NYSE:WH Wyndham Hotels & Resorts Q4 2023 Earnings Report $85.21 +0.30 (+0.35%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$85.26 +0.05 (+0.05%) As of 04/25/2025 07:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Wyndham Hotels & Resorts EPS ResultsActual EPS$0.91Consensus EPS $0.90Beat/MissBeat by +$0.01One Year Ago EPS$0.72Wyndham Hotels & Resorts Revenue ResultsActual Revenue$321.00 millionExpected Revenue$321.35 millionBeat/MissMissed by -$350.00 thousandYoY Revenue Growth-3.90%Wyndham Hotels & Resorts Announcement DetailsQuarterQ4 2023Date2/14/2024TimeAfter Market ClosesConference Call DateThursday, February 15, 2024Conference Call Time8:30AM ETUpcoming EarningsWyndham Hotels & Resorts' Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled on Thursday, May 1, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Wyndham Hotels & Resorts Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 15, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the Wyndham Hotels and Resorts 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants have been placed on a listen only mode I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead. Speaker 100:00:42Thank you, operator. Good morning and thank you for joining us. With me today are Jeff Bellotti, our CEO and Michelle Allen, our CFO. Before we get started, I want to remind you that our remarks today will contain forward looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. Speaker 100:01:03These risk factors are discussed in detail in our most recent annual report on Form 10 ks filed with the and Exchange Commission and any subsequent reports filed with the SEC. 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. 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 metric. Speaker 100:01:42In addition, last evening, we posted investor presentation containing supplemental information on our Investor Relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC and any public conference calls or webcasts. We have also created a separate website at staywindham.com to provide additional information relating to the ongoing situation with Choice With that, I will turn the call over to Jeff. Speaker 200:02:19Thanks, Matt, and thanks everyone for joining us this morning. 2023 was an exceptional year for Wyndham, marked by outstanding operational achievements and a series of record breaking performance metrics. But before delving into our results, we want to take a moment to discuss the ongoing matters with Choice. As we shared in our public response, Choice has nominated directors with the sole purpose of advancing its inadequate, hostile and risk laden offer, an offer which our Board has unanimously determined is not in the best interest of our shareholders. Our Board is well constituted combining decades of experience in areas critical to overseeing the execution of our strategy, including hospitality and more specifically, global hotel franchising, M and A, governance and risk oversight. Speaker 200:03:07As we've consistently communicated, Choice's offer fails to address 3 principal concerns. First, the Adequacy of the value of the offer compared with our future growth prospects. 2nd, the significant amount of Choice stock included in the consideration mix, which would expose our shareholders to an over levered pro form a company with slower long term growth prospects and third, the asymmetrical risks to Wyndham and our shareholders resulting from a prolonged and an uncertain regulatory review. On the regulatory topic, our concerns regarding the unique risks of this transaction have only increased as the process has unfolded. Starting with the Federal Trade Commission's unsolicited outreach to us and subsequent investigation even before Choice launched its exchange offer. Speaker 200:03:58Moreover, state attorneys general from Washington, Colorado, Kansas and Vermont have also now opened their own separate investigations. The expansive second request we received from the FTC on January 11 is requiring us to provide virtually every communication and every piece of data that relates in any way to our competition with choice. To put this into context, second requests are issued for only around 1% of deals reviewed by the FTC and they require additional time consuming back and forth discussions and meetings with the agency. Regulatory interest has undoubtedly peaked due to the continued opposition of franchisees in the Asian American Hotel Owners Association, which represents more than 2 thirds of both companies Domestic hotel owners. In a recent Ahowa survey of members who own either a Choice or a Wyndham Hotel, Over 2 thirds say that consider leaving were the merger to occur. Speaker 200:05:04The uncertain timeline and outcome facing our shareholders compounded by the risk that they are left with no deal and a damaged business at the end of a very long regulatory review process is highlighted by a recent report showing that over 90% of significant merger investigations in 2023 resulted in a lawsuit by the government to block the deal or the abandonment of the transaction with the FTC not accepting any pre lawsuit settlements involving a divestiture or other remedy. This trend has continued in recent months with the transactions such as JetBlue Spirit and its merger, the IQVIA Propel merger and Amazon's proposed acquisition of Irobot, all of which were either blocked or now face significant delays and challenges. The potential value destruction that could arise from this ongoing An elongated process remains significant. Choice continues to try to take advantage of the uncertain timeline and outcome to exploit franchisee uncertainty for its own competitive advantage. And Choice's unsolicited offer also has significant real dollar costs for our shareholders, currently estimated at approximately $75,000,000 which includes approximately $15,000,000 related solely to the FTC review. Speaker 200:06:31More fundamentally, as our 2023 results and longer term progress demonstrate, Wyndham is positioned to generate shareholder value well in excess of Choice's current offer. Over the last 3 years, We've consistently grown our system, our market share and our earnings, while also expanding our pipeline to support future growth. As Michelle will cover in further detail, our strategy, which is well underway, is expected to generate an organic adjusted EBITDA CAGR of 7% to 10% over the next 3 years. We also expect to produce over $700,000,000 of excess cash Over the next 2 years, this resilient cash flow along with our incremental leverage capacity, assuming only a 3.5 times net leverage ratio, can generate a total of $1,400,000,000 of excess liquidity, which can be deployed strategically for both organic and inorganic growth opportunities, further supporting additional value creation for Wyndham shareholders beyond our 7% to 10% EBITDA growth expectation. And now on to the results. Speaker 200:07:39We were extremely pleased to report another strong quarter with a host of record breaking full year metrics. We opened 66,000 rooms, the largest year of organic room additions in Wyndham's history against drop of hotel transaction volumes nearly 50% below last year, which are important to our business since each time a hotel transaction changes hands, The new owner has a brand decision to make. We achieved this success despite the distraction over the past 10 months caused by choice. Our global retention rate, which includes all terminations reached 95.6%, a 30 basis point improvement year over year and an over 250 basis improvement since our spin off. With the growing support and the growing engagement of our franchisee community along with investments that we've made in our brands were now within reach of our targeted 96% retention rate And we expect that our direct franchising retention rate will continue to improve. Speaker 200:08:42We delivered 3.5% of net room growth with Q4 marking the 12th consecutive quarter of organic net room growth. We grew our development pipeline for the 14th consecutive quarter to a record 240,000 rooms. And our brands all powered by Wyndham Rewards ranked number 1 by USA TODAY for 6 consecutive years continue to grow their market share with our economy brands outperforming the STR U. S. Chain scale by another 60 basis points, helping to drive 5% global RevPAR growth currency along with 7% growth in Wyndham Rewards membership to a record 106,000,000 members. Speaker 200:09:25Full year adjusted EBITDA reached an all time high of $659,000,000 and we generated $339,000,000 of free cash flow in 2023. We also returned over $500,000,000 to our shareholders, representing over 8% of our market cap from the beginning of the year. Our owner first philosophy continues to attract a wide variety of franchisees to the Wyndham portfolio of brands. We opened an average of 2 hotels each business day in 2023 and the 500 hotels we opened this year were 11% more than the number we opened last year. In the process, we introduced 13 of our brands in 24 new countries around the world, including our first La Quinta in Ecuador, our first Super 8 in the United Kingdom and our first Hawthorne Suites in China And all of these brand launches in new countries can support more hotels from each brand going forward. Speaker 200:10:25And more importantly, were sold on a direct versus a master license franchising basis with no royalty share driving international direct net room growth in excess of 10%, along with a 30 basis point improvement in our international royalty rate. Our teams awarded 864 contracts globally for approximately 104,000 room additions, which was 30% more than what we signed back in 2019. In Q4 alone, we executed 33% more contracts domestically than we did back in 2019 when transaction volumes was over 30% higher than it was this year. And Q4 signings internationally increased by 35% year over year and by over 30% compared to 2019, with the largest increase coming from EMEA, our global region with our 2nd highest RevPAR. Our development pipeline increased 10% year over year to a record 240,000 rooms. Speaker 200:11:28Mid scale and above brands in the pipeline increased 6% to a record 170,000 rooms and now represent nearly 70% of our pipeline. Our pipeline represents approximately $125,000,000 of royalty fees over the next 4 years With domestic hotels weighted more to upscale and higher RevPAR brands and with our international pipeline concentrated in higher RevPAR regions like Europe and Latin America. These RevPAR accretive rooms will come into the system over the next 4 years with fee pars on average 30% higher than our current system average, providing us with another tailwind for growth that Michelle will cover in more detail. Echo Suites by Wyndham, the industry's fastest growing new brand launch, grew by nearly 60% in 2023 with over 33,000 rooms Now in our development pipeline. During the Q4, we began to selectively award contracts for the brand to experienced individual In addition to the many institutional developers, we have contracted with thus far. Speaker 200:12:34We have nearly a dozen Echo Suites now under construction, which we expect to open by year end and 75 are expected to be open by the end of 2026. Last month at the Americas Lodging Investment Summit, we announced a new partnership with SBE Entertainment. We're combining SBE's unmatched culinary and unmatched lifestyle experience with Wyndham's distribution and technology platform to fuel Project HQ's development under our growing Registry Collection Hotels brand. This partnership expands our platform and it fills a white space in our portfolio for hotel owners searching for a differentiated, yet approachable lifestyle brand that will immediately benefit them from the scale and the resources of the world's largest hotel franchisor. Project HQ plans to open 50 registry collection hotels by 2,030, delivering approximately 7,500 rooms designed uniquely for what millennial and Gen Z travelers are seeking. Speaker 200:13:34The partnership represents the latest example of are shifting mix to higher RevPAR segments and increasing fee par at a faster rate than our system average. U. S. RevPAR, which was down 4% year over year, increased 10% versus 2019, which is a 120 basis point acceleration from Q3 performance. Q4 trends represented a continued moderation of the revenge leisure travel that we saw last year, which largely favored select service chain scales. Speaker 200:14:05Internationally, Q4 RevPAR was 7% higher than last year in constant currency and 44% higher than Q4 of 2019, relatively consistent with the strong performance from Q3. In our quest to maximize franchisees top and bottom lines and to improve owner engagement and retention. This year, we implemented a number of innovative tools. We developed Wyndham Community, a state of the art mobile enabled platform