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Wyndham’s Newest Annual Report: 8 Issues We Discovered

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Skift Take

Eight issues jumped out at us from Wyndham annual monetary submitting. One shock was that it has launched an AI danger disclosure. That’s one thing we count on will turn into commonplace in journey firm filings.

Wyndham is the world’s largest lodge franchisor, and we discovered a handful of noteworthy particulars in its annual 10-Ok submitting.

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1. Wyndham primarily hasn’t grown in property rely over the previous 5 years.

5 years in the past, as of December 2018, it had 9,177 lodges. On the finish of final yr, it simply had yet another lodge.

How is that attainable? Wyndham has seen lodges depart its system, and it has added ones. Over time, the combo has shifted to lodges with extra rooms, increasing the entire variety of rooms beneath administration. The group managed practically 809,000 rooms 5 years in the past. It now manages 7.7% extra, at 871,794.

Wyndham plans to develop its system by between 3% and 4% in 2024.

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It has an ambition to hurry as much as a “3% to five% tempo” yearly by 2026. It thinks it might do that by getting higher at retaining franchisees, though it already has main retention charges. It additionally thinks it might velocity up its progress by “increasing into adjoining market segments [with new brands] and new geographies.”

2. Wyndham is changing into extra international.

When the U.S.-based firm went public in 2018, about 70% of its lodges had been U.S.-based.

By the tip of final yr, nevertheless, solely 57% of Wyndham’s lodges had been U.S.-based.

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3. However going international can require funding.

In September 2022, Wyndham accomplished its acquisition of the Vienna Home lodge model. It disclosed the worth for the 41 franchised European lodges as being $44 million.

The corporate’s 10-Ok revealed a bit extra coloration. Vienna Home’s trademark was valued at $28 million, whereas its 20-year franchise agreements had been valued at $16 million.

4. Argentine inflation harm Wyndham in 2023.

Increasing internationally can contain the occasional snafu. A living proof is Wyndham’s progress in Argentina. Inflation in Argentina has spiked just lately, hitting 211% in December.

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Wyndham incurred overseas foreign money alternate losses associated to Argentina of $14 million final yr.

Doesn’t Wyndham hedge in opposition to overseas foreign money alternate dangers? Sure, however final yr it misplaced $3 million on these contracts throughout the currencies it hedges in opposition to (Canada’s, China’s, Europe’s, Britain’s, and Argentina’s). The losses on each fronts had been unusually unfortunate for the corporate in comparison with latest years’ efficiency.

5. Wyndham has added a danger warning about its use of synthetic intelligence to its disclosures.

For the primary time, Wyndham has included a danger disclosure about its use of AI know-how. I count on different lodge teams so as to add related language to their monetary filings as time goes on.

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“We could use synthetic intelligence in our enterprise, and challenges with correctly managing its use might lead to reputational hurt, aggressive hurt, and authorized legal responsibility,” its submitting mentioned.

Attainable issues the submitting highlighted:

  • Rivals could adapt AI extra shortly.
  • The AI instruments it faucets might introduce errors, affecting operations and technique.
  • AI might lead to cybersecurity incidents that would compromise the safety of visitor information.
  • AI could current “rising moral points.” So its use of the AI would possibly sometime harm its model popularity or introduce authorized legal responsibility.
  • “The fast evolution of AI, together with potential future regulation of AI, might also lead to extra prices related to compliance with rising laws.”

6. Wyndham is extra asset-light than its opponents.

Quite a bit is made by the main lodge teams about their need to promote their property and solely handle manufacturers. However Wyndham is way forward on the trail than a few of its comparably-sized rivals. As of the tip of 2022, it had offered the 2 remaining lodges it had owned, totally exited from managing select-service lodges, and had “exited from considerably all of its U.S. full-service administration enterprise.”

The corporate has a tiny remaining enterprise of managing full-service lodges abroad, however this phase “not meets the quantitative thresholds to be thought-about a reportable phase.”

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One quirk of its having to workers full-service lodges abroad is that about 1,200 of its staff work outdoors of the U.S., or 52% of its workforce worldwide.

7. Wyndham is slowly morphing to look extra like a web-based journey firm than a lodge operator.

Now that Wyndham is actually out of the enterprise of operating or proudly owning lodges, it spends plenty of time on advertising its manufacturers and promoting to get company to decide on its properties.

Final yr, it spent $127 million — or 9% of its revenues — on promoting bills.

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It licensed its title to timeshare properties owned by Journey + Leisure Co., receiving $90 million in charges.

8. Wyndham’s loyalty program has grown quick in member rely.

As of year-end, Wyndham Rewards had “over 106 million” enrollees. Membership has grown 7% a yr for the previous 3 years. That put it forward of Selection, Hyatt, IHG, and Accor.

However this system’s dimension is comparatively small in contrast with Marriott’s and Hilton’s. It ended the yr with company having earned about $117 million of rewards, in contrast with Hilton company having earned $2.7 billion in rewards and Marriott company having earned an astonishing $7 billion in rewards.

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Wyndham’s co-branded bank card appears to be underperforming its potential for a gaggle that served “140 million company” final yr. It solely obtained $3 million in income from its bank card associate. That’s a tiny fraction of what Marriott and Hilton collected for his or her co-branded playing cards.

What do you assume? Inform me. I’m at [email protected] and on LinkedIn.

Lodging Sector Inventory Index Efficiency Yr-to-Date

What am I taking a look at? The efficiency of lodges and short-term rental sector shares throughout the ST200. The index contains firms publicly traded throughout international markets, together with worldwide and regional lodge manufacturers, lodge REITs, lodge administration firms, various lodging, and timeshares.

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The Skift Journey 200 (ST200) combines the monetary efficiency of practically 200 journey firms price greater than a trillion {dollars} right into a single quantity. See extra lodges and short-term rental monetary sector efficiency.

Learn the total methodology behind the Skift Journey 200.

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