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WYNDHAM HOTELS & RESORTS, INC. (WH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: adjusted diluted EPS of $1.33 vs S&P Global consensus ~$1.16 (+14%; bold beat) and fee-related & other revenues of $397M vs ~$387M (+3%; beat), aided by strong ancillary revenues (+19% YoY) and an $8M favorable marketing fund swing . EPS/Revenue consensus values retrieved from S&P Global.*
  • Guidance raised: full-year adjusted diluted EPS increased to $4.60–$4.78 (from $4.57–$4.74), and rooms growth low-end lifted to 4.0%–4.6% (from 3.6%–4.6%) as reporting methodology excludes the dilutive Super 8 China master licensee portfolio .
  • Top-line drivers offset U.S. RevPAR softness: global RevPAR -3% CC (U.S. -4% partly due to Easter/eclipse timing), while international RevPAR +1% CC with notable strength in EMEA (+7%) and LatAm (+18%) . Pipeline reached a record 255,000 rooms (+5% YoY) and 229 contracts (+40% YoY), underscoring durable development momentum .
  • Capital returns remain a catalyst: $77M buybacks and $0.41 dividend in Q2 ($109M returned), total liquidity ~$580M, leverage 3.5x—leaving significant capacity for H2 repurchases or strategic transactions .

What Went Well and What Went Wrong

What Went Well

  • Ancillary revenue and royalty rate expansion: ancillary revenues +19% YoY; royalty rates up 6 bps domestically and 13 bps internationally, reflecting higher FeePAR mix . “We drove an increase of nearly 20% in our ancillary fee streams, and we saw continued expansion in both our U.S. and in our international royalty rates” — CEO Geoff Ballotti .
  • Development momentum and pipeline quality: 229 contracts (+40% YoY), pipeline at a record 255k rooms (+5% YoY), ~70% midscale-and-above, ~76% new construction, ~58% international—signaling durable future royalty growth . “Record first-half openings and a 40% second quarter increase in new contracts awarded reflect strong developer confidence” — Ballotti .
  • Cash returns and liquidity: $109M returned (buybacks + dividend), $88M adjusted FCF in Q2, ~$580M total liquidity; leverage at 3.5x midpoint of target, implying up to ~$550M deployable capital in 2025 after dividends .

What Went Wrong

  • U.S. RevPAR declined 4% (CC): driven by softer demand and ~150 bps headwind from Easter timing and the 2024 solar eclipse; normalized U.S. RevPAR decline ~2.3% . Analysts probed RevPAR pressure across segments and timing of growth resumption .
  • Marketing fund variability obscured comparability: Q2 2025 had $3M MF revenues > expenses vs $5M MF expenses > revenues in Q2 2024, creating an $8M favorable swing; comparable adjusted EBITDA growth +5% vs reported +10% .
  • China master licensee issues necessitated reporting changes: the company issued a notice of default to the Super 8 China master licensee; rooms under that agreement are excluded from system metrics going forward ( < $3M FY24 EBITDA impact), adding complexity for trend analysis .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Fee-related & other revenues ($USD)$341,000,000 $316,000,000 $397,000,000
Net Income ($USD)$85,000,000 $61,000,000 $87,000,000
Diluted EPS ($USD)$1.04 (adj) / $1.08 (GAAP) $0.86 (adj) / $0.78 (GAAP) $1.33 (adj) / $1.13 (GAAP)
Adjusted EBITDA ($USD)$168,000,000 $145,000,000 $195,000,000

Notes: Adjusted metrics per non-GAAP reconciliations .

SegmentQ4 2024Q1 2025Q2 2025
Hotel Franchising Net Revenues ($USD)$341,000,000 (Total Co.) / $341,000,000 $316,000,000 $397,000,000
Hotel Franchising Adjusted EBITDA ($USD)$189,000,000 $161,000,000 $214,000,000
Corporate Adjusted EBITDA ($USD)$(21,000,000) $(16,000,000) $(19,000,000)
Total Company Adjusted EBITDA ($USD)$168,000,000 $145,000,000 $195,000,000
KPIsQ4 2024Q1 2025Q2 2025
Global system rooms903,000 907,200 (as previously reported) 846,700 (revised reporting basis)
Pipeline rooms252,000 254,000 255,000
Contracts awarded (units)n/a181 229
Global RevPAR ($, CC YoY)$40.01, +5% $36.13, +2% $47.55, (3%)
U.S. RevPAR ($, CC YoY)$46.41, +5% $42.37, +2% $53.32, (4%)
International RevPAR ($, CC YoY)$32.17, +6% $28.73, +3% $39.45, +1%
MarginsQ4 2024Q1 2025Q2 2025
EBITDA Margin %44.28%*40.82%*45.34%*
Net Income Margin %24.93%*19.30%*21.91%*

