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    WYNDHAM HOTELS & RESORTS (WH)

    WH Q2 2025: Net Room Growth Guidance Lifted to 4–4.6%

    Reported on Jul 24, 2025 (After Market Close)
    Pre-Earnings Price$88.82Last close (Jul 24, 2025)
    Post-Earnings Price$89.30Open (Jul 25, 2025)
    Price Change
    $0.48(+0.54%)
    • Robust Direct Franchising in China: Management highlighted that their direct franchising business in China has grown over 100% since the spin, now approaching 100,000 rooms and supported by a pipeline of about 400 direct hotels, offering significantly higher royalty rates compared to legacy models.
    • Strong Pipeline & Echo Suites Momentum: Executions are robust with new construction pipeline growth and record contract signings—particularly, an increasing Echo Suites pipeline that added over 1,600 new rooms this quarter, underscoring strong long‐term growth prospects.
    • Resilient Ancillary Revenue and Improving Demand: The Q&A noted a 19% rise in ancillary fees driven by a high-performing co-branded credit card program, alongside improving consumer travel sentiment (with booking indicators rising to 94-95% intention levels), supporting the overall revenue outlook.
    • China Operations Risk: The ongoing issues with the Super eight master licensee in China—resulting in a notice of default and uncertainty about its ultimate outcome—could disrupt operations and potentially impact system performance.
    • Weak Domestic RevPAR: Q2 saw a 4% decline in U.S. RevPAR, with notable softness in key Sunbelt regions, suggesting that domestic demand and pricing pressures might continue to weigh on performance.
    • Macroeconomic Headwinds: Persistent inflation and higher for longer interest rates create an environment of economic volatility that could further depress travel demand and occupancy.
    MetricYoY ChangeReason

    Total Revenue

    8.5% increase (from 366 to 397 million USD)

    Overall revenue growth is driven by improved operational performance and consolidation of revenue streams. This builds on previous periods where challenges like lower RevPAR and franchise fee declines in Q1 2024 were addressed by higher fee-related income in Q1 2025.

    Fee-Related and Other Revenues

    Consolidated revenue of 397 million USD

    The consolidation reflects a strategic reclassification as the previously separate Hotel Franchising segment is now included. This change builds on earlier gains from higher royalties, franchise fees, and ancillary revenues, as seen in Q1 2025 improvements.

    Marketing, Reservation, and Loyalty Revenues

    10% increase (from 150 to 165 million USD)

    The 10% YoY rise is attributed to refined expense management and operational adjustments. This contrasts with the Q1 2024 decline driven by lower RevPAR and the increased expense variability seen in Q1 2025 , suggesting enhanced market execution and a more favorable revenue mix in Q2 2025.

    Other Revenues

    28% increase (from 39 to 50 million USD)

    The robust 28% jump likely reflects a rebound from previous nonrecurring charges such as transaction-related expenses noted in Q1 2024. This recovery, which aligns with an improved ancillary income stream, signals both market adjustments and internal corrections from past volatility.

    Hotel Franchising Revenue

    Omitted in Q2 2025 (previously 367 million USD)

    The significant reporting change—omitting the previously reported 367 million USD—indicates a strategic move to consolidate franchise revenue with fee-related income. This aligns with prior Q1 2025 trends of leveraging net room growth and enhanced fee structures to better reflect the company’s evolving revenue model.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Net Room Growth

    FY 2025

    3% to 5%

    4% to 4.6%

    raised

    Adjusted EPS

    FY 2025

    $4.57 to $4.74

    $4.60 to $4.78

    raised

    Global RevPAR Growth

    FY 2025

    down 2% to up 1%

    down 2% to up 1%

    no change

    Marketing Fund

    FY 2025

    breakeven on a full-year basis, with similar Q2 expectations

    breakeven on a full-year basis with an anticipated $10M underspend in Q3 and Q4

    no change

    Diluted Share Count

    FY 2025

    no prior guidance

    77.8 million shares

    no prior guidance

    Capital Deployment

    FY 2025

    no prior guidance

    up to $550 million available for deployment, with $110 million earmarked for key money and nearly $400 million for share repurchases/strategic transactions

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Ancillary Revenue Growth & Co‐Branded/Loyalty Programs

    In Q1, Q4, and Q3, discussions centered on steady ancillary revenue growth driven by credit card programs, partnership fees, and robust loyalty enrollment including innovative partnerships

    Q2 emphasized a 19% growth in ancillary revenues, spurred by a renewed long‐term co‐branded credit card agreement and enhanced loyalty experiences (e.g., Wyndham Rewards Experiences with live event bidding)

    Increased positive sentiment and accelerated growth with enhanced guest engagement.

    Room Growth & Development Pipeline Expansion (including Echo Suites)

    Prior periods highlighted record room openings, strong international performance, and an expanding pipeline with notable Echo Suites developments and conversions

    Q2 reported 4% global system growth, record first‐half room openings, and significant Echo Suites pipeline expansion with new developments and conversions across key regions

    Consistently strong performance with further international expansion and deeper emphasis on Echo Suites.

