting to see.

Speaker Change: Okay. Thank you and then just pivoting to margins the margins ex marketing spend were fairly strong in the quarter.

Steven: How much of the year over year margin goals are from the higher margin ancillary revenue and how much is from some of the core operating expenses and how should we think about that moving forward.

Geoffrey A. Ballotti: Our brands have always outperformed the broader lodging market segments when there's, you know... any pressure out there on the macro side, and we think we could continue to do it and certainly are. Our brands, our large brands, continue to over-index from a share. Our most recent, April ADD, our largest brand, La Quinta Hawthorne Suites, well over its fair share of Microtel. Days in, again, very proud of the team and all the great work.

Speaker Change: I think there's some fall off the top of my head, Matt you'll have to you'll have to go back to confirm but I think it's about two thirds from the ancillary and maybe a third from them from the cost side.

Matt: Yeah that sounds about right we are and.

Matt: And we do.

Matt: We are expecting margins to be pretty comparable year over year on a full year basis.

Speaker Change: Okay. Thanks I appreciate it.

Geoffrey A. Ballotti: With Days In and Super 8, Days In has jumped from 117% to 120% fair market in our latest filing. It's really being driven by all the great work our marketing teams are doing on the Wyndham Rewards side. Grow, it's up, up over 700 basis points domestically versus where it was pre-COVID. And so we're going to continue to promote into that and look to continue to grow share. It's becoming more competitive, certainly on ADR further out.

Matt: We'll go next now to Ian Zaffino of Oppenheimer.

Matt: Hey, Good morning. This is Alex on for Ian Thanks for taking all the questions just to follow up on the infrastructure impact could you maybe help us understand how the 1% to 2% uplift uplift is split between ADR and occupancy.

Speaker Change: I'm not sure if you can break out specifically, but it sounds like there is obviously, a big opportunity more broadly to bridge the gap to 2019 occupancy levels.

Speaker Change: Absolutely, we see a tremendous occupancy more so than rate one of the biggest issues that we've.

Speaker Change: We've got out there is a you know our rate or pricing pressure as we said in our prepared remarks.

Geoffrey A. Ballotti: We've been looking for that base business, that infrastructure business to put on the book as often and as frequently as we can as our global sales. That allows franchisees to drive rates closer to arrival dates. And that's where we're going. Okay, thank you.

Speaker Change: With rate up 14%.

Matt: We are educating and working with our franchisees to make sure that when one of our field sales global sales teams bring them on infrastructure count.

Matt: But that that they're not only immediately responding to the RFP, but that they're realizing that that base business that I just talked about.

Michele Allen: And then just pivoting to margins, the margins x marketing spend were fairly strong in the quarter. But how much of the year-over-year margin gains are from higher-margin ancillary revenue and how much is from some of the core operating expenses, and how should we think about that moving forward? I think it's about off the top of my head and Matt, you'll have to you'll have to go back to confirm, but I think it's about two thirds from the ancillary and maybe a third from the cost side.

Matt: Is it so important, albeit a much longer length of stay at a lower average daily rate.

Speaker Change: Okay understood. Thanks, and then a quick follow up on extended stay.

Speaker Change: When should we expect the first echo suites locations to open up.

Speaker Change: And maybe what's the timeline for conversions at water work as well.

Speaker Change: Sure.

Speaker Change: It's a great question, we ask our developers all the time on slide eight of our Investor presentation. If you flip to that shows a half a dozen of the nearly dozen that are nearing completion and should be opening soon across the country. We now have a dozen hotels under construction and in 10 states from Texas.

Michele Allen: We are, yep, and we do. We are expecting margins to be pretty comparable year over year on a full year basis. Okay, thanks. Appreciate it. We'll go next to Ian Zaffino of Opus Dei.

Michele Allen: Hey, good morning, this is Isaac Salazan on for Ian. Thanks for taking all the questions. Just to follow up on the infrastructure impact, could you maybe help us understand how the one to 2% uplift is split between ADR and occupancy? I'm not sure if you can break it out specifically, but it sounds like there's obviously a big opportunity more broadly to bridge the gap to 2019 occupancy levels. Absolutely, we see a tremendous occupancy rate, more so than rate.

Speaker Change: Uh huh.

Speaker Change: Well from from Florida, all the way across the country and another 30 sites in active development, it's going to be up to the local inspection offices, who received their first certificate of occupancy.

