Earnings call transcript: Wyndham Hotels Q2 2025 beats forecasts, stock rises

Wyndham Hotels & Resorts Inc. reported strong financial results for the second quarter of 2025, surpassing Wall Street expectations. The company posted an adjusted earnings per share (EPS) of $1.33, exceeding the forecasted $1.16. Revenue also outperformed projections, coming in at $397 million against an anticipated $386.64 million. Following these results, Wyndham’s stock rose by 5.25% in after-hours trading, reflecting investor optimism.

Key Takeaways

• Wyndham Hotels’ Q2 2025 EPS of $1.33 beat the forecast by 14.66%.
• Revenue reached $397 million, surpassing expectations by 2.68%.
• Stock price climbed 5.25% in after-hours trading.
• Adjusted EBITDA grew by 5% on a comparable basis.
• Global system growth was reported at 4%.

Company Performance

Wyndham Hotels demonstrated robust performance in Q2 2025, with significant growth in key financial metrics. The company’s adjusted EBITDA increased by 5% on a comparable basis, and its adjusted diluted EPS rose by 11%. Wyndham’s global system growth of 4% and record first-half openings of 30,000 rooms highlighted its expansion efforts, particularly in China, where direct franchising doubled since the company’s spin-off.

Financial Highlights

• Revenue: $397 million, up from the previous year’s quarter.
• Earnings per share: $1.33, representing an 11% increase on a comparable basis.
• Adjusted EBITDA: $195 million, marking a 5% growth.
• Adjusted Free Cash Flow: $88 million in Q2, $168 million year-to-date.

Earnings vs. Forecast

Wyndham Hotels delivered an EPS of $1.33, outperforming the forecast of $1.16 by 14.66%. Revenue also exceeded expectations, with a reported figure of $397 million compared to the anticipated $386.64 million. This marks a positive surprise for investors, aligning with the company’s historical trend of strong quarterly performances.

Market Reaction

Following the earnings announcement, Wyndham’s stock price increased by 5.25%, reaching $88.90 in after-hours trading. This surge reflects investor confidence, as the stock moved closer to its 52-week high of $113.07. The market reaction was buoyed by the company’s better-than-expected earnings and revenue figures. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with analysts setting a high target of $118. Want deeper insights? InvestingPro offers 12 additional exclusive tips and comprehensive valuation metrics for Wyndham Hotels & Resorts.

Outlook & Guidance

Wyndham Hotels maintained a positive outlook, projecting an EPS range of $4.60 to $4.78 for the full year. The company anticipates net room growth between 4% and 4.6%, with a full-year RevPAR expectation ranging from a 2% decline to a 1% increase. Strategic initiatives, such as the launch of Wyndham Gateway and Wyndham Connect Plus, are expected to drive future growth.

Executive Commentary

CEO Jeff Bellotti emphasized the company’s strategic focus, stating, "RevPAR lasts for a day and pipeline lasts for a lifetime." He highlighted the addition of hotels with stronger economics, contributing to meaningful royalty rate accretion. CFO Michelle Allen reiterated the company’s investment priorities, focusing on high-quality growth.

Risks and Challenges

• Potential impact of global trade tensions on consumer sentiment.
• Competition from other hotel chains and alternative accommodation providers.
• Macroeconomic pressures, including inflation and interest rate changes.
• Fluctuations in international travel demand.
• Supply chain disruptions affecting operational efficiency.

Q&A

During the earnings call, analysts inquired about the default of the China Super Eight Master Licensee and its implications. The company also addressed RevPAR trends across different U.S. regions and detailed ancillary revenue growth from its credit card program. Additionally, the development of the Echo Suites brand was highlighted as a key area of focus.

By delivering strong financial results and maintaining a positive outlook, Wyndham Hotels & Resorts Inc. has positioned itself well for continued growth, despite potential challenges in the market.

Full transcript - Wyndham Hotels & Resorts Inc (WH) Q2 2025:

Operator: would now like to turn the call over to Mr. Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead, sir.

Matt Capuzzi, Senior Vice President of Investor Relations, Wyndham Hotels and Resorts: Thank you, operator. Good morning, and thank you for joining us. With me today are Jeff Bellotti, our CEO and Michelle Allen, our CFO and Head of Strategy. Before we get started, I want to remind you that our remarks today will contain forward looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied.