that seamlessly connects our owners to the day to day performance of their hotels while delivering a constant connection to Wyndham scale and resources to help maximize their profitability. We delivered a segment leading guest engagement platform, Allowing our franchisees to sell room upgrades and services like early check-in and late checkout, along with beverages or snacks and other local amenities for in room delivery upon a guest's arrival, a first for select service hotel owners that will provide significant room revenue opportunities for them. Speaker 200:15:07We completed the rollout of our mobile next generation property management systems at unprecedented pricing from best in class suppliers, which drove RevPAR increases of over 170 basis points on average for franchisees using these systems. And we provided an OTA commission reconciliation tool helping to put 1,000 of dollars back into the pockets of franchisees on a monthly basis by reconciling OTA bookings that either never show up or that depart early. Before handing the call over to Michelle, all of us at Wyndham, we'd like to take a moment to honor the passing of an industry icon. In late December, we lost Ron Rivett, Co Founder of the Super 8 brand. Ron leaves an indelible mark on the industry With the creation of Super 8, we acquired the brand in 1993. Speaker 200:15:59And by following Ron's owner philosophy of being available, being approachable and being accountable, Super 8 is now the largest economy brand in the world with 2,000 663 hotels in 9 countries. We're honored that not only is the very first Super 8 in Aberdeen, South Dakota still in our system, but it's also run by Ron's family, who keeps his memory and his dedication to this industry alive every day. And as we commemorate Super 8's 50th anniversary this year, we will celebrate Ron Rivett and his many accomplishments. We would also like to extend our heartfelt appreciation to all of our team members and all of our franchisees. Our record Setting achievement would not have occurred without their dedication and their support. Speaker 200:16:50Their enthusiasm for the opportunities that lie ahead, Coupled with their commitment to our initiatives to deliver exceptional value remains the key to our success. And with that, I'll now turn the call over to Michelle. Michelle? Speaker 300:17:07Thanks, Jeff, and good morning, everyone. I'll begin my remarks today with a detailed review of our Q4 and full year results. I'll then review our cash flows and balance sheet, followed by our longer term growth prospects and finally, our 2024 outlook. As Jeff mentioned, we were delighted with our operational progress in 2023. At the same time, we're pleased to put the tough year over year financial reporting comparisons behind us since 2023 was our 1st year of reporting without the inclusion the lower margin select service managed business and owned hotels and was also impacted by lapping the revenge travel that occurred in 2022 following COVID. Speaker 300:17:46In the Q4, we generated $320,000,000 of fee related and other revenues and $154,000,000 of adjusted EBITDA. Fee related and other revenues increased 3% year over year reflecting global net room growth as well as higher license and ancillary fees, partially offset by a year over year RevPAR decline. Adjusted EBITDA increased $28,000,000 including a favorable marketing fund timing impact of $21,000,000 as expected. On a comparable basis, adjusted EBITDA grew 6%, primarily reflecting our revenue growth. 4th quarter adjusted diluted EPS was $0.91 reflecting the adjusted EBITDA growth as well as benefits from our share repurchase activity, which were partially offset by higher interest For the full year, we generated $1,380,000,000 of fee related and other revenues in line with our expectations compared to $1,350,000,000 last year, which included $50,000,000 from the sold, managed and owned businesses. Speaker 300:18:46On a comparable basis, fee related and other revenues increased 6% year over year, reflecting global RevPAR and net room growth as well as higher license and ancillary fees. Adjusted EBITDA was also in line with our expectations at 6 $59,000,000 in full year 2023 compared to $650,000,000 last year, which included an $18,000,000 contribution from the sold management owned businesses. The year over year change was further impacted by $11,000,000 of unfavorable marketing fund variability. On a comparable basis, EBITDA increased 6% year over year, primarily reflecting our revenue growth and our adjusted EBITDA margin remained consistent at 80%. Full year adjusted diluted EPS increased 8% on a comparable basis to 4 point activity, which were partially offset by higher interest expense. Speaker 300:19:40We generated $114,000,000 of free cash flow in the 4th quarter and $339,000,000 for the full year. Importantly, in line with our target, we converted 51% of our adjusted EBITDA to free cash flow, which at the adjusted net income line translated to nearly 100%. We returned $515,000,000 to our shareholders in 2023, representing 8% of our market cap, through $397,000,000 of share repurchases and $118,000,000 of common stock dividends. We ended the year with approximately $650,000,000 in total liquidity and our net leverage ratio of 3.2 times within the lower half of our target range. Amidst the prevailing higher interest rate environment, we continue to limit our exposure with only about 25% of our long term growth debt at variable rates. Speaker 300:20:29We now have our variable rate debt locked in at an effective interest rate of approximately 5.6% through 2027. As Jeff mentioned, our ongoing strategic initiatives will continue to provide a significant runway for accelerated earnings growth over the next several years. In October, We shared with you our expectation that our strategic plan will result in an adjusted EBITDA CAGR of 7% to 10%, which translates to $150,000,000 to $210,000,000 of incremental adjusted EBITDA between 20242026. This plan assumes 2% to 3% RevPAR growth and 3% to 5% annual net room growth over the plan period. These numbers should sound familiar to you. Speaker 300:21:12The RevPAR assumption in the U. S. Is anchored to current industry outlook for our chain sector performance. The net room growth assumption reflects the 75 Echo Hotels we expect to have opened by 2026 along with continued improvement in our direct franchising retention rate. On top with 70% of our pipeline now in the higher RevPAR, mid scale and categories. Speaker 300:21:36These properties will come into the system with higher fee parts. Combined, we expect these drivers to contribute over $100,000,000 or over half of the incremental EBITDA during the planned period. The remainder will come from our other growth initiative. As you know, Wyndham is uniquely positioned to benefit from the increased government spending tied to the infrastructure and chip stack. No hotel company has more select service located in the states where infrastructure spending will be concentrated. Speaker 300:22:03Over the estimated 8 year spend period, we expect that capturing just our fair share of this spend will generate $150,000,000 of incremental royalties for Wyndham shareholders, about $30,000,000 of which will contribute to the planned 7% to 10 EBITDA CAGR over the next 3 years. Additionally, ancillary revenue streams provide multiple opportunities for incremental growth to supplement our core business model. These areas include our suite of co branded credit cards, marketing partnerships and other monetization opportunities, which we expect to contribute $40,000,000 of incremental EBITDA over the planned period. Finally, as Jeff mentioned, our business model generates strong free cash flow and we have significant leverage capacity, which provide additional capital to drive incremental growth opportunities over and above our 7% to 10 EBITDA CAGR for the 3 years ending 2026. Turning now to 2024 outlook. Speaker 300:22:58We expect our direct franchising business will grow global net room growth 3% to 4%, including 20 basis points to 30 basis points of expected improvement in our retention rate. We are projecting global RevPAR growth of 2% to 3%. RevPAR growth is expected to be at its lowest quarterly level in Q1 as we lapped the toughest comp period in 2023, specifically the first half of the quarter, which is already behind us, where global RevPAR trailed of 2023 by about 3 points in January, but is expected to improve as we enter March and the spring break leisure travel season. Year over year comps become progressively easier throughout the remaining quarters. Fee related and other revenues are to be $1,430,000,000 to $1,460,000,000 You'll recall that in 2023, we hosted our Global which generated EBITDA neutral marketing revenue of $18,000,000 Since the conference is held every 18 months, These revenues will not repeat in 2024 and therefore negatively impact our year over year growth rate by about 2 points. Speaker 300:24:01Adjusted EBITDA is expected to be between $690,000,000 $700,000,000 consistent with our October outlook and reflecting comparable basis growth of approximately 6% to 8% based on our 2023 actual results. Adjusted net income is projected to be $341,000,000 to $351,000,000 and adjusted diluted EPS is projected at $4.11 to $4.23 based on a diluted share count of 83,000,000 which as usual excludes any future potential share repurchases. Free cash flow conversion before development advances is expected to approximate 60%. 2024 development advance spend is expected to increase to $90,000,000 from $72,000,000 in 2023. This increase primarily reflects the ramping of development efforts for our Echo brand as expected. Speaker 300:24:55Given the challenging macro backdrop this year, we had an opportunity to attract more owners in higher chain scales and accretive RevPAR markets by using key money as a tool to alleviate some of their debt burden. This is a trend we expect to continue throughout 2024. We also use more key money to navigate the uncertainty and disruptions created by Choice and we anticipate continuing this approach while the current situation persists. Today's outlook excludes the $75,000,000 of currently anticipated costs related to Choice's hostel offer. In addition to the cash we generate from operations, we also have the benefit of a strong balance sheet. Speaker 300:25:33Holding leverage flat to the 3.2 times we ended 2023 with will provide another $150,000,000 of available capital in 2024 to either invest in the business or to return to shareholders. Levering to 3.5x just the midpoint of our target range would provide $330,000,000 and levering to the high end of 4x would provide $675,000,000 of capital to deploy. Finally, while we expect our marketing funds to breakeven on a full year basis, we will continue to see timing differences in the quarterly results as we deploy incremental spend to capture building leisure demand for the spring break season ahead. For Q1, we expect the funds to overspend $10,000,000 to $15,000,000 And like last year, we expect Q2 will also overspend and then those amounts will reverse in the back half of this year. In closing, we are extremely proud of our 2023 performance. Speaker 300:26:25We successfully executed on our key business objectives, achieved a host of record breaking performance metrics, grew adjusted EBITDA 6% and generated significant capital return for our shareholders. Looking ahead, we approach 2024 with a compelling strategy poised to accelerate our growth and enhance returns for our shareholders. With that, Jeff and I would be happy to take your questions. Operator? Operator00:26:52Thank you. The floor is now open for questions. And speakers at this time, we currently are waiting for Mr. Eladi to dial back in. We are trying to reconnect him. Operator00:28:17We'll go first to Joe Greff with JPMorgan. Please go ahead. Speaker 400:28:23Good morning, everybody. Jeff, just trying to get a sense of maybe how disruptive the Choice offer is in the developer community. Obviously, Not an issue in the Q4 with pipeline and actual room openings, but here in the Q4, are you seeing an impact in either elongated construction timelines or interest in partnering with you, particularly maybe with the Echo brand. And maybe ask differently, would your net rooms growth be higher were it not for Maybe this perceived distraction on the part of developers with this Choice offer and would how much of the $90,000,000 in development advances is a function of your having to do that to grow because of maybe a distraction with Choice And maybe that impact there? Any color would be helpful. Speaker 400:29:20Thank you. Speaker 200:29:21Yes. Thanks, Joe. We could assign deals in the Q4 to your question. We've seen both deals and ground breaks pause. Many of these small business owners have experienced