Speaker Change: But my guess is you know it should be sometime this summer developers of Plano, Texas, and Spartan Spartanburg, South Carolina would be my guess, they're racing each other just to have the grand opening that are well well I'll certainly attend as to water work.

Michele Allen: One of the biggest issues that we've got out there is, you know, our rate, our pricing pressure, as we said in our prepared remarks, you know, with rates up 14 percent, we are educating and working with our franchisees to make sure that when one of our field sales, global sales teams brings them an infrastructure, they're not only immediately responding to the RFP, but that they're realizing that that base business that I just talked about is Okay, thanks. And then a quick follow up on the extended stay.

Speaker Change: You know I think.

Speaker Change: And in terms of timing and we've just announced that deal. We're just right now doing everything that that theyre looking for in terms of bringing them onto our distribution platforms and shifting more mixed erecting and getting them.

Speaker Change:

Speaker Change: More and more Wyndham business to drive operating margins.

Speaker Change: As I said, we this is a pipeline that our franchise sales team is very excited about beginning to build and it'll be a mix of conversion and new construction going forward.

Geoffrey A. Ballotti: When should we expect the first Echo Suites locations to open? And maybe what's the timeline for conversions at Waterwalk as well? Sure, it's a great question we ask our developers all the time.

Speaker Change: Okay, great. Thank you so much thank you.

Speaker Change: We'll go next now to Alex <unk> of Redburn Atlantic.

Alex: Hi, Thanks, so much for taking my questions.

Alex: The first one is on Revpar.

Geoffrey A. Ballotti: Slide 8 of our investor presentation, if you flip to that, shows a half dozen of the nearly dozen that are nearing completion and should be opening soon across the country. We now have a dozen hotels under construction in 10 states, well, from Florida all the way across the country, and another 30 sites in active development. It's going to be up to the local inspection office to issue the first certificate of occupancy.

Alex: It's kind of a broader question that I've been putting that to everybody but.

Alex: The comps are you referring to obviously the year on year number in Q1 'twenty three was the highest but based on your own disclosure, but the number versus 2019 was the lowest in Q1 of 2023, and it's about 6700 basis points harder in terms of versus 2019.

Speaker Change: The age to 2023.

Speaker Change: In Europe.

Speaker Change: Obviously not in the U S. It's all international in Europe, but beginning to see that year on year numbers negative U K okay.

Geoffrey A. Ballotti: But my guess is, you know, it should be sometime this summer. The developers of Plano Tech and Spartanburg, South Carolina, my guess, they're racing each other to have the grand opening that we'll offer. 10. As to water walking... You know, I, I, I think, um..., in terms of timing, and we've just announced that. We're just right now doing everything that they're looking for in terms of bringing them onto our distribution platforms and shifting more mix to direct, and getting them.

Speaker Change: So 2019, that's when it got hot so I'm just trying to.

Speaker Change: Reconciled how youre thinking about dot com.

Speaker Change: In terms of us just running 19 rather than in buses.

Speaker Change: The year on year number that you talked about thank you very much.

Speaker Change: Yeah. Thank you Alex I'll, let Michelle dive into the year on year comps, but just overall.

Speaker Change: We were really pleased with the with what happened in Europe.

Geoffrey A. Ballotti: A more Wyndham business to drive operating margins, but as I said, this is a pipeline that our franchise sales team is very excited about beginning to build, and it'll be a mix of conversions and New Construction. Okay, good. Thank you so much. Thank you. We'll go next now to Alex Brignall of Red Burn.

Michelle: All of our largest countries saw positive year on year and let's just talk to you on here for a moment, because I know I'll get to.

Michelle: To the I think the base of the question, which is the tailwind we have still to 2019, but are we saw Germany, and you mentioned U K both with the.

Geoffrey A. Ballotti: Hi. Thanks so much for taking the questions. The first one is on RevPAR.

Michelle: Sort of low single digit year on year growth.

Geoffrey A. Ballotti: It's kind of a broader question that I've been putting to everybody. The comps that you're referring to, obviously, the year-on-year number in Q1-23 was the highest, but based on your own disclosure, the number versus 2019 was the lowest in Q1 of 2023, and it's about 6,700 bases when it's harder in terms of versus 2019 for H2-2023. In Europe, it's obviously not in the US; it's all international.

Michelle: U K was both rate and occupancy for US I think we were up about 3% of the U K a year on year, a one point was was.

Michelle: Two two points where rates occupancy was probably flat.