These risk factors are discussed in detail in our most recent annual report on Form 10 ks filed with the Securities and Exchange Commission and any subsequent reports filed with the SEC. We’ll also be referring to a number of non GAAP measures. Corresponding GAAP measures and a reconciliation of non GAAP measures to GAAP metrics are provided in our earnings release and investor presentation, which are 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. In addition, last evening, we posted an investor presentation containing supplemental information on our Investor Relations website.

We may continue to provide supplemental information on our website and on our social media channels in the future. Accordingly, we encourage investors to monitor our website and our social media channels in addition to our press releases, filings submitted with the SEC and any public conference calls or webcasts. With that, I will turn the call over to Jeff.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Thanks, Matt. Good morning, everyone, and thanks for joining us today. We reported another strong quarter of progress with global system growth of 4% and sequential net room growth across every region we operate in. We grew comparable adjusted EBITDA by 5%, and we grew EPS by 11% despite the challenging RevPAR environment. We drove an increase of nearly 20% in our ancillary fee streams, and we saw continued expansion in both our U.

S. And in our international royalty rates. Year to date, our resilient, highly cash generative business model has produced approximately $170,000,000 of adjusted free cash flow, and we’ve returned nearly $220,000,000 to our shareholders. The second quarter reaffirmed our team’s owner first commitment as we registered over 6,000 owners and strategic sourcing partners for the Wyndham Global Conference in May. As one of the largest gatherings of hoteliers in the world, our conference was designed to empower our owners with major new initiatives to increase their revenues in guest service, to lower their costs and to strengthen their operating performance.

We unveiled several new cutting edge technology driven tools, including Wyndham Gateway, a new centralized WiFi login system that creates new ancillary revenue opportunities and eliminates loyalty program enrollment requirements for participating hotels. And building on our very successful guest engagement platform, Wyndham Connect, we launched Wyndham Connect Plus, an AI driven guest engagement platform designed to enhance the guest experience and improve hotel operations. Utilizing automated text messaging and voice assistance to facilitate bookings to answer questions and to provide tailored recommendations, this platform is also designed to drive more direct bookings, to reduce front desk workloads and to create personalized guest experiences. Since being launched at our conference, over 1,100 of our over 5,000 hotels already on Wyndham Connect have now enrolled in Wyndham Connect Plus. We introduced Wyndham Marketplace with PriceIQ to reduce procurement costs, access better pricing and simplify supply chain processes.

We debuted new strategic F and B partnership integrations with Grubhub, with Applebee’s and with SBE’s Everybody Eats to increase guest satisfaction by offering chef driven restaurant quality offerings without the need for extensive equipment or large back of the house operations. We launched affordable high quality insurance programs through a partnership with Hub International to provide tailored solutions to improve coverage and lower costs at a critical moment for franchisees amidst rising insurance premiums. And we introduced Wyndham Rewards Experiences, leveraging partnerships with world renowned sports and entertainment brands like Madison Square Garden, Radio City Music Hall and Minor League Baseball, allowing our 120,000,000 members to use their points to bid on premier live events as well as unforgettable once in a lifetime memories. Franchisee satisfaction with what they learned and how they believe this conference will improve their business was higher than in any past conference as was their confidence in the years ahead. And last month, we released our first annual Hotel Owner Trends Report, a multi month effort which surveyed hundreds of developers and owners from The United States, Canada and The Caribbean.

The results reveal an industry full of owners who remain confident in its resilience and long term growth prospects. Nearly all of those surveyed responded that they’re open to exploring branded offerings, underscoring the value that strong brands deliver compared to operating independently. When ranking the most critical factors in selecting a brand, these owners and developers pointed to support and executive leadership as top priorities, followed by a strong loyalty program and access to best in class technology. More than 90% of respondents expressed optimism about the next five years. And while they acknowledge the challenges posed by the current macro environment, four out of five owners also indicated plans to expand their portfolios via either new construction or new unit additions.

Our owners’ confidence in their brands and their future with Wyndham was once again reflected in our growing openings, signings and net room growth this quarter. We opened over 16,000 rooms in Q2, bringing June year to date new additions to over 30,000 rooms, a record first half of openings for our company and 3% higher than last year. Q2 contract signings increased 40% to prior year, driving another 5% growth in our global development pipeline to a record 255,000 rooms. This was the twentieth consecutive quarter of pipeline growth, a development pipeline with an average fee par premium that’s approximately 30% higher domestically and nearly 15% higher internationally versus the existing domestic and international rooms in our system. Domestically, our midscale and above brands grew 3% with new construction openings like the La Quinta Olive branch located just minutes from Graceland, Elvis Presley’s historic home in Memphis, Tennessee and strong conversion activity with new additions like the Hilo Hawaiian Hotel on the Big Island and the Airport Honolulu Hotel on the Island Of Oahu, both converting to our trademark collection by Wyndham brand.