with Choice and They want to see this resolved certainly before moving forward. Speaker 200:29:37I mean, with Echo, we were thrilled with the 268, I believe we executed In 2023, that was 90% of what we committed to do last year. Our focus has shifted on from the large multiunit developers to individuals. And we certainly had some progress. I think we executed 3 in the quarter, But we could have executed more. But look, we're thrilled with the tremendous success in selling through this uncertainty. Speaker 200:30:07I mean, it really began back in May with the Street Journal leak. And we expect to continue to do the same in 2024. Our franchise sales teams around the world, I could tell you, are fired up. 4th quarter, as you say, was a record of openings, but more deal noise, to your point, certainly creates a more challenging sales environment, which really comes in 2 forms, owners, as I said, moving more slowly on committing to deals with us and a second sort of increased competitive deal landscape To your point on Dans as becoming more prevalent as Choice pushes to really reverse its declining system, But yes, we know our record Q4 could have been better both domestically and internationally without the noise. Speaker 300:30:52Yes. And to your last question, Joe to the last part of your question, Joe, I would say pushing through Choice is probably less than 10% of the total $90,000,000 budgeted for 2024. Speaker 400:31:03Thank you. Operator00:31:08Thank you. Our next question will come from David Katz with Jefferies. Speaker 500:31:19I do want to talk about sort of the NUG environment in a broader sense. Obviously, there's a lot of discussion out there about conversions and conversion competitiveness. If you could color in for us just a little bit where you fit in that landscape. And obviously, we look at this through a public company lens. But give us a sense for just how competitive that conversion environment is as well as for the new builds like in your segments, given the Street's perception, right, that it's become much more competitive? Speaker 200:31:58Sure. I think if you were talking to our Chairman, Steve Owens, I'd tell you, David, It's always been competitive. But the biggest question aside from the strength of our brands and how our franchisees are about us and they're certainly feeling great about us with our attention at record highs. We have a saying that people do business with us because they know us, they like us and they trust us. It's really when it comes down to competition, it's all about the size and the strength of our franchise sales team. Speaker 200:32:23And our franchise sales team has never been larger And it's never been stronger and that's really around the world, whether we're in Europe, Africa, Middle East, Asia Pacific, down in Latin America. They are, as I said, putting up record numbers right now. On the conversion front, we had a great year. We had a great quarter, we didn't slow down. Our quarter was up 60% versus 2019 in conversion Signings when transaction volumes, as we pointed out in the script, were a lot lower. Speaker 200:32:57And on the new construction side, Look, our pipeline grew 8% to prior year. We have a record 1400 new construction hotels in our pipeline. And we saw no slowdowns in new construction starts. Those were also up year to date. Developers are seeing very strong ROIs despite higher interest rates. Speaker 200:33:21Our in ground percentage improved, was up, I think, 90 basis points from the Q3. So projects are still getting built. And yes, developer events notes are being used on competitive deals, but we're really pleased with our brand offerings, how our brands are performing. And from a competitive standpoint, just how our franchisees are feeling and our sales teams are selling our products. Speaker 500:33:51Thank you. And look, as my follow-up, yesterday Choice did put out a preliminary proxy, Which has some commentary in there, just in an open ended way. Anything any thoughts, perspectives or comments you can share about that, I'm sure we'd all be interested in hearing? Speaker 200:34:12Yes. No, no surprise to your question. It was completely expected by our team and really just a procedural moment and a non event. I mean, this was Choice's first step, of course, to hold a preliminary proxy for a special meeting of their shareholders required to approve the issuance of Choices shares in connection with a deal that they believe they could do. The filing didn't change the offer. Speaker 200:34:39It didn't remove any of the numerous conditions to it, like the financing contingency or I don't know their due diligence out or Most importantly, their need for FTC clearance, to name just a few. Their offer, David, remains highly conditional, and it still does not address adequately our Board's 3 key issues that we talked about in the script. Speaker 500:35:02Got it. Thank you very much. Thanks, David. Operator00:35:07Our next question comes from Patrick Scholes with Truist Securities. Please go ahead. Speaker 500:35:13Hi, good morning, Jeff and Michelle. Speaker 200:35:16Good morning, Patrick. Speaker 500:35:17Good morning. Two questions. My first one, Jeff, you briefly touched Sean, the feedback you have been receiving from your large or top shareholders, can you just give us a little bit more color what Specifically, the feedback has been? Sure. Speaker 200:35:34I mean, we Michelle and I, there's not a day that goes by. We're not talking to our large shareholders. And the feedback consistently has been from them, and I'm sure we'll be on the phone with many of them this afternoon, is that they're generally supportive of the risks, the asymmetrical risks that are out there that we've been talking about that our board has objected to and certainly would want to see addressed before continuing discussions. Okay. Speaker 500:36:04Secondly, question regarding the 2% to 3% RevPAR growth for this year. How would you break that out between international and domestic. And again, you noted you expect a sizable acceleration. Certainly, I wouldn't say January for domestic hotels, especially economy mid scale has been Spectacular. What's I guess what you mentioned about what drives that acceleration domestically, but what's your for international to get to those numbers? Speaker 600:36:40Thank you. Speaker 300:36:42Sure, Patrick. I would say international is definitely going grow faster than the U. S. In the full year and we see that in January as well, right? International is up about 4% and the domestic system is certainly down. Speaker 300:37:00January's results, Not a surprise to us given how difficult the comps were this year. January last year, RevPAR was up 6%. So it was always going to be our most difficult month to compare against. And then as you move throughout the quarters, the comp gets progressively easier by the end of the quarter in March, I think RevPAR had only grown 1%. So we start at 6%, you go all the way down to 1%. Speaker 300:37:26And then obviously, as you move out of the Q1, the comps get tremendously easier for the remainder of the year. So when we think about the full year forecast at 2% to 3%, specifically answering your question with respect To domestic, we're expecting really 3 movements. We're expecting to see some benefits from the infrastructure pickup. That's continued momentum we have coming out of 2023 and we know projects new projects are getting approved every day. We are also expecting to see some impact from occupancy tailwinds. Speaker 300:38:05We're still trailing 2019 levels by about 9 points. So we're only assuming a very, A very small impact, maybe a point, a little bit less of that coming back into the 2024 results. And then from an ADR perspective, it's just really modest growth across the globe. We continue to see ADR trail the rate of inflation in the U. S. Speaker 300:38:30By 3 points and a couple of points internationally as well. And we're still in this very limited new supply environment in economy and mid scale, which generally favors pricing. And overall, RevPAR growth is highly correlated GDP and that's still expected to grow 2% to 3%. And then finally, I said fundamentals remain strong. Despite kind of the headlines that we still see our middle income cohort consumers growing wages faster than the rate than the ADR growth. Speaker 300:39:05We're seeing savings still elevated, probably about 30% versus their pre pandemic levels and And unemployment still remains really low. And very importantly, I say the intent to travel and the prioritization of travel spend continues to increase. And we were just looking at a recent survey by iSEEATS that showed 60% of their respondents are expecting to take 1 to 4 additional trips this year. So that's pretty meaningful. Of course, we're not seeing any of that in the January results, but like I said, That is the toughest comp we have year over year. Speaker 300:39:39So when we put it all together and with the international, we see multiple paths to that 2% to 3% full year assumption. Speaker 500:39:49Okay, Michelle. Thank you for the detail. I'm all set. Speaker 300:39:53Thank you. Operator00:39:55Thank you. Our next question comes from Michael Bellisario with Baird. Please go ahead. Speaker 700:40:02Thanks everyone. Good morning. First question, just can you help us understand what is the FTC asking for? How long is the list? Maybe any examples on customer facing or franchisee facing type questions and requests would be helpful. Speaker 200:40:21Sure. The list is long, Michael. We are complying expeditiously with this second request, which We predicted all along would occur and which happens in less than, as we said, 1% of FTC reviews. And of course, we're also working with 4 state attorney generals who we mentioned, who are also now investigating it. It is a tremendous effort. Speaker 200:40:44It has over 300 different work streams And data requests generated by a 44 page letter that we received from them. Boy, in terms of examples, Michelle, Can you think of a good one from your side? Speaker 300:41:01Yes, I most certainly can. I'm living it every day. Maybe just to give some flavor, one of the 300 work streams is asking for, a listing of every bid we've ever provided for any franchise service and that would be they want it over the past 5 years. They want it by brand. It must include a bunch of details including whether there was a prior brand affiliation across the industry, the details of each stage of the negotiation. Speaker 300:41:29So the initial interim and final bids for each deal, it's still broad. It's asking for all factors considered in establishing the pricing for those bids and then our costs around those negotiating activities, whether those costs are fixed or variable, The part of the chain scale that the hotel switched to, who we were competing against on and on and on, that's one of the 300 work streams, so multiple parts in that one request. So as Jeff pointed out, it's a tremendous effort. Speaker 700:42:03Helpful. And then just my follow-up, maybe a clarification on sort of the spending commentary. Are you putting More dollars into the same number of deals or you having to put more dollars into more deals? And then is it really just Echo or is it across the brand portfolio? Thank you. Speaker 300:42:24Sure. When we look at the 2024 budget versus 2023, it really is echo. But we did see the increase in 2023 versus our And that's where we saw an opportunity to invest more heavily in the business. We We did have over 500 hotels that we opened this year, but I would say more importantly, it's the type of hotels we're bringing into the system and the type of hotels that we're bringing into the pipeline. You know that we grew our midscale above pipeline another 6% this year. Speaker 300:43:04A good part of that is the ability to use key money to attract those hotel owners into the system. We're also getting more exposure to top 25 MSAs, in line with our strategy of increasing our footprint in higher RevPAR and fee par markets and brands. And so this year we added cities like Chicago, San Diego, Phoenix, for example. And we're able to do that because we're deploying more dollars per key in those high RevPAR markets. And then I'd also say we are putting a little bit of money to work in the existing system to improve the quality of the product and franchisee engagement and franchisee retention. Speaker 300:43:50One example is we doubled the number of renovated rooms through our capital support programs, including phase in where we renovated nearly 5,000 rooms. So we're doing all of this while targeting above WACC returns. So more hotels, but probably more impactful the higher fee par hotels coming into the system. Speaker 700:44:14Helpful. Thank you. Speaker 300:44:16Thank you. Speaker 200:44:17Thanks, Mike. Operator00:44:19Thank you. Our