Michelle: We saw growth in our in and in Turkey, as well that was double digit in Spain was was double digit but the opportunity for the rest of the year is still an occupancy tailwind when we look back to 2019, I mean versus 2019 international accelerated from and I think this is in the deck from 45% from Q3.

Geoffrey A. Ballotti: In Europe, we're beginning to see those year-on-year numbers turn negative, particularly in the UK, because the versus 2019 comp, that's when it got harder. So I'm just trying to... reconcile how you think about that comp in terms of versus 2019 rather than versus the year-on-year number that you talked about. Thank you very much.

Michelle: Q4 <unk>.

Michelle: To 60% I believe it was for Q1 versus 2019. So there are there are there are 14 solid points.

Michelle: Occupancy tailwind to capture internationally and.

Michelle: Across the world all of our regions are seeing a really sharp uptick.

Michelle: And obviously oversees corporate contracted in mice is very important for us we're seeing a pick up their tour operators over in Europe or are very optimistic European low cost carriers or or forecasting a banner summer and a record high.

Geoffrey A. Ballotti: Yeah, thank you, Alex. I'll let Michele dive into the year-on-year comparisons, but just overall, we were really pleased with what happened in Europe. All of our largest countries saw positive year-on-year growth.

Michelle: Our European teams encouraged and and and we see opportunity there as we do in Asia, but Michelle I don't know if you want to add anything to that.

Michelle: Yeah that was great Jeff I think the only thing I would add is most of the growth we've seen in Q1 versus 2019 as ADR and its the pricing power, it's not the recovery and occupancy we still have a long runway of occupancy recovery and in EMEA and <unk>.

Geoffrey A. Ballotti: And let's just talk year-on-year for a moment because then I'll get to the, I think the base of the question, which is the tail end we have still to 2019, but we saw Germany and you mentioned the UK both with, sort of, low single-digit year-on-year growth. The UK was both rate and occupancy for us.

Michelle: In Asia Pacific and most of the International region. So that's what we're really focused on from a recovery standpoint and international.

Geoffrey A. Ballotti: I think we were up about 3% in the UK year on year. Two points were rated, occupancy was probably flat, and we saw a growth in... [inaudible] and Occupancy Tailwind when we look back. I mean, verse is 29, international accelerated from 45% from Q3 to Q4, to 60%, I believe it was, to one. So there are 14 solid... occupancy, Tailwind, to cap.

Speaker Change: Okay Fantastic and then and then just a follow up.

Michelle: Uh huh phenomenal signings performance all the way through Covid.

Jeff Michelle: Much better than some of your peers and it seems that that has continued after the hiatus that you had that wasn't ideal, causing do you think that the strength in Q1 is the market being stronger or would you attribute that largely to your own kind of performance and maybe taking back. Some some jobs that had been held back was U S.

Geoffrey A. Ballotti: Internationally and across the world, all of our... really sharp, and obviously overseas corporate contracted in my.., for us, we're seeing a pickup. Tour operators over in Europe are very optimistic. Low-cost carriers are forecasting a banner summer and a record high. Are European teams encouraged?

Jeff Michelle: Dealing with other people.

Speaker Change: Sure I'd say, it's more of the ladder, Alex I I R.

Speaker Change: Our our Nu.

Michele Allen: opportunity there as we do in Asia, but Michele, I don't know. Yeah, that was great, Geoff. I think the only thing I would add is most of the growth we've seen in Q1 versus 2019 is ADR, and it's the pricing power. It's not recovery and occupancy. We still have a long runway of occupancy recovery in EMEA, in Asia Pacific, and most of the international region. So that's what we're really focused on from a recovery standpoint in international.

Speaker Change: You look at it we look at it both ways on from a conversion a N a.

Speaker Change: A new construction standpoint, but our new construction prototypes are laquita azhar la Quinta Hawthorn, a dual brand our microtel R. R. Echo suites I mean, they have all been really performing well with developers in any of that hiatus uncertainty that was out there any conversations that we've been having.

Speaker Change: That may have been paused those those are picking back up our new construction executions were up 20% versus as I said, all the way back in a pre COVID-19 and are you seeing it reflected in our pipeline and and certainly conversion room signings if.

Michele Allen: Okay, fantastic. And then just to follow up, you had a phenomenal signing performance all the way through COVID, much better than some of your peers. And it seems that that's continued after the hiatus that you had that wasn't of your doing. Do you think that the strength in Q1 is the market being stronger, or would you attribute it largely to your own kind of performance and maybe taking back some share that had been held back whilst you were dealing with other people? Sure, I'd say it's more of the latter, Alex.