    Domestic RevPAR Weakness & U.S. Demand Challenges

    Q1 showed modest RevPAR growth below expectations and Q3 reported declines with mixed regional performance, while Q4 focused on positive RevPAR driven by infrastructure and leisure demand

    Q2 noted a 4% decline in U.S. RevPAR—attributed partly to timing effects—with quality improvements in normalized figures and mixed regional performance

    Mixed sentiment as challenges persist while normalization signals emerge amid varying regional trends.

    Macroeconomic Headwinds & Cost Inflation/Supply Chain Pressures

    Earlier periods (Q1, Q3, and Q4) mentioned an uncertain macro environment without detailed discussion of cost inflation or supply chain issues

    Q2 provided explicit focus on higher interest rates, persistent inflation, higher insurance premiums, and the launch of supply chain cost‐reduction initiatives like Wyndham Marketplace with PriceIQ

    New in‐depth emphasis on cost pressures and supply chain challenges compared to previous periods.

    China Direct Franchising Strategy & Associated Operational Risks

    Q1 and Q3 discussed the strategic shift to direct franchising in China—with faster growth than legacy master license agreements—and Q4 highlighted robust direct franchise performance

    Q2 reiterated the focus on direct franchising while also flagging operational risks such as license agreement violations that led to a notice of default, necessitating revised reporting metrics

    Continued strategic focus with emerging operational risk concerns compared to earlier upbeat sentiment.

    Innovative Technology Investments (Cloud‑based Tech Stack)

    Previous calls emphasized a $300 million investment in a cloud‑based tech stack, partnerships with leading providers, and tangible benefits like enhanced loyalty metrics and operational efficiency

    Q2 introduced new technology initiatives including Wyndham Gateway, Wyndham Connect Plus, and supply chain innovations that open up ancillary revenue opportunities, reinforcing the company’s commitment to technology-led differentiation

    Consistent long‑term commitment with expanded platforms and deeper innovation in guest engagement and operations.

    Key Money Investments & High FeePAR Strategy

    Q1 and Q4 highlighted selective capital deployment to secure high FeePAR deals with notable premiums, while Q3 had indirect mentions through development investments

    Q2 reiterated the focus with discussions of $110 million in key money investments, improved FeePAR metrics, and favorable deal signings that enhance both domestic and international returns

    Consistent emphasis on deploying capital efficiently to secure premium, FeePAR‐accretive properties.

    Infrastructure Spending Uncertainty

    Q1 mentioned a slowdown in infrastructure disbursements with cautious optimism; Q4 noted that uncertainty had been resolved to fuel pipeline growth; Q3 described early-stage spending as a promising catalyst

    Q2 reported that infrastructure spending was slower relative to Q4, yet identified ongoing opportunities from data center projects and transportation initiatives, reflecting a more measured tone

    A mixed picture—with some lingering uncertainty in Q2 versus highly optimistic signals in Q3/Q4—indicating evolving market conditions.

    External Operational Risks (Weather Volatility, Seasonal Pull‐Forward, Election Distractions)

    Q3 discussed these external risks in detail, covering impacts from hurricanes, seasonal booking shifts, and election-related effects on group and corporate travel

    Q2 did not mention these risks at all [N/A]

    These topics have been de‑emphasized or omitted in the current period.

    1. RevPAR Trends
      Q: What’s happening with RevPAR?
      A: Management explained that normalized RevPAR declined by 2.3% in Q2, with softness in leisure-focused regions offset by better performance in industrial and Midwest markets, reflecting steady pricing discipline.

    2. Net Room Growth
      Q: How are net rooms growing?
      A: They raised guidance to 4%–4.6%, driven by high-quality executions and an expanding pipeline across both domestic and international markets.

    3. China Strategy
      Q: How will China issues impact growth?
      A: The team is moving away from old master licenses toward direct franchising, evidenced by a 100%+ increase in direct China rooms and a strong deal pipeline.

    4. Ancillary Performance
      Q: What’s driving credit card revenue?
      A: Ancillary fees surged 19% this quarter, mainly due to the co-branded credit card program and higher engagement, supporting low-teens full-year growth.

    5. Pipeline & Retention
      Q: How robust is the development pipeline?
      A: Development remains vigorous with no project dropouts and retention rates at 95.8%, even as Q4 faces a tougher comparison from last year.

    6. Echo Suites Growth
      Q: What’s the outlook for Echo Suites?
      A: Echo Suites is expanding with record pipeline growth from more one-off deals, and plans for international expansion—possibly starting in Mexico—are underway.

    7. Key Money Environment
      Q: Has key money become more competitive?
      A: The environment remains steady, with management deploying about $110 million judiciously toward high-quality deals without easing its disciplined guardrails.

    Research analysts covering WYNDHAM HOTELS & RESORTS.