next question comes From Danny Asad with Bank of America. Please go ahead. Speaker 200:44:25Hi. Good morning, Jeff and Michelle. I just wanted to touch on the 3 year EBITDA CAGR target of 7% to 10% through 2026. So if EBITDA is going to grow, let's call it 5% to 6% for this year, can you help us piece the parts of the business that would help drive the acceleration from the 5% to 6% to 7% to 10% kind of for the full 3 year period? Speaker 300:44:53Sure. So we ended 2023 with 6%. I think we're expecting to get to 6% to 8% in 20 24% and then that 6% to 8% moves to 7% to 10% over the planned period. So if you just think about where we ended in 2023, it's really only one additional point at the low end, 6% to 7% and then 2.5% probably at the midpoint moving from 6% in 2023 to 8.5% at the midpoint of the 7% to 10% growth. Again, 3 categories, Fannie. Speaker 300:45:34The first one we'll start with is net room growth. We have a high degree visibility into this number. We know the pipeline has been expanding up 10% year over year. We've got echo starting to come into the system this year. You can see in our IP some of the progress that we're making there. Speaker 300:45:49And we've got momentum now for 3 consecutive years on the retention rate having improved a total of 80 basis points over those 3 years. So we feel confident that we're going to continue to be able to improve retention, yet we're only assuming another half a point of net room growth at the midpoint the CAGR, right. So net room growth in 2023 was 3.5% and in the 7% to 10%, CAGR It's moving to 4% at the midpoint, right, at the 3% to 5%. So that's a pretty conservative estimate, giving the multiple avenues of growth I just laid out there. On the RevPAR side, our assumption is 2% to 3% growth over the planned period. Speaker 300:46:29That's consistent with industry projections and with historical performance, but that growth might not be linear over the years. It will we are expecting it would average out over the plan period. And then there's additional opportunity when you put that assumption into the context of 9 points of occupancy still to be recovered versus pre COVID levels. The fact that ADR in our segments lag the rate of inflation. The fact that our segments have limited new supply coming in And that generally favors the pricing power. Speaker 300:47:02And then at the 2% to 3% assumption, you can see that not all of that upside is Again, a pretty conservative approach that builds in cushion and then we've re mixed our pipeline to concentrate more heavily on the higher chain So those properties are coming in at higher RevPAR, both in the U. S. And internationally. And then 3rd, apart from the Standard drivers, there's upside from royalty rate expansion, and that's going to come from Echo, from the pipeline we just talked about. It's going to come from scaling Our footprint internationally including some COVID fee discounts for onboarded properties back in the thick of the pandemic that are start to expire last year. Speaker 300:47:42And you can already see some of that in the 30 basis point improvement we're seeing internationally in 2023 in the royalty rate. And we've also made large investments that Jeff mentioned to capture the infrastructure opportunity that we're already seeing benefits from with that category up Double digits. On the ancillary side of the house, we're coming into the plan having grown those fee streams 6% in 2023. There's not too much of a stretch here to get to the 8% we're expecting in the plan and there are multiple opportunities there as well. So all of these initiatives are already underway. Speaker 300:48:13So we have a good line of sight into each of them. And because there are so many levers, we're really not dependent on 1, any one single opportunity. And therefore, we have a high degree of confidence that enough will align with our predictions, and so that the midpoint is not beyond our reach even if you don't work out as expected. Speaker 200:48:33That's super helpful. Thank you so much. Speaker 300:48:35Thank you. Operator00:48:38Thank you. Our next question comes from Ian Zaffino with Oppenheimer. Please go ahead. Speaker 600:48:44Hi, thank you. Speaker 200:48:46I picked up a lot of the comments Speaker 600:48:48on the infrastructure bill. Can you maybe tell us how that plays out? Have you started to see anything yet? What areas, is it mainly extended? Is it select? Speaker 600:48:58Where are you seeing that? And then are you also maybe seeing some trends in leisure related to that as well? Or is it pretty Predominantly midweek. Thanks. Speaker 200:49:09It is predominantly midweek, Ian. And We're absolutely seeing benefit and it's not only extended, it's also transient. I mean, that is when you look at the top 6 states of where this infrastructure spending will be spent. And you think about a state like Texas where we have 700 hotels. I mean, those are our Days Inn, those are our Super 8. Speaker 200:49:32So those are La Quintas that are really beginning to benefit and gain share. When you look at some of the chips acts in terms of how that Spending is being spent. I mean, there are dozens of hotels and they're not only extended stay hotels around the Intel site in Chandler, Arizona or the Samsung plant being built, we've talked about in Taylor, Texas, which is a $17,000,000,000 bill with 2,000 jobs over the next 5 or so years. And we're placing 1,000,000 of dollars of contracted business into both transient hotels and new build hotels like our Hawthorne Suites, which is extended and the La Quinta nearby. But I mean the investment that we're making that we're so excited about is, 1st and foremost, we've got we feel the best field sales team out there. Speaker 200:50:19We've increased our sales force that's selling to these infrastructure accounts by 25%. So that's 1st and foremost. Secondly, we are doing a lot on the technology front. We've got, we think the best IT team out there. Our Teams have rolled out some really robust technology that's identified 3,600 projects within 10 miles of markets, which have multiple transient and extended stay Wyndham Hotels so far. Speaker 200:50:49And that's just a sliver of the 40 1,000 infrastructure projects that have been announced to date by the federal government, including we're really big on the federal rail infrastructure bill that our teams are following, that's estimated at a $26,000,000,000 spend. Dozens of new accounts already and growing, both on the East Coast and the West Coast. And we're excited today about the announcement on the airport terminal grants to I think it's 40 plus So, yes, we're excited. It's early days and but we are seeing a double digit uptick not only in infrastructure bookings, but more importantly leads from those projects, with a 20% increase in new accounts so far this year. Speaker 600:51:39Okay. Thank you. And then just as a follow-up, maybe a little bit higher level, but we're hearing a lot echo, but then we're hearing a lot about sort of moving upscale a little bit. So if we look out 3 years or something along those lines. How does the portfolio mix look? Speaker 600:51:58And what type of either M and A that you need to get there? Maybe just broadly speaking. Thank you. Speaker 300:52:08Yes, sure. So, Echo obviously will make up a bigger portion of the system as it comes in. Remember though, it is coming in at an accretive RevPAR to where we are today. So when we think about our 70% pipeline in the midscale and above And how that's going to come into the system, and then how Echo comes into the system obviously will be a lot less dependent on just the economy itself, which has been in a very limited new supply environment for quite a long time. Speaker 600:52:45All right. Thank you very much. Speaker 200:52:47Thanks, Ian. Operator00:52:49Thank you. Our last question comes from Meredith Jensen with HSBC. Speaker 800:52:56Good morning. Thanks for taking my question. I wondered, I know you've spoken about the growth And the ancillary fee streams, I think on Page 19, there's a nice discussion of it. Could you talk just a little bit more about the co brand credit card opportunity and some of the other partnerships you're looking into, so maybe we can build that out a little bit more because I know there's a lot there. Thanks. Speaker 300:53:27Sure. Marinette, we see multiple opportunities that are currently underway for which again we have a really Good minus sight for ancillary fee stream. To name a few, we're working to tap The significant potential in the credit card suite of products that's going to include new products. It's going to include expansion internationally right now the card is U. S. Speaker 300:53:54Centric. So there's a lot of opportunity, as we think about potential to leverage Wyndham Rewards and the Wyndham Rewards loyalty across the 95 countries in which we operate. On the partnership opportunity side, I won't get into specifics for competitive reasons, but again, we're working to leverage our global footprint and expand beyond just again the U. S. Centric partnerships that we have in the house today. Speaker 300:54:22And then of course, we're going to continue to focus on our relationship with T and L and helping them grow their business, including through the use of the Wyndham rewards points currency. So there's many levers here on the ancillary side. Speaker 800:54:38Super. Thanks. 1 Quick expansion on the international side in terms of the direct franchise business, which I see again the presentation is great. On Page 13, it talks about the increase in the direct franchise business rising again. Is there more to be done there or How much last of the transition from the master franchise to direct? Speaker 800:55:06And should we build in any particular changes lift to fees there and maybe just a little on China too, if you don't mind? Thanks so much. Speaker 200:55:17Yes, I'll start with China and then maybe you could talk about how to model it, Michelle. I mean, we are going to continue, Meredith, to be seeing more direct franchising in terms of percentage growth. Now remember, it is a I think, Michelle could correct me here, but it's about a third of our China system, but it has been growing double digit as it did this quarter, as it did this year. And it's growing, as Michelle has pointed out a 3 times the license fees of our master. So going forward, I think we'll continue. Speaker 200:55:53We're not Selling master license agreements any longer, I mean, that was something that we did 15, 20 years ago. Our growth and if you China's example is much faster on the direct franchising basis than it is on the master. Think our overall net room growth in China was 6%. It was something like 2% from the master and 13% from the direct. And that's consistent elsewhere. Speaker 200:56:19We don't have a lot of masters left, but our focus is really direct. What would you add to that, Michelle? Speaker 300:56:25Yes, Jeff, I think you've covered it all. I mean, at 3 times the royalty rate coming out of the direct franchising business versus the master franchising And the vast majority of the growth in China coming out of that direct franchising business, we are going to see royalty rate expansion. For sure, you could see that already showing up in some of the 30 basis point improvement in 2023 and we'll continue to see that show up as we move forward. Overall, I'd say in addition to moving from masters to direct, the other thing we're benefiting from is just scaling the footprint so that we can continue to take advantage of pricing opportunity for brands that have scale in specific regions. Speaker 800:57:13That's super helpful. Thanks again for the color. Speaker 200:57:16Thanks Meredith. Thanks Meredith. Operator00:57:20Thank you. At this time, I will turn the floor back over to Jeff Bellotti for closing remarks. Speaker 200:57:25Thank you, Todd, and thanks everyone for your questions, for your interest in Wyndham Hotels and Resorts and for most importantly, your support in our ability to realize our future growth potential. Michelle, Matt and I look forward to talking to you and seeing many of you in the weeks and the months ahead. We wish Everyone, a happy Presidents' Day weekend coming up, and we look forward to seeing you soon. Operator00:57:49Thank you. This does conclude today's Wyndham Hotels and Resorts 4th Quarter and Full Year 2023 Earnings Conference Call.