Speaker Change: Because of the owner first value proposition, we're delivering I'm just continuing to we believe performed well and steal share and there's no reason, we can't keep doing that.

Speaker Change: Fantastic. Thank you so much.

Speaker Change: Thanks, Alex.

Speaker Change: We'll take our next question now from Dan <unk> of Morningstar.

Geoffrey A. Ballotti: You know, we look at it both ways, from a conversion and a new construction standpoint, but our new construction prototypes, our LaQuintas, our LaQuinta Hawthorne dual brand, our Microtel, our Echo Suites, I mean they have all been really performing well with developers, and any of that hiatus uncertainty that was out there, any conversations that we've been having that may have been paused, Our new construction executions were up 20%, as I said, all the way back in, you know, pre-COVID. And you're seeing it reflected in our pipeline and, certainly, in our conversion room signings. Because of the owner-first value proposition we're delivering, just... to, we believe, form well in SteelShare, and there's... That's fantastic. Thank you so much.

Dan: Hey, good morning.

Dan: Jeff and Michelle Thanks for taking my question you kind of already talked about this but just in relation to that.

Dan: I guess tailwind potential of ADR kind of closing that gap with inflation and the occupancy recovery that you can still have.

Dan: How are you guys thinking about that looking beyond this year I mean is this barring an economic recession or potential.

Dan: Couple of year tailwind for Revpar growth that we can.

Dan: Kind of look forward to to maintaining the type of growth you're expecting this year for the next few years after that.

Speaker Change: Yeah, I think it's a multiyear recovery, especially on the occupancy side and could we know.

Dan: And we know that during periods of <unk>.

Dan: Increasing demand there is the ability to push it to push rate higher I would say asphalt the occupancy recovery I think there is still room for ADR growth, particularly when you look at it compared to the rate of inflation. So we see it as a multiyear recovery in both occupancy and ADR across the globe.

Geoffrey A. Ballotti: Thanks, Alex. We'll take our next question now from Dan Wasiolek of... Hey, good morning, Geoff and Michele. Thanks for taking my question. You kind of already talked about this, but just in relation to that, I guess, the tailwind potential of ADR kind of closing that gap with, you know, inflation and the occupancy recovery that you can still have. How are you guys thinking about that looking beyond this year? I mean, is this, you know, barring an economic recession, a potential, you know, couple-year tailwind for red part growth that we can kind of, you know, look forward to maintaining the type of growth you're expecting this year for the next few years after that? Yeah, I think it's a multi-year recovery, especially on the occupancy side.

Speaker Change: Okay. Thanks, all my other questions already asked and answered so thank you nice quarter. Thank you. Thanks.

Dan: We'll go next now to Meredith Jensen of HSBC.

Meredith Jane Prichard Jensen: Yes, Hi, I was interested in our Wyndham for business and how the new platform might differ from what existed prior and what kind of metrics or what kind of questions. We can ask going forward to kind of track the progress of that given the importance of that.

Meredith Jane Prichard Jensen: Groups and small businesses here to your overall business. Thanks.

Meredith Jane Prichard Jensen: Sure.

Speaker Change: Well I mean, we are adding a lot to it we've had a focus on Meredith.

Speaker Change: Obviously, helping companies manage their travel needs and providing discounts, but we're looking to help these planners.

Michele Allen: And we know that during periods of increasing demand, there's the ability to push rates higher. I would say, absent the occupancy recovery, I think there is still room for ADR growth, particularly when you look at it compared to the rate of inflation. So we see it as a multi-year recovery in both occupancy and ADR across the board. Okay, thanks. All my other questions have already been asked and answered, so thank you.

Speaker Change: Make it easier to book and I think the metric that you you want to look at going forward.

Meredith Jane Prichard Jensen: Our the number of members, we have and in the pace of applications in those applications being signed and as I said since we've launched it just a week ago. Our weekly pace has doubled and it will further continue to drive the the 1.8 million companies out there that are our bookings.

Michele Allen: Nice quarter. Thank you. We go next to Meredith Jensen now.

Geoffrey A. Ballotti: Yes, hi. I was interested in Wyndham for Business and how the new platform might differ from what existed prior, and what kind of metrics or what kind of questions we can ask going forward to kind of track the progress of that given the importance of groups and small businesses to your overall business. Thanks. Sure. Well, we are adding a lot to it. We've had a focus on Meredith, obviously helping companies manage their travel needs and providing discounts, but we're looking to help these planners.