Internationally, we increased net rooms by 8%. EMEA grew net rooms by 5% with several new construction additions like the beautiful new Wyndham Alanya Resort on Turkey’s Mediterranean Coast, while also growing their development pipeline by 34%. And just last week, we announced the development agreement with Gurgaon based Signet Hotels, who will be developing our La Quinta and Registry brands across India, Bangladesh, Sri Lanka and Nepal. Latin America and The Caribbean grew its pipeline by 16% and increased net rooms by 4% with new construction openings like the Dazzler by Wyndham Salta in the cradle of Argentinian history and folklore and several new high quality conversions like the first HQ Hotel in Residence by SBE, a $100,000,000 development on the northern tip of Antigua Hodges Bay Resort and Spa, a proud member of our growing Registry Collection brand the Lifestyle Luxury segment. In Southeast Asia and The Pacific Rim, net rooms grew by 13% with new build additions like the Wyndham Soleil Da Nang Resort, highlighting our rapid expansion in Vietnam where our system size now exceeds 7,000 rooms.

In China, our team grew net rooms by another 16% in our direct franchising system with high quality new conversions and stunning new construction additions like the Days Hotel by Wyndham Suzhou Dushu Lake and the Wyndham Garden Shanghai Pudong, our fiftieth Wyndham Garden in China. As we’ve shared on our last two earnings calls, our Super eight master licensee in China has struggled to add new units and retain existing ones. Following an operational review this quarter, we identified violations of the license agreement by this master licensee and subsequently issued them a notice of default, a potential outcome of which could include termination. As a result, we revised our reporting basis to exclude the impacts of these rooms from our reporting metrics. And as a reminder, the financial impact of this portfolio is immaterial to our overall results as Michelle will discuss in a moment.

As we focus on our development of higher fee par brands and geographies, on building scale in markets where we have a strong footprint and strong growth potential and on expanding direct franchising in regions previously reliant on master license agreements, we’re adding hotels with stronger economics that drive meaningful royalty rate accretion. This quarter, our royalty rate increased by another six basis points domestically and by 13 basis points internationally. By continuing to focus our development on higher fee par properties and geographies, we’re enhancing the continued long term earnings potential of our system. On a global basis, RevPAR declined 3% in constant currency. International RevPAR grew 1% with strength across all regions except Asia Pacific, which was down 9% on continued softness across China.

EMEA RevPAR grew 7% with strength across Europe and The Middle East. Latin America and The Caribbean RevPAR grew by 18% driven by strong ADR and higher fee par additions in Brazil, Mexico and The Caribbean. And Canada RevPAR grew by 7% with lower U. S. Outbounds.

U. S. RevPAR declined 4%. About 150 basis points of this decline was driven by the lapping effect of the solar eclipse in April and the timing of the Easter holiday, which shifted into the second quarter of this year. On a normalized basis, our second quarter RevPAR declined approximately 2.3%, consistent with our expectations and a 60 basis point improvement from the 3% normalized RevPAR decline we reported for March.

Higher for longer interest rates, persistent inflation and uncertainty around immigration and trade have created an environment of ongoing economic volatility for economy and mid scale guests who remain especially sensitive to these dynamics. Also as expected, we saw significant acceleration in our ancillary fee growth this quarter, given the full quarter of benefit that our renewed co branded credit card agreement delivered, combined with our growing strategic partnership initiatives and our significant and ongoing technology innovations. Collectively, our ancillary revenues have now grown 13% for the first half of the year, pacing in line with our full year expectations. Before Michelle takes us through the financials, we’d like to take a moment to thank and recognize our teams around the world. The continued success of our OwnerFirst operating philosophy, which was on full display at our Wyndham Global Conference this quarter, is a direct result of their unwavering commitment and dedication.