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallWyndham Hotels & Resorts Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Wyndham Hotels & Resorts Earnings HeadlinesWyndham Hotels & Resorts (NYSE:WH) Given New $94.00 Price Target at Morgan StanleyApril 25 at 3:11 AM | americanbankingnews.comWyndham Hotels & Resorts (NYSE:WH) Price Target Lowered to $100.00 at BarclaysApril 23, 2025 | americanbankingnews.comGet Your Bank Account “Fed Invasion” Ready with THESE 4 Simple StepsStarting as soon as a few months from now, the United States government will make a sweeping change to bank accounts nationwide. It will give them unprecedented powers to control your bank account.April 27, 2025 | Weiss Ratings (Ad)Is Wyndham Hotels & Resorts, Inc. (WH) The Best WallStreetBets Stock To Buy According to Hedge Funds?April 21, 2025 | msn.comIs Wyndham Hotels & Resorts Inc. (NYSE:WH) a Reddit Stock with High Potential?April 17, 2025 | msn.comWyndham Hotels & Resorts (WH) Gets a Buy from Goldman SachsApril 15, 2025 | markets.businessinsider.comSee More Wyndham Hotels & Resorts Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Wyndham Hotels & Resorts? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Wyndham Hotels & Resorts and other key companies, straight to your email. Email Address About Wyndham Hotels & ResortsWyndham Hotels & Resorts (NYSE:WH) engages in the franchise and operation of hotels under the Wyndham brand. It operates through the Hotel Franchising and Hotel Management segments. The Hotel Franchising segment focuses on licensing the company’s lodging brands and providing related services to third-party hotel owners and others. The Hotel Management segment provides management services. 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There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the Wyndham Hotels and Resorts 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants have been placed on a listen only mode I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead. Speaker 100:00:42Thank you, operator. Good morning and thank you for joining us. With me today are Jeff Bellotti, our CEO and Michelle Allen, our CFO. Before we get started, I want to remind you that our remarks today will contain forward looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. Speaker 100:01:03These risk factors are discussed in detail in our most recent annual report on Form 10 ks filed with the and Exchange Commission and any subsequent reports filed with the SEC. 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. 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 metric. Speaker 100:01:42In addition, last evening, we posted investor presentation containing supplemental information on our Investor Relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC and any public conference calls or webcasts. We have also created a separate website at staywindham.com to provide additional information relating to the ongoing situation with Choice With that, I will turn the call over to Jeff. Speaker 200:02:19Thanks, Matt, and thanks everyone for joining us this morning. 2023 was an exceptional year for Wyndham, marked by outstanding operational achievements and a series of record breaking performance metrics. But before delving into our results, we want to take a moment to discuss the ongoing matters with Choice. As we shared in our public response, Choice has nominated directors with the sole purpose of advancing its inadequate, hostile and risk laden offer, an offer which our Board has unanimously determined is not in the best interest of our shareholders. Our Board is well constituted combining decades of experience in areas critical to overseeing the execution of our strategy, including hospitality and more specifically, global hotel franchising, M and A, governance and risk oversight. Speaker 200:03:07As we've consistently communicated, Choice's offer fails to address 3 principal concerns. First, the Adequacy of the value of the offer compared with our future growth prospects. 2nd, the significant amount of Choice stock included in the consideration mix, which would expose our shareholders to an over levered pro form a company with slower long term growth prospects and third, the asymmetrical risks to Wyndham and our shareholders resulting from a prolonged and an uncertain regulatory review. On the regulatory topic, our concerns regarding the unique risks of this transaction have only increased as the process has unfolded. Starting with the Federal Trade Commission's unsolicited outreach to us and subsequent investigation even before Choice launched its exchange offer. Speaker 200:03:58Moreover, state attorneys general from Washington, Colorado, Kansas and Vermont have also now opened their own separate investigations. The expansive second request we received from the FTC on January 11 is requiring us to provide virtually every communication and every piece of data that relates in any way to our competition with choice. To put this into context, second requests are issued for only around 1% of deals reviewed by the FTC and they require additional time consuming back and forth discussions and meetings with the agency. Regulatory interest has undoubtedly peaked due to the continued opposition of franchisees in the Asian American Hotel Owners Association, which represents more than 2 thirds of both companies Domestic hotel owners. In a recent Ahowa survey of members who own either a Choice or a Wyndham Hotel, Over 2 thirds say that consider leaving were the merger to occur. Speaker 200:05:04The uncertain timeline and outcome facing our shareholders compounded by the risk that they are left with no deal and a damaged business at the end of a very long regulatory review process is highlighted by a recent report showing that over 90% of significant merger investigations in 2023 resulted in a lawsuit by the government to block the deal or the abandonment of the transaction with the FTC not accepting any pre lawsuit settlements involving a divestiture or other remedy. This trend has continued in recent months with the transactions such as JetBlue Spirit and its merger, the IQVIA Propel merger and Amazon's proposed acquisition of Irobot, all of which were either blocked or now face significant delays and challenges. The potential value destruction that could arise from this ongoing An elongated process remains significant. Choice continues to try to take advantage of the uncertain timeline and outcome to exploit franchisee uncertainty for its own competitive advantage. And Choice's unsolicited offer also has significant real dollar costs for our shareholders, currently estimated at approximately $75,000,000 which includes approximately $15,000,000 related solely to the FTC review. Speaker 200:06:31More fundamentally, as our 2023 results and longer term progress demonstrate, Wyndham is positioned to generate shareholder value well in excess of Choice's current offer. Over the last 3 years, We've consistently grown our system, our market share and our earnings, while also expanding our pipeline to support future growth. As Michelle will cover in further detail, our strategy, which is well underway, is expected to generate an organic adjusted EBITDA CAGR of 7% to 10% over the next 3 years. We also expect to produce over $700,000,000 of excess cash Over the next 2 years, this resilient cash flow along with our incremental leverage capacity, assuming only a 3.5 times net leverage ratio, can generate a total of $1,400,000,000 of excess liquidity, which can be deployed strategically for both organic and inorganic growth opportunities, further supporting additional value creation for Wyndham shareholders beyond our 7% to 10% EBITDA growth expectation. And now on to the results. Speaker 200:07:39We were extremely pleased to report another strong quarter with a host of record breaking full year metrics. We opened 66,000 rooms, the largest year of organic room additions in Wyndham's history against drop of hotel transaction volumes nearly 50% below last year, which are important to our business since each time a hotel transaction changes hands, The new owner has a brand decision to make. We achieved this success despite the distraction over the past 10 months caused by choice. Our global retention rate, which includes all terminations reached 95.6%, a 30 basis point improvement year over year and an over 250 basis improvement since our spin off. With the growing support and the growing engagement of our franchisee community along with investments that we've made in our brands were now within reach of our targeted 96% retention rate And we expect that our direct franchising retention rate will continue to improve. Speaker 200:08:42We delivered 3.5% of net room growth with Q4 marking the 12th consecutive quarter of organic net room growth. We grew our development pipeline for the 14th consecutive quarter to a record 240,000 rooms. And our brands all powered by Wyndham Rewards ranked number 1 by USA TODAY for 6 consecutive years continue to grow their market share with our economy brands outperforming the STR U. S. Chain scale by another 60 basis points, helping to drive 5% global RevPAR growth currency along with 7% growth in Wyndham Rewards membership to a record 106,000,000 members. Speaker 200:09:25Full year adjusted EBITDA reached an all time high of $659,000,000 and we generated $339,000,000 of free cash flow in 2023. We also returned over $500,000,000 to our shareholders, representing over 8% of our market cap from the beginning of the year. Our owner first philosophy continues to attract a wide variety of franchisees to the Wyndham portfolio of brands. We opened an average of 2 hotels each business day in 2023 and the 500 hotels we opened this year were 11% more than the number we opened last year. In the process, we introduced 13 of our brands in 24 new countries around the world, including our first La Quinta in Ecuador, our first Super 8 in the United Kingdom and our first Hawthorne Suites in China And all of these brand launches in new countries can support more hotels from each brand going forward. Speaker 200:10:25And more importantly, were sold on a direct versus a master license franchising basis with no royalty share driving international direct net room growth in excess of 10%, along with a 30 basis point improvement in our international royalty rate. Our teams awarded 864 contracts globally for approximately 104,000 room additions, which was 30% more than what we signed back in 2019. In Q4 alone, we executed 33% more contracts domestically than we did back in 2019 when transaction volumes was over 30% higher than it was this year. And Q4 signings internationally increased by 35% year over year and by over 30% compared to 2019, with the largest increase coming from EMEA, our global region with our 2nd highest RevPAR. Our development pipeline increased 10% year over year to a record 240,000 rooms. Speaker 200:11:28Mid scale and above brands in the pipeline increased 6% to a record 170,000 rooms and now represent nearly 70% of our pipeline. Our pipeline represents approximately $125,000,000 of royalty fees over the next 4 years With domestic hotels weighted more to upscale and higher RevPAR brands and with our international pipeline concentrated in higher RevPAR regions like Europe and Latin America. These RevPAR accretive rooms will come into the system over the next 4 years with fee pars on average 30% higher than our current system average, providing us with another tailwind for growth that Michelle will cover in more detail. Echo Suites by Wyndham, the industry's fastest growing new brand launch, grew by nearly 60% in 2023 with over 33,000 rooms Now in our development pipeline. During the Q4, we began to selectively award contracts for the brand to experienced individual In addition to the many institutional developers, we have contracted with thus far. Speaker 200:12:34We have nearly a dozen Echo Suites now under construction, which we expect to open by year end and 75 are expected to be open by the end of 2026. Last month at the Americas Lodging Investment Summit, we announced a new partnership with SBE Entertainment. We're combining SBE's unmatched culinary and unmatched lifestyle experience with Wyndham's distribution and technology platform to fuel Project HQ's development under our growing Registry Collection Hotels brand. This partnership expands our platform and it fills a white space in our portfolio for hotel owners searching for a differentiated, yet approachable lifestyle brand that will immediately benefit them from the scale and the resources of the world's largest hotel franchisor. Project HQ plans to open 50 registry collection hotels by 2,030, delivering approximately 7,500 rooms designed uniquely for what millennial and Gen Z travelers are seeking. Speaker 200:13:34The partnership represents the latest example of are shifting mix to higher RevPAR segments and increasing fee par at a faster rate than our system average. U. S. RevPAR, which was down 4% year over year, increased 10% versus 2019, which is a 120 basis point acceleration from Q3 performance. Q4 trends represented a continued moderation of the revenge leisure travel that we saw last year, which largely favored select service chain scales. Speaker 