Meredith Jane Prichard Jensen: Infrastructure business for our select service economy, and Midscale hotels across the country. So you know it is it is just one of those we've done a lot from a technology standpoint, AR to continue to make it easier to do a to do business with us we've been investing heavily in our capabilities.

Meredith Jane Prichard Jensen: And we've been increasing our sales team to sell Wyndham business. We we've increased our sales team by 25% and we will continue to rollout.

Meredith Jane Prichard Jensen: More new technology like this that allows them to book without having to RFP.

Geoffrey A. Ballotti: I think the metric that you want to look at going forward is the number of members we have and the pace of applications and those applications being signed. And as I said, since we launched it just a week ago, our weekly pace has doubled, and it will continue to do so. Drive. There are 2.8 million companies out there that are booking this infrastructure visit for our select service economy and mid-scale hotels across the country. So, you know, it is just one of those things.

Meredith Jane Prichard Jensen: And that's something that the the team is really excited about is they've identified I think we talked about this on the last call of over 3600 projects within 10 miles of markets of our hotels with with multiple hotels in those markets that are looking to contract because again it.

Meredith Jane Prichard Jensen: It is really early days well, 40% has been allocated to that of that spend.

Geoffrey A. Ballotti: We've done a lot from a technology standpoint to continue to make it easier to do business with us. We've been investing heavily in our capabilities. And we've been increasing our sales team to sell Wyndham. We've increased our sales team by 25%, and we'll continue to roll out more new technology like this that allows them to book without having to RFP. And that's something that the team is really excited about, is they've identified, I think we talked about this on the last call, over 3,600 projects.

Meredith Jane Prichard Jensen: It has not yet been spent and we want to make sure it's spent with us.

Speaker Change: Super Thanks, one last quick and I apologize if I missed that.

Speaker Change: For if you could.

Speaker Change: Could discuss kind of the engagement and loyalty program between Grand if there's kind of a differential and kind of be occupancy there or the take up in and maybe internationally also what you're seeing.

Speaker Change: Sure sure.

Speaker Change: Share of occupancy and you didn't miss it I don't think Meredith, we talked about it.

Speaker Change: But I touched high level that our share of occupancy was up over 700 basis points, which is really important for our franchisees. It's one of our biggest value proposition.

Geoffrey A. Ballotti: 10 miles of markets around our hotels with multiple hotels in those markets that are looking to contract. Because, again, it is really early days. While 40% has been allocated to that spend, it's not yet been spent, and we want to make sure it isn't. Super, thanks.

Speaker Change: Go to market are offers that our franchise sales team has and it is harder domestically than it is internationally roughly one out of every two check ins tonight across the United States of America.

Speaker Change: Here in this country will be asking for their loyalty points overseas that share of occupancy is lower but overseas. It's it's growing it's growing higher.

Geoffrey A. Ballotti: One last quick question, and apologies if I missed that before. If you could discuss kind of the engagement in the loyalty program between brands, if there's kind of a differential in kind of the occupancy there, or the take up, and maybe internationally also what you're seeing. Sure. Our share of occupancy, and you didn't miss it, I don't think, Meredith, we talked about it, but I touched on the high level that our share of occupancy was up over 700 basis points, is really important for our franchisees.

Speaker Change: It's growing faster.

Speaker Change: It has a it hasn't and opportunity.

Speaker Change: To continue to grow I think our overall share of occupancy domestically is is roughly one out of two <unk>.

Speaker Change: I think on a global basis were somewhere approaching 40% share of occupancy and with the work that our marketing teams are doing and in countries like China. Our China team is very bullish the awareness of Wyndham continues to grow when we think about ancillary fee opportunities over there I mean, we'd become a lot more targets.

Geoffrey A. Ballotti: It's one of our biggest value propositions, go-to-market offers that are franchise sales. And it is harder domestically than it is internationally. Roughly one out of every two check-ins tonight across the United States of America, here in this country, will be asking for their loyalty.

Speaker Change: It.

Speaker Change: And from a digital marketing platform marketing standpoint.

Geoffrey A. Ballotti: Overseas, that share of occupancy is lower, but overseas, it's growing higher. It's growing faster, and it has an opportunity. We continue to grow. I think our overall share of occupancy domestically is roughly one out of two.

Speaker Change: Doing a lot of really creative things over there.

Speaker Change: We could continue to push that higher.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you and our final question today will come from Patrick Scholes of tourist with a follow up question.