Values retrieved from S&P Global.*

Performance vs Estimates (S&P Global)Q4 2024Q1 2025Q2 2025
Primary EPS Consensus Mean$0.991* (Actual $1.04) $0.814* (Actual $0.86) $1.164* (Actual $1.33)
Revenue Consensus Mean ($USD)$344,468,100* (Actual $341,000,000) $317,207,610* (Actual $316,000,000) $386,643,390* (Actual $397,000,000)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted diluted EPS ($)FY 2025$4.57 – $4.74 $4.60 – $4.78 Raised
Rooms growth (YoY)FY 20253.6% – 4.6% 4.0% – 4.6% Raised low-end
Global RevPAR growth (CC YoY)FY 2025(2%) – 1% (2%) – 1% Maintained
Fee-related & other revenues ($B)FY 2025$1.45 – $1.49 $1.45 – $1.49 Maintained
Adjusted EBITDA ($M)FY 2025$730 – $745 $730 – $745 Maintained
Adjusted net income ($M)FY 2025$358 – $372 $358 – $372 Maintained
Adjusted FCF conversion rateFY 2025~57% ~57% Maintained
Dividend per shareQ2 2025$0.41 (declared May) Paid Q2 $0.41 Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesStrengthening tech stack, new debit card, renewal of Barclays co-brand; investments in Oracle/Sabre/Amazon/Adobe; Wyndham Connect monetization Launch of Wyndham Connect Plus (AI-driven guest engagement), Wyndham Gateway Wi-Fi portal; broadened owner tools (Marketplace, PriceIQ) Expanding AI-driven/owner-first tools
Supply chain, tariffs/macroTariff concerns; cost management via domestic sourcing; Canadian lumber exemption cited; macro uncertainty weighed on leisure in Q1 Macro volatility affecting economy/midscale guests; pricing steady; blue-collar demand stable Macro headwinds persist; pricing resilient
Development/pipeline & extended-stayRecord openings; Echo Suites pipeline >30k rooms; direct franchising in China accelerating; EMEA pipeline +40% 229 contracts (+40% YoY); pipeline 255k rooms (+5% YoY); Echo signings/openings continue Strong, quality-weighted growth
Regional RevPAR trendsQ4 U.S. RevPAR +5% (hurricane lift 140 bps); LATAM +43%, EMEA +7%; China softness U.S. -4% (Easter/eclipse), International +1%; EMEA +7% and LATAM +18%; Canada +7%; China -8% Mixed; International strength offsets U.S. softness
Regulatory/legalNone material beyond standard risk; outlook framed Notice of default to Super 8 China master licensee; reporting basis revised Compliance actions underway; immaterial EBITDA impact
Infrastructure/data center tailwindsQ4: meaningful RevPAR lift near projects; multi-year tailwind Ongoing midwest strength; data center pipeline tracked (150 projects within 15 miles) Tailwind maintained

Management Commentary

  • “We grew comparable adjusted EBITDA by 5%, and we grew EPS by 11% despite the challenging RevPAR environment… increase of nearly 20% in our ancillary fee streams” — CEO Geoff Ballotti .
  • “Beginning this quarter, we've revised our reporting methodology to exclude the full Super 8 China Master License portfolio… contributed less than $3 million to our full year 2024 consolidated adjusted EBITDA” — CFO Michele Allen .
  • “Our pipeline continues to skew higher domestically… and international executions of 11,000 rooms” — Ballotti .
  • “At this leverage ratio, our current outlook implies up to $550M of capital available for deployment this year after dividends… ~$110M for key money, leaving nearly $400M for share repurchases or strategic transactions” — Allen .

Q&A Highlights

  • RevPAR granularity and outlook: Management emphasized normalized U.S. RevPAR -2.3% in Q2 with softness in Sunbelt leisure offset by strength in industrial/oil/gas states; pricing/ADR steady and chain-scale gaps widening .
  • Net room growth durability: 4.0%–4.6% 2025 target reaffirmed; composition improving in quality and visibility, more midscale-and-above, and Echo ramping .
  • China strategy: No new master license agreements; focus on direct franchising with higher royalty rates and robust pipeline (approx. 400 direct hotels) .
  • Ancillary fees trajectory: Card program driving engagement—+5% new accounts, +2% spend; full-year low-teens growth expected; momentum to continue .
  • Capital deployment guardrails: Key money used judiciously; hurdle-rate discipline; balance between growth deals and opportunistic buybacks .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: adjusted EPS $1.33 vs ~$1.164 (bold beat); revenue $397M vs ~$386.6M (beat). Margin resiliency (EBITDA margin ~45.34%) despite U.S. RevPAR softness supports above-consensus profitability. Values retrieved from S&P Global.
  • Revisions implications: Raised FY EPS guide and higher rooms growth low-end should prompt upward adjustments to FY EPS and possibly royalty-rate assumptions, while RevPAR outlook remains (2%) to +1% amid macro uncertainty .

Key Takeaways for Investors

  • Development-led compounding: Record pipeline and higher FeePAR mix (royalty rate expansion) build medium-term earnings power even as U.S. demand normalizes .
  • Ancillary monetization is a structural growth vector: Credit/debit programs and AI-enabled guest engagement (Wyndham Connect Plus) diversify fee streams and cushion RevPAR cyclicality .
  • Reporting reset in China removes dilutive noise: Excluding Super 8 master licensee rooms clarifies growth trajectory; financial impact remains immaterial (<$3M FY24 EBITDA) .
  • Capital returns remain active: Q2 buybacks + dividend with ~$580M liquidity and leverage at 3.5x enable incremental H2 repurchases as valuation permits .
  • Near-term watch items: U.S. leisure in Sunbelt states, infrastructure/data center demand ramp, EMEA strength persistence, and continued royalty-rate accretion .
  • Marketing fund timing: Expect quarterly variability (Q3/Q4 underspend ~ $10M each) but breakeven for full year—focus on comparable metrics for trend analysis .
  • Guidance credibility: Maintaining EBITDA and revenue ranges while lifting EPS (share count and mix effects) signals cost control and cash conversion discipline .