200:14:05Internationally, Q4 RevPAR was 7% higher than last year in constant currency and 44% higher than Q4 of 2019, relatively consistent with the strong performance from Q3. In our quest to maximize franchisees top and bottom lines and to improve owner engagement and retention. This year, we implemented a number of innovative tools. We developed Wyndham Community, a state of the art mobile enabled platform that seamlessly connects our owners to the day to day performance of their hotels while delivering a constant connection to Wyndham scale and resources to help maximize their profitability. We delivered a segment leading guest engagement platform, Allowing our franchisees to sell room upgrades and services like early check-in and late checkout, along with beverages or snacks and other local amenities for in room delivery upon a guest's arrival, a first for select service hotel owners that will provide significant room revenue opportunities for them. Speaker 200:15:07We completed the rollout of our mobile next generation property management systems at unprecedented pricing from best in class suppliers, which drove RevPAR increases of over 170 basis points on average for franchisees using these systems. And we provided an OTA commission reconciliation tool helping to put 1,000 of dollars back into the pockets of franchisees on a monthly basis by reconciling OTA bookings that either never show up or that depart early. Before handing the call over to Michelle, all of us at Wyndham, we'd like to take a moment to honor the passing of an industry icon. In late December, we lost Ron Rivett, Co Founder of the Super 8 brand. Ron leaves an indelible mark on the industry With the creation of Super 8, we acquired the brand in 1993. Speaker 200:15:59And by following Ron's owner philosophy of being available, being approachable and being accountable, Super 8 is now the largest economy brand in the world with 2,000 663 hotels in 9 countries. We're honored that not only is the very first Super 8 in Aberdeen, South Dakota still in our system, but it's also run by Ron's family, who keeps his memory and his dedication to this industry alive every day. And as we commemorate Super 8's 50th anniversary this year, we will celebrate Ron Rivett and his many accomplishments. We would also like to extend our heartfelt appreciation to all of our team members and all of our franchisees. Our record Setting achievement would not have occurred without their dedication and their support. Speaker 200:16:50Their enthusiasm for the opportunities that lie ahead, Coupled with their commitment to our initiatives to deliver exceptional value remains the key to our success. And with that, I'll now turn the call over to Michelle. Michelle? Speaker 300:17:07Thanks, Jeff, and good morning, everyone. I'll begin my remarks today with a detailed review of our Q4 and full year results. I'll then review our cash flows and balance sheet, followed by our longer term growth prospects and finally, our 2024 outlook. As Jeff mentioned, we were delighted with our operational progress in 2023. At the same time, we're pleased to put the tough year over year financial reporting comparisons behind us since 2023 was our 1st year of reporting without the inclusion the lower margin select service managed business and owned hotels and was also impacted by lapping the revenge travel that occurred in 2022 following COVID. Speaker 300:17:46In the Q4, we generated $320,000,000 of fee related and other revenues and $154,000,000 of adjusted EBITDA. Fee related and other revenues increased 3% year over year reflecting global net room growth as well as higher license and ancillary fees, partially offset by a year over year RevPAR decline. Adjusted EBITDA increased $28,000,000 including a favorable marketing fund timing impact of $21,000,000 as expected. On a comparable basis, adjusted EBITDA grew 6%, primarily reflecting our revenue growth. 4th quarter adjusted diluted EPS was $0.91 reflecting the adjusted EBITDA growth as well as benefits from our share repurchase activity, which were partially offset by higher interest For the full year, we generated $1,380,000,000 of fee related and other revenues in line with our expectations compared to $1,350,000,000 last year, which included $50,000,000 from the sold, managed and owned businesses. Speaker 300:18:46On a comparable basis, fee related and other revenues increased 6% year over year, reflecting global RevPAR and net room growth as well as higher license and ancillary fees. Adjusted EBITDA was also in line with our expectations at 6 $59,000,000 in full year 2023 compared to $650,000,000 last year, which included an $18,000,000 contribution from the sold management owned businesses. The year over year change was further impacted by $11,000,000 of unfavorable marketing fund variability. On a comparable basis, EBITDA increased 6% year over year, primarily reflecting our revenue growth and our adjusted EBITDA margin remained consistent at 80%. Full year adjusted diluted EPS increased 8% on a comparable basis to 4 point activity, which were partially offset by higher interest expense. Speaker 300:19:40We generated $114,000,000 of free cash flow in the 4th quarter and $339,000,000 for the full year. Importantly, in line with our target, we converted 51% of our adjusted EBITDA to free cash flow, which at the adjusted net income line translated to nearly 100%. We returned $515,000,000 to our shareholders in 2023, representing 8% of our market cap, through $397,000,000 of share repurchases and $118,000,000 of common stock dividends. We ended the year with approximately $650,000,000 in total liquidity and our net leverage ratio of 3.2 times within the lower half of our target range. Amidst the prevailing higher interest rate environment, we continue to limit our exposure with only about 25% of our long term growth debt at variable rates. Speaker 300:20:29We now have our variable rate debt locked in at an effective interest rate of approximately 5.6% through 2027. As Jeff mentioned, our ongoing strategic initiatives will continue to provide a significant runway for accelerated earnings growth over the next several years. In October, We shared with you our expectation that our strategic plan will result in an adjusted EBITDA CAGR of 7% to 10%, which translates to $150,000,000 to $210,000,000 of incremental adjusted EBITDA between 20242026. This plan assumes 2% to 3% RevPAR growth and 3% to 5% annual net room growth over the plan period. These numbers should sound familiar to you. Speaker 300:21:12The RevPAR assumption in the U. S. Is anchored to current industry outlook for our chain sector performance. The net room growth assumption reflects the 75 Echo Hotels we expect to have opened by 2026 along with continued improvement in our direct franchising retention rate. On top with 70% of our pipeline now in the higher RevPAR, mid scale and categories. Speaker 300:21:36These properties will come into the system with higher fee parts. Combined, we expect these drivers to contribute over $100,000,000 or over half of the incremental EBITDA during the planned period. The remainder will come from our other growth initiative. As you know, Wyndham is uniquely positioned to benefit from the increased government spending tied to the infrastructure and chip stack. No hotel company has more select service located in the states where infrastructure spending will be concentrated. Speaker 300:22:03Over the estimated 8 year spend period, we expect that capturing just our fair share of this spend will generate $150,000,000 of incremental royalties for Wyndham shareholders, about $30,000,000 of which will contribute to the planned 7% to 10 EBITDA CAGR over the next 3 years. Additionally, ancillary revenue streams provide multiple opportunities for incremental growth to supplement our core business model. These areas include our suite of co branded credit cards, marketing partnerships and other monetization opportunities, which we expect to contribute $40,000,000 of incremental EBITDA over the planned period. Finally, as Jeff mentioned, our business model generates strong free cash flow and we have significant leverage capacity, which provide additional capital to drive incremental growth opportunities over and above our 7% to 10 EBITDA CAGR for the 3 years ending 2026. Turning now to 2024 outlook. Speaker 300:22:58We expect our direct franchising business will grow global net room growth 3% to 4%, including 20 basis points to 30 basis points of expected improvement in our retention rate. We are projecting global RevPAR growth of 2% to 3%. RevPAR growth is expected to be at its lowest quarterly level in Q1 as we lapped the toughest comp period in 2023, specifically the first half of the quarter, which is already behind us, where global RevPAR trailed of 2023 by about 3 points in January, but is expected to improve as we enter March and the spring break leisure travel season. Year over year comps become progressively easier throughout the remaining quarters. Fee related and other revenues are to be $1,430,000,000 to $1,460,000,000 You'll recall that in 2023, we hosted our Global which generated EBITDA neutral marketing revenue of $18,000,000 Since the conference is held every 18 months, These revenues will not repeat in 2024 and therefore negatively impact our year over year growth rate by about 2 points. Speaker 300:24:01Adjusted EBITDA is expected to be between $690,000,000 $700,000,000 consistent with our October outlook and reflecting comparable basis growth of approximately 6% to 8% based on our 2023 actual results. Adjusted net income is projected to be $341,000,000 to $351,000,000 and adjusted diluted EPS is projected at $4.11 to $4.23 based on a diluted share count of 83,000,000 which as usual excludes any future potential share repurchases. Free cash flow conversion before development advances is expected to approximate 60%. 2024 development advance spend is expected to increase to $90,000,000 from $72,000,000 in 2023. This increase primarily reflects the ramping of development efforts for our Echo brand as expected. Speaker 300:24:55Given the challenging macro backdrop this year, we had an opportunity to attract more owners in higher chain scales and accretive RevPAR markets by using key money as a tool to alleviate some of their debt burden. This is a trend we expect to continue throughout 2024. We also use more key money to navigate the uncertainty and disruptions created by Choice and we anticipate continuing this approach while the current situation persists. Today's outlook excludes the $75,000,000 of currently anticipated costs related to Choice's hostel offer. In addition to the cash we generate from operations, we also have the benefit of a strong balance sheet. Speaker 300:25:33Holding leverage flat to the 3.2 times we ended 2023 with will provide another $150,000,000 of available capital in 2024 to either invest in the business or to return to shareholders. Levering to 3.5x just the midpoint of our target range would provide $330,000,000 and levering to the high end of 4x would provide $675,000,000 of capital to deploy. Finally, while we expect our marketing funds to breakeven on a full year basis, we will continue to see timing differences in the quarterly results as we deploy incremental spend to capture building leisure demand for the spring break season ahead. For Q1, we expect the funds to overspend $10,000,000 to $15,000,000 And like last year, we expect Q2 will also overspend and then those amounts will reverse in the back half of this year. In closing, we are extremely proud of our 2023 performance. Speaker 300:26:25We successfully executed on our key business objectives, achieved a host of record breaking performance metrics, grew adjusted EBITDA 6% and generated significant capital return for our shareholders. Looking ahead, we approach 2024 with a compelling strategy poised to accelerate our growth and enhance returns for our shareholders. With that, Jeff and I would be happy to take your questions. Operator? Operator00:26:52Thank you. The floor is now open for questions. And speakers at this time, we currently are waiting for Mr. Eladi to dial back in. We are trying to reconnect him. Operator00:28:17We'll go first to Joe Greff with JPMorgan. Please go ahead. Speaker 400:28:23Good morning, everybody. Jeff, just trying to get a sense of maybe how disruptive the Choice offer is in the developer community. Obviously, Not an issue in the Q4 with pipeline and actual room openings, but here in the Q4, are you seeing an impact in either elongated construction timelines or interest in partnering with you, particularly maybe with the Echo brand. And maybe ask differently, would your net rooms growth be higher were it not for Maybe this perceived distraction on the part of developers with this Choice offer and