We’re incredibly grateful to our team members who consistently put our owners at the very heart of everything it is that we do. Their passion fuels our momentum and their confidence in the road ahead reinforces our ability to deliver exceptional value to our shareholders, our guests and our franchisees each and every day. And with that, I’ll now turn the call over to Michelle. Michelle?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Thanks, Jeff, and good morning, everyone. I’ll begin my remarks today with a detailed review of our second quarter results. I’ll then review our cash flows and balance sheet followed by our outlook. Before we begin, let me remind everyone that the comparability of our financial results continues to be impacted by the timing of our marketing fund spend. In the second quarter of this year, marketing fund revenues exceeded expenses by $3,000,000 compared to expenses exceeding revenues by $5,000,000 in the second quarter of last year.

To enhance transparency and provide a better understanding of the results of our ongoing operations, I will be highlighting as usual our results on a comparable basis, which neutralizes the marketing fund impact. Additionally, as Jeff mentioned, beginning this quarter, we’ve revised our reporting methodology to exclude the full Super eight China Master License portfolio from our reported system size, RevPAR, royalty rate and related growth metrics, given the operational challenges of obtaining accurate information from this master licensee and the uncertain outcome of this compliance process. While we work through our compliance actions, we’ll continue to recognize fees due to us under the master agreement, which contributed less than $3,000,000 to our full year 2024 consolidated adjusted EBITDA. We also updated our full year net room growth guidance to reflect this reporting change, raising the low end of that range by 40 basis points. Historical results for comparability can be found in Table six of our earnings release with additional background and context provided on Slide 25 of our investor presentation.

Now moving to second quarter results. In the second quarter, we generated $397,000,000 of fee related and other revenues and $195,000,000 of adjusted EBITDA. Fee related and other revenues increased $31,000,000 year over year, primarily reflecting higher royalties and franchise fees and 19% increase in ancillary fee stream and higher pass through marketing reservation and loyalty revenues due to our global franchisee conference in May, which is held about every eighteen months. The increase in royalties and franchise fees reflects system growth of 4%, higher other franchise fees and royalty rate improvement, partially offset by a 3% decline in global RevPAR. Ancillary revenue growth meaningfully accelerated this quarter as expected, driven by the full quarter impact of our renewed long term co branded credit card agreement, which is also fueling stronger loyalty engagement across our portfolio.

Adjusted EBITDA grew 5% on a comparable basis, reflecting our revenue growth, partially offset by higher operating expenses, primarily related to the growth in our credit card program and the absence of insurance recoveries recognized in the second quarter of last year. Adjusted diluted EPS for the quarter was $1.33 up 11% on a comparable basis, driven by our EBITDA growth, the benefit of share repurchases and lower depreciation and amortization, partially offset by higher interest expense. Adjusted free cash flow was $88,000,000 in the second quarter and $168,000,000 year to date with a conversion rate from adjusted EBITDA of approximately 50%. At our current trading levels, our adjusted free cash flow yield of 6% remains the highest in the lodging sector. Development advanced spend was $23,000,000 in the second quarter, bringing our year to date total to $51,000,000 We continue to see an increased appetite for our brands with global openings up 3% so far this year and we’re happy to put our excess cash to work in order to position us in key markets and high demand locations that attract BPAR accretive properties into our system.

We returned $109,000,000 to our shareholders during the second quarter through $77,000,000 of share repurchases and $32,000,000 of common stock dividends. Year to date, we have now repurchased 1,700,000.0 shares of our stock for $153,000,000 We closed the quarter with approximately $580,000,000 in total liquidity and our net leverage ratio of 3.5x remains as expected at the midpoint of our target range. At this leverage ratio, our current outlook implies up to $550,000,000 of capital available for deployment this year after dividends. Of that, we’ve earmarked $110,000,000 for key money, leaving nearly $400,000,000 for share repurchases or strategic transactions. Through the first half of the year, we’ve deployed about $200,000,000 largely taking advantage of a depressed stock price, leaving ample capacity for additional capital return or opportunistic investment in the back half.

Turning now to outlook. As we’ve already mentioned, our net room growth outlook is now 4% to 4.6%, up from 3.6% to 4.6% to reflect the removal of our Super eight Master licensee in China. We are also raising our EPS outlook to a range of $4.6 to $4.78 to reflect the impact of second quarter share repurchases. This outlook is based on a lower diluted share count of 77,800,000 shares and as usual assumes no additional share repurchases or incremental interest expense associated with any potential borrowing activity to maintain our leverage at 3.5 times. We are reaffirming our expectation that full year constant currency global RevPAR growth will range between down 2% to up 1%.