Charles Patrick Scholes: Great. Thank you.

Charles Patrick Scholes: A follow up question here regarding the quarterly results specifically international certainly in Latin America. Your numbers were phenomenal can you give us a bit.

Geoffrey A. Ballotti: I think on a global basis we're somewhere approaching 40% share of occupancy with the work that, you know, our marketing teams are doing in countries like China. Our China team is very bullish. The awareness of Wyndham continues to grow.

Charles Patrick Scholes: More color on how you did 41% revpar.

Charles Patrick Scholes: Our revpar.

Charles Patrick Scholes: Certainly that.

Charles Patrick Scholes: Part of that.

Speaker Change: It's a good question Patrick most of it is Argentina and you you know all about the hyperinflation down there. If you back out Argentina are Latin America Revpar came in at a roughly 3% and that was driven by our obviously, our Argentina had a great quarter, we have it's an important market for us.

Geoffrey A. Ballotti: When we think about ancillary fee opportunities over there, I mean, we've become a lot more targeted. And from a digital marketing, platform marketing standpoint, and we do a lot of really creative things over there, we could continue to push that higher. Great. Thanks so much.

Charles Patrick Scholes: But that was the bulk of it we had good results in Brazil, we had good results in Peru.

Charles Patrick Scholes: Okay, and then lastly on China.

Geoffrey A. Ballotti: Thank you. And our final question today will come from Patrick. Good.

Charles Patrick Scholes: You did significantly better than the overall market are what drove that thank you sure yeah, China I cant our China team was that just said to Meredith is very very bullish.

Geoffrey A. Ballotti: Thank you. Just a follow-up question here regarding the quarterly results, specifically international. Certainly, in Latin America, your numbers were phenomenal. Can you give us a little bit more color on how you did 41% REVPAR there? Certainly, that caught us off by surprise. It's a good question, though. Patrick, most of it is Argentina, and you know all about the hyperinflation down there. If you back out Argentina or Latin America, Rep. Parr came in at roughly 3%.

Charles Patrick Scholes: We're seeing more domestic travel.

Speaker Change: Flight capacity is part of it.

Speaker Change: Obviously the.

Speaker Change: Some of our peers have talked about not being able to fly our in terms of this that the load factor the way you could before but cost consciousness. Our team believes is also part of it if you look at the Chinese travel patterns. This year, they're opting to stay closer to home, especially over the Chinese new year period, I believe that was February.

Geoffrey A. Ballotti: And that was driven by, obviously, Argentina had a great quarter, it's an important market for us, but that was the bulk of it. We had good results in Brazil, we had good results, Okay. And then lastly, in China here, you did significantly better than the overall market. What drove that?

Speaker Change: 10, I think it was for eight days.

Speaker Change: We saw really strong pickup of more domestic travel and we think that will continue throughout the rest of the year in terms of where it's happening our tier one cities are big Windows Big win of grants are doing very very well and are probably outpacing the tier two and three cities we're in.

Geoffrey A. Ballotti: Thank you. Sure. Yeah, China, again, our China team, as I just said to Meredith, is very, very bullish. We're seeing more domestic travel. Flight capacity is part of it. Obviously, some of our peers who talked about not being able to fly and the Load Factory the way they could before. But cost consciousness, our team believes, is also part of it. If you look at Chinese travel patterns this year, they're opting to stay closer to home, especially during the Chinese New Year period.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Patrick.

Speaker Change: Thank you at this time, Mr. Blahdy I'd like to hand things back to you Sir for any closing comments alright. Thank you and thanks, everybody for your questions and your interest in Wyndham hotels, and resorts, Michele Matt and I look forward to talking to and hopefully seeing many of you in the weeks and months ahead at many of the upcoming investor conferences will be attending have a great day.

Speaker Change: Thank you Mr. Bloody this does conclude today's Wyndham hotels and resorts first quarter 2024 earnings Conference call. Please disconnect. Your line at this time and have a wonderful day.

Geoffrey A. Ballotti: I believe that was February. [inaudible] All right, thank you. Thanks, Patrick. Thank you. At this time, Mr. Bloddy, I'd like to hand things back. All right, thank you, and thanks, everybody, for your questions and your interest in Wyndham Hotels and Resorts. Michele, Matt, and I look forward to talking to you and, hopefully, seeing many of you in the weeks and months ahead at many of the upcoming investor conferences we'll be attending. Have a great day. Thank you, Mr. Blotti. This does conclude today's conference call. Please connect your line at this time.

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