would how much of the $90,000,000 in development advances is a function of your having to do that to grow because of maybe a distraction with Choice And maybe that impact there? Any color would be helpful. Speaker 400:29:20Thank you. Speaker 200:29:21Yes. Thanks, Joe. We could assign deals in the Q4 to your question. We've seen both deals and ground breaks pause. Many of these small business owners have experienced with Choice and They want to see this resolved certainly before moving forward. Speaker 200:29:37I mean, with Echo, we were thrilled with the 268, I believe we executed In 2023, that was 90% of what we committed to do last year. Our focus has shifted on from the large multiunit developers to individuals. And we certainly had some progress. I think we executed 3 in the quarter, But we could have executed more. But look, we're thrilled with the tremendous success in selling through this uncertainty. Speaker 200:30:07I mean, it really began back in May with the Street Journal leak. And we expect to continue to do the same in 2024. Our franchise sales teams around the world, I could tell you, are fired up. 4th quarter, as you say, was a record of openings, but more deal noise, to your point, certainly creates a more challenging sales environment, which really comes in 2 forms, owners, as I said, moving more slowly on committing to deals with us and a second sort of increased competitive deal landscape To your point on Dans as becoming more prevalent as Choice pushes to really reverse its declining system, But yes, we know our record Q4 could have been better both domestically and internationally without the noise. Speaker 300:30:52Yes. And to your last question, Joe to the last part of your question, Joe, I would say pushing through Choice is probably less than 10% of the total $90,000,000 budgeted for 2024. Speaker 400:31:03Thank you. Operator00:31:08Thank you. Our next question will come from David Katz with Jefferies. Speaker 500:31:19I do want to talk about sort of the NUG environment in a broader sense. Obviously, there's a lot of discussion out there about conversions and conversion competitiveness. If you could color in for us just a little bit where you fit in that landscape. And obviously, we look at this through a public company lens. But give us a sense for just how competitive that conversion environment is as well as for the new builds like in your segments, given the Street's perception, right, that it's become much more competitive? Speaker 200:31:58Sure. I think if you were talking to our Chairman, Steve Owens, I'd tell you, David, It's always been competitive. But the biggest question aside from the strength of our brands and how our franchisees are about us and they're certainly feeling great about us with our attention at record highs. We have a saying that people do business with us because they know us, they like us and they trust us. It's really when it comes down to competition, it's all about the size and the strength of our franchise sales team. Speaker 200:32:23And our franchise sales team has never been larger And it's never been stronger and that's really around the world, whether we're in Europe, Africa, Middle East, Asia Pacific, down in Latin America. They are, as I said, putting up record numbers right now. On the conversion front, we had a great year. We had a great quarter, we didn't slow down. Our quarter was up 60% versus 2019 in conversion Signings when transaction volumes, as we pointed out in the script, were a lot lower. Speaker 200:32:57And on the new construction side, Look, our pipeline grew 8% to prior year. We have a record 1400 new construction hotels in our pipeline. And we saw no slowdowns in new construction starts. Those were also up year to date. Developers are seeing very strong ROIs despite higher interest rates. Speaker 200:33:21Our in ground percentage improved, was up, I think, 90 basis points from the Q3. So projects are still getting built. And yes, developer events notes are being used on competitive deals, but we're really pleased with our brand offerings, how our brands are performing. And from a competitive standpoint, just how our franchisees are feeling and our sales teams are selling our products. Speaker 500:33:51Thank you. And look, as my follow-up, yesterday Choice did put out a preliminary proxy, Which has some commentary in there, just in an open ended way. Anything any thoughts, perspectives or comments you can share about that, I'm sure we'd all be interested in hearing? Speaker 200:34:12Yes. No, no surprise to your question. It was completely expected by our team and really just a procedural moment and a non event. I mean, this was Choice's first step, of course, to hold a preliminary proxy for a special meeting of their shareholders required to approve the issuance of Choices shares in connection with a deal that they believe they could do. The filing didn't change the offer. Speaker 200:34:39It didn't remove any of the numerous conditions to it, like the financing contingency or I don't know their due diligence out or Most importantly, their need for FTC clearance, to name just a few. Their offer, David, remains highly conditional, and it still does not address adequately our Board's 3 key issues that we talked about in the script. Speaker 500:35:02Got it. Thank you very much. Thanks, David. Operator00:35:07Our next question comes from Patrick Scholes with Truist Securities. Please go ahead. Speaker 500:35:13Hi, good morning, Jeff and Michelle. Speaker 200:35:16Good morning, Patrick. Speaker 500:35:17Good morning. Two questions. My first one, Jeff, you briefly touched Sean, the feedback you have been receiving from your large or top shareholders, can you just give us a little bit more color what Specifically, the feedback has been? Sure. Speaker 200:35:34I mean, we Michelle and I, there's not a day that goes by. We're not talking to our large shareholders. And the feedback consistently has been from them, and I'm sure we'll be on the phone with many of them this afternoon, is that they're generally supportive of the risks, the asymmetrical risks that are out there that we've been talking about that our board has objected to and certainly would want to see addressed before continuing discussions. Okay. Speaker 500:36:04Secondly, question regarding the 2% to 3% RevPAR growth for this year. How would you break that out between international and domestic. And again, you noted you expect a sizable acceleration. Certainly, I wouldn't say January for domestic hotels, especially economy mid scale has been Spectacular. What's I guess what you mentioned about what drives that acceleration domestically, but what's your for international to get to those numbers? Speaker 600:36:40Thank you. Speaker 300:36:42Sure, Patrick. I would say international is definitely going grow faster than the U. S. In the full year and we see that in January as well, right? International is up about 4% and the domestic system is certainly down. Speaker 300:37:00January's results, Not a surprise to us given how difficult the comps were this year. January last year, RevPAR was up 6%. So it was always going to be our most difficult month to compare against. And then as you move throughout the quarters, the comp gets progressively easier by the end of the quarter in March, I think RevPAR had only grown 1%. So we start at 6%, you go all the way down to 1%. Speaker 300:37:26And then obviously, as you move out of the Q1, the comps get tremendously easier for the remainder of the year. So when we think about the full year forecast at 2% to 3%, specifically answering your question with respect To domestic, we're expecting really 3 movements. We're expecting to see some benefits from the infrastructure pickup. That's continued momentum we have coming out of 2023 and we know projects new projects are getting approved every day. We are also expecting to see some impact from occupancy tailwinds. Speaker 300:38:05We're still trailing 2019 levels by about 9 points. So we're only assuming a very, A very small impact, maybe a point, a little bit less of that coming back into the 2024 results. And then from an ADR perspective, it's just really modest growth across the globe. We continue to see ADR trail the rate of inflation in the U. S. Speaker 300:38:30By 3 points and a couple of points internationally as well. And we're still in this very limited new supply environment in economy and mid scale, which generally favors pricing. And overall, RevPAR growth is highly correlated GDP and that's still expected to grow 2% to 3%. And then finally, I said fundamentals remain strong. Despite kind of the headlines that we still see our middle income cohort consumers growing wages faster than the rate than the ADR growth. Speaker 300:39:05We're seeing savings still elevated, probably about 30% versus their pre pandemic levels and And unemployment still remains really low. And very importantly, I say the intent to travel and the prioritization of travel spend continues to increase. And we were just looking at a recent survey by iSEEATS that showed 60% of their respondents are expecting to take 1 to 4 additional trips this year. So that's pretty meaningful. Of course, we're not seeing any of that in the January results, but like I said, That is the toughest comp we have year over year. Speaker 300:39:39So when we put it all together and with the international, we see multiple paths to that 2% to 3% full year assumption. Speaker 500:39:49Okay, Michelle. Thank you for the detail. I'm all set. Speaker 300:39:53Thank you. Operator00:39:55Thank you. Our next question comes from Michael Bellisario with Baird. Please go ahead. Speaker 700:40:02Thanks everyone. Good morning. First question, just can you help us understand what is the FTC asking for? How long is the list? Maybe any examples on customer facing or franchisee facing type questions and requests would be helpful. Speaker 200:40:21Sure. The list is long, Michael. We are complying expeditiously with this second request, which We predicted all along would occur and which happens in less than, as we said, 1% of FTC reviews. And of course, we're also working with 4 state attorney generals who we mentioned, who are also now investigating it. It is a tremendous effort. Speaker 200:40:44It has over 300 different work streams And data requests generated by a 44 page letter that we received from them. Boy, in terms of examples, Michelle, Can you think of a good one from your side? Speaker 300:41:01Yes, I most certainly can. I'm living it every day. Maybe just to give some flavor, one of the 300 work streams is asking for, a listing of every bid we've ever provided for any franchise service and that would be they want it over the past 5 years. They want it by brand. It must include a bunch of details including whether there was a prior brand affiliation across the industry, the details of each stage of the negotiation. Speaker 300:41:29So the initial interim and final bids for each deal, it's still broad. It's asking for all factors considered in establishing the pricing for those bids and then our costs around those negotiating activities, whether those costs are fixed or variable, The part of the chain scale that the hotel switched to, who we were competing against on and on and on, that's one of the 300 work streams, so multiple parts in that one request. So as Jeff pointed out, it's a tremendous effort. Speaker 700:42:03Helpful. And then just my follow-up, maybe a clarification on sort of the spending commentary. Are you putting More dollars into the same number of deals or you having to put more dollars into more deals? And then is it really just Echo or is it across the brand portfolio? Thank you. Speaker 300:42:24Sure. When we look at the 2024 budget versus 2023, it really is echo. But we did see the increase in 2023 versus our And that's where we saw an opportunity to invest more heavily in the business. We We did have over 500 hotels that we opened this year, but I would say more importantly, it's the type of hotels we're bringing into the system and the type of hotels that we're bringing into the pipeline. You know that we grew our midscale above pipeline another 6% this year. Speaker 300:43:04A good part of that is the ability to use key money to attract those hotel owners into the system. We're also getting more exposure to top 25 MSAs, in line with our strategy of increasing our footprint in higher RevPAR and fee par markets and brands. And so this year we added cities like Chicago, San Diego, Phoenix, for example. And we're able to do that because we're deploying more dollars per key in those high RevPAR markets. And then I'd also say we are putting a little bit of money to work in the existing system to improve the quality of the product and franchisee engagement and franchisee retention. Speaker 300:43:50One example