As we shared last quarter, we purposefully set a wider range to account for ongoing volatility and uneven demand across markets. And we continue to believe that range remains appropriate today. When normalized for the headwinds from the solar eclipse and Easter timing, second quarter performance was within that range. Should we see a near term resolution to global trade tensions, consumer sentiment and demand could recover as quickly as it softened and with our largest volume months still ahead, we believe this outlook reflects the range of potential outcomes in today’s environment. There are no changes to the remainder of our outlook nor to our expectations for the marketing fund to breakeven on a full year basis give or take a few million dollars.

With respect to seasonality, we expect the marketing funds to underspend by roughly $10,000,000 in each of the third and fourth quarters in order to land at approximately breakeven for the full year. In closing, our second quarter results reflect steady execution across key priorities, growing our system with high quality CPAR accretive rooms, accelerating ancillary revenues, expanding our royalty rates and delivering on our earnings target. With a strong balance sheet and highly cash generative business model, we’re well positioned to navigate near term headwinds, while continuing to invest in long term value creation. As always, we remain committed to disciplined capital allocation and generating consistent meaningful returns for shareholders. With that, Jeff and I would be happy to take your questions.

Operator?

Operator: Thank you very much, Ms. Allen. Ladies and gentlemen, the floor is now open for your questions. We’ll go first this morning to David Katz of Jefferies.

David Katz, Analyst, Jefferies: Good morning, everybody. Thanks for taking my questions. First, just a quick comment with respect to China. I know we’re not going to talk about it, but I know this has been an issue since 2018 and I hope it works out in a productive way. My question, Jeff and Michelle, is around RevPAR in your segments.

We see the weekly numbers, and it’s been pressured. My hope is that you can help us unpack a bit what’s going on a even a more granular level with RevPAR, which is pressured in a lot of areas, but not all. And I’d love just a little walk around on what you’re seeing with respect to RevPAR and maybe we can when we might start to see some growth? Thank you.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Sure. Thanks, David. As we’ve always heard you say RevPAR lasts for a day and pipeline lasts for a lifetime. And this has been more than a day. Q2 RevPAR was down 2.3% normalized versus the down 2.9% we ran in March.

So a bit better. Slide 11 in our investor presentation lays that out. July month to date has been generally consistent with the STR results with continued softness in the Sunbelt states like Texas, Florida and California, where we have about onefour of our system. But it’s been offset by strength in oil markets like Ohio, up 4% in the quarter and up July to date Oklahoma, up double digits and natural gas states like Pennsylvania, which was up 6% the quarter. Combined with strengths in the large Midwest industrial states, Matt put a green shoots chart in 11 where we’re seeing strengths RevPAR wise in states like Wisconsin, Michigan, Minnesota, Missouri, all indicating steady demand from our blue collar everyday travelers.

So softness more leisure focused in those large Sunbelt and border states that I just mentioned. In terms of going forward, the next two weeks of July are as you all know our most important weeks of the year. And in August, we’ll see a stronger summer travel season, which we’re happy about given the favorable school calendars with more schools starting later this year than last year per STR. And while the demand shift happened very quickly and while optimism certainly abounds for continued resolution of the global trade tensions and improved consumer sentiment, we’re not seeing anything structurally, to your question that concerns us. Pricing is holding steady.

ADR year over year was essentially flat in the quarter and is up 17% to 2019, which is trailing inflation by a full seven points. But we’re not seeing any trade down opportunities or impact. In fact, the gaps between those chain scales continue to strengthen with little signs of any discounting or compression. If you just look at the last quarter, 50 gap between economy and upper midscale, it’s now over $65 And the $80 gap last quarter between upper mid and upper upscale has moved up as well. So nothing structurally that concerns us.

Our most booking lead times of late is essentially flat to last year. The average length of stay are consistent with last year, in fact, up about three percent pre COVID. And our cancellation rates have actually improved somewhat over the last year by about 60 basis points. Economy is still humming. Our guests are more employed.

They have healthy balance sheets and household incomes that continue to strengthen. Each month, David, we run internal research on our guests that point towards more optimism on travel intent and less concern about economic worries than both last year and even last month. And we look at all the research we can get our hands on, syndicated research that’s out there. And we continue to see consumers with more plans to travel in next six months. I think it was 94%, 95%, up from 89% in the first quarter.