is we doubled the number of renovated rooms through our capital support programs, including phase in where we renovated nearly 5,000 rooms. So we're doing all of this while targeting above WACC returns. So more hotels, but probably more impactful the higher fee par hotels coming into the system. Speaker 700:44:14Helpful. Thank you. Speaker 300:44:16Thank you. Speaker 200:44:17Thanks, Mike. Operator00:44:19Thank you. Our next question comes From Danny Asad with Bank of America. Please go ahead. Speaker 200:44:25Hi. Good morning, Jeff and Michelle. I just wanted to touch on the 3 year EBITDA CAGR target of 7% to 10% through 2026. So if EBITDA is going to grow, let's call it 5% to 6% for this year, can you help us piece the parts of the business that would help drive the acceleration from the 5% to 6% to 7% to 10% kind of for the full 3 year period? Speaker 300:44:53Sure. So we ended 2023 with 6%. I think we're expecting to get to 6% to 8% in 20 24% and then that 6% to 8% moves to 7% to 10% over the planned period. So if you just think about where we ended in 2023, it's really only one additional point at the low end, 6% to 7% and then 2.5% probably at the midpoint moving from 6% in 2023 to 8.5% at the midpoint of the 7% to 10% growth. Again, 3 categories, Fannie. Speaker 300:45:34The first one we'll start with is net room growth. We have a high degree visibility into this number. We know the pipeline has been expanding up 10% year over year. We've got echo starting to come into the system this year. You can see in our IP some of the progress that we're making there. Speaker 300:45:49And we've got momentum now for 3 consecutive years on the retention rate having improved a total of 80 basis points over those 3 years. So we feel confident that we're going to continue to be able to improve retention, yet we're only assuming another half a point of net room growth at the midpoint the CAGR, right. So net room growth in 2023 was 3.5% and in the 7% to 10%, CAGR It's moving to 4% at the midpoint, right, at the 3% to 5%. So that's a pretty conservative estimate, giving the multiple avenues of growth I just laid out there. On the RevPAR side, our assumption is 2% to 3% growth over the planned period. Speaker 300:46:29That's consistent with industry projections and with historical performance, but that growth might not be linear over the years. It will we are expecting it would average out over the plan period. And then there's additional opportunity when you put that assumption into the context of 9 points of occupancy still to be recovered versus pre COVID levels. The fact that ADR in our segments lag the rate of inflation. The fact that our segments have limited new supply coming in And that generally favors the pricing power. Speaker 300:47:02And then at the 2% to 3% assumption, you can see that not all of that upside is Again, a pretty conservative approach that builds in cushion and then we've re mixed our pipeline to concentrate more heavily on the higher chain So those properties are coming in at higher RevPAR, both in the U. S. And internationally. And then 3rd, apart from the Standard drivers, there's upside from royalty rate expansion, and that's going to come from Echo, from the pipeline we just talked about. It's going to come from scaling Our footprint internationally including some COVID fee discounts for onboarded properties back in the thick of the pandemic that are start to expire last year. Speaker 300:47:42And you can already see some of that in the 30 basis point improvement we're seeing internationally in 2023 in the royalty rate. And we've also made large investments that Jeff mentioned to capture the infrastructure opportunity that we're already seeing benefits from with that category up Double digits. On the ancillary side of the house, we're coming into the plan having grown those fee streams 6% in 2023. There's not too much of a stretch here to get to the 8% we're expecting in the plan and there are multiple opportunities there as well. So all of these initiatives are already underway. Speaker 300:48:13So we have a good line of sight into each of them. And because there are so many levers, we're really not dependent on 1, any one single opportunity. And therefore, we have a high degree of confidence that enough will align with our predictions, and so that the midpoint is not beyond our reach even if you don't work out as expected. Speaker 200:48:33That's super helpful. Thank you so much. Speaker 300:48:35Thank you. Operator00:48:38Thank you. Our next question comes from Ian Zaffino with Oppenheimer. Please go ahead. Speaker 600:48:44Hi, thank you. Speaker 200:48:46I picked up a lot of the comments Speaker 600:48:48on the infrastructure bill. Can you maybe tell us how that plays out? Have you started to see anything yet? What areas, is it mainly extended? Is it select? Speaker 600:48:58Where are you seeing that? And then are you also maybe seeing some trends in leisure related to that as well? Or is it pretty Predominantly midweek. Thanks. Speaker 200:49:09It is predominantly midweek, Ian. And We're absolutely seeing benefit and it's not only extended, it's also transient. I mean, that is when you look at the top 6 states of where this infrastructure spending will be spent. And you think about a state like Texas where we have 700 hotels. I mean, those are our Days Inn, those are our Super 8. Speaker 200:49:32So those are La Quintas that are really beginning to benefit and gain share. When you look at some of the chips acts in terms of how that Spending is being spent. I mean, there are dozens of hotels and they're not only extended stay hotels around the Intel site in Chandler, Arizona or the Samsung plant being built, we've talked about in Taylor, Texas, which is a $17,000,000,000 bill with 2,000 jobs over the next 5 or so years. And we're placing 1,000,000 of dollars of contracted business into both transient hotels and new build hotels like our Hawthorne Suites, which is extended and the La Quinta nearby. But I mean the investment that we're making that we're so excited about is, 1st and foremost, we've got we feel the best field sales team out there. Speaker 200:50:19We've increased our sales force that's selling to these infrastructure accounts by 25%. So that's 1st and foremost. Secondly, we are doing a lot on the technology front. We've got, we think the best IT team out there. Our Teams have rolled out some really robust technology that's identified 3,600 projects within 10 miles of markets, which have multiple transient and extended stay Wyndham Hotels so far. Speaker 200:50:49And that's just a sliver of the 40 1,000 infrastructure projects that have been announced to date by the federal government, including we're really big on the federal rail infrastructure bill that our teams are following, that's estimated at a $26,000,000,000 spend. Dozens of new accounts already and growing, both on the East Coast and the West Coast. And we're excited today about the announcement on the airport terminal grants to I think it's 40 plus So, yes, we're excited. It's early days and but we are seeing a double digit uptick not only in infrastructure bookings, but more importantly leads from those projects, with a 20% increase in new accounts so far this year. Speaker 600:51:39Okay. Thank you. And then just as a follow-up, maybe a little bit higher level, but we're hearing a lot echo, but then we're hearing a lot about sort of moving upscale a little bit. So if we look out 3 years or something along those lines. How does the portfolio mix look? Speaker 600:51:58And what type of either M and A that you need to get there? Maybe just broadly speaking. Thank you. Speaker 300:52:08Yes, sure. So, Echo obviously will make up a bigger portion of the system as it comes in. Remember though, it is coming in at an accretive RevPAR to where we are today. So when we think about our 70% pipeline in the midscale and above And how that's going to come into the system, and then how Echo comes into the system obviously will be a lot less dependent on just the economy itself, which has been in a very limited new supply environment for quite a long time. Speaker 600:52:45All right. Thank you very much. Speaker 200:52:47Thanks, Ian. Operator00:52:49Thank you. Our last question comes from Meredith Jensen with HSBC. Speaker 800:52:56Good morning. Thanks for taking my question. I wondered, I know you've spoken about the growth And the ancillary fee streams, I think on Page 19, there's a nice discussion of it. Could you talk just a little bit more about the co brand credit card opportunity and some of the other partnerships you're looking into, so maybe we can build that out a little bit more because I know there's a lot there. Thanks. Speaker 300:53:27Sure. Marinette, we see multiple opportunities that are currently underway for which again we have a really Good minus sight for ancillary fee stream. To name a few, we're working to tap The significant potential in the credit card suite of products that's going to include new products. It's going to include expansion internationally right now the card is U. S. Speaker 300:53:54Centric. So there's a lot of opportunity, as we think about potential to leverage Wyndham Rewards and the Wyndham Rewards loyalty across the 95 countries in which we operate. On the partnership opportunity side, I won't get into specifics for competitive reasons, but again, we're working to leverage our global footprint and expand beyond just again the U. S. Centric partnerships that we have in the house today. Speaker 300:54:22And then of course, we're going to continue to focus on our relationship with T and L and helping them grow their business, including through the use of the Wyndham rewards points currency. So there's many levers here on the ancillary side. Speaker 800:54:38Super. Thanks. 1 Quick expansion on the international side in terms of the direct franchise business, which I see again the presentation is great. On Page 13, it talks about the increase in the direct franchise business rising again. Is there more to be done there or How much last of the transition from the master franchise to direct? Speaker 800:55:06And should we build in any particular changes lift to fees there and maybe just a little on China too, if you don't mind? Thanks so much. Speaker 200:55:17Yes, I'll start with China and then maybe you could talk about how to model it, Michelle. I mean, we are going to continue, Meredith, to be seeing more direct franchising in terms of percentage growth. Now remember, it is a I think, Michelle could correct me here, but it's about a third of our China system, but it has been growing double digit as it did this quarter, as it did this year. And it's growing, as Michelle has pointed out a 3 times the license fees of our master. So going forward, I think we'll continue. Speaker 200:55:53We're not Selling master license agreements any longer, I mean, that was something that we did 15, 20 years ago. Our growth and if you China's example is much faster on the direct franchising basis than it is on the master. Think our overall net room growth in China was 6%. It was something like 2% from the master and 13% from the direct. And that's consistent elsewhere. Speaker 200:56:19We don't have a lot of masters left, but our focus is really direct. What would you add to that, Michelle? Speaker 300:56:25Yes, Jeff, I think you've covered it all. I mean, at 3 times the royalty rate coming out of the direct franchising business versus the master franchising And the vast majority of the growth in China coming out of that direct franchising business, we are going to see royalty rate expansion. For sure, you could see that already showing up in some of the 30 basis point improvement in 2023 and we'll continue to see that show up as we move forward. Overall, I'd say in addition to moving from masters to direct, the other thing we're benefiting from is just scaling the footprint so that we can continue to take advantage of pricing opportunity for brands that have scale in specific regions. Speaker 800:57:13That's super helpful. Thanks again for the color. Speaker 200:57:16Thanks Meredith. Thanks Meredith. Operator00:57:20Thank you. At this time, I will turn the floor back over to Jeff Bellotti for closing remarks. Speaker 200:57:25Thank you, Todd, and thanks everyone for your questions, for your interest in Wyndham Hotels and Resorts and for most importantly, your support in our ability to realize our future growth potential. Michelle, Matt and I look forward to talking to you and seeing many of you in the weeks and the months ahead. We wish Everyone, a happy Presidents' Day weekend coming up, and we look forward to seeing you soon. Operator00:57:49Thank you. This does conclude today's Wyndham Hotels and Resorts 4th Quarter and Full Year 2023 Earnings Conference Call.Read morePowered by