Consumer spending on travel is continuing despite the macro headlines. And we remain optimistic that, that RevPAR long term 2% to 3% Smith Travel domestic RevPAR CAGR is going to return, especially given the historical low levels of supply that we’ve been seeing.

David Katz, Analyst, Jefferies: I do say that. Appreciate the credit and the answer. Thank you.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Thank you, David.

Operator: Thank you. We’ll go next now to Brent Montour of Barclays.

Brent Montour, Analyst, Barclays: Good morning. Thanks for taking my question. So Jeff, I want to or Michelle, want to talk a little bit more about net unit growth expectations and just sort of how your expectations for the year has evolved since the beginning of the year? So we know that construction in The U. S.

Has been challenged and starts have been challenged for all the reasons we all know. But has the mix shift for your expectations changed between starts on new or sorry, new construction opening versus conversions? And how are those sort of pieces evolving throughout the year for you?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Great. Thanks, Brent.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: I’ll start and then talk about outlook for the year. I mean, Brent, near term optimism just continues to grow from an openings and executions and a pipeline start and certainly a net room growth both domestically and internationally. And we are just a high level on openings, we have been so happy in terms of the accelerating net room growth in the higher fee par segments that we’ve continued to see. There’s a good slide in nine in the IP that points to those record openings pacing ahead of prior year as is first half of NRG. From an execution standpoint, just thrilled with how our teams have performed this year.

The pipeline is larger. It’s stronger than ever. And our franchise sales teams really around the world have been more productive than they’ve ever been. And that pipeline continues to skew higher domestically. It’s been in the last few years growing from about 35% domestic to 42%, as you see in our investor presentation this quarter, driven by really strong domestic executions, up 6% to last year and international executions of 11,000 rooms, up significantly 400 basis points internationally.

Patrick Scholes, Analyst, Truist: Great.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: And Thanks, I would just add to that, Brandt. Our expectations for net room growth have remained largely consistent throughout the year, although the composition has improved in both quality and visibility as the year has progressed. And at the start of the year, we set the range at 3.6% to 4.6%, which has now been raised to 4% to 4.6%, and that reflects the removal of the Super eight Master license agreement. But again, also the continued strength in the development activity and Jeff that Jeff mentioned and the record first half openings as well as the growth in our pipeline and the 23% year to date increase in executions. So we’re really pleased with the development momentum.

Operator: We go next now to Danny Asad of Bank of America.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Good morning, Jeff and Michelle. So more of a strategic question here, but how does this incident with the Super eight master licensee in China approach change your approach to China or other international markets going forward? So does it accelerate even more the want or need for direct franchising? Yes. I mean, we’ve been saying, Danny, thanks for the question, consistently that we’re no longer signing master license agreements to grow.

And that these agreements that were entered into over twenty years ago with local developers before we had franchise sales teams located in those markets as we do today were why we did it back then. We have very strong teams as we’ve talked about before on these calls in China. I believe we have the biggest, largest, most successful franchise sales team over there today. So we’re absolutely committed. And as we’ve been talking about consistently, we’ve seen continued development acceleration in our direct franchising business to your question on both the openings and the executions front.

No slowdown. It’s grown 12% on a compounded annual growth rate since 2020. That’s our direct franchising business. It’s on pace this year, delivered double digit growth again. And we are we have increased our direct franchising business in China by over 100% since spin to nearly 100,000 rooms.

And that is at three times the royalty rate. And we have about 400 direct hotels now in our pipeline. Q2 is another great example. We opened 5% more rooms direct and that drove the 16% net room growth in our direct VPAR accretive rooms. And our teams executed really strongly again 26 new deals more than last year with a new construction pipeline that’s growing.

And these are contracts that are about three quarters weighted to new construction, one quarter to conversions. So there is a lot of excitement. There’s a lot of development out there. We continue to add new brands to Wyndham, Wyndham Grand, Wyndham Garden, Wingate, Ramada. They’ve all been really performing well for us.

We took back a master license days in. We just signed our one hundred and tenth days in over there. We’ve added 25 microteles. Nobody thought we’d be adding La Quinta’s, but I think the team just opened their fifth over there. And the team is very committed.

We’re very committed to growing across the country. And they’re firing on all cylinders. Thank you very much. Thanks, Danny.

Operator: We’ll go next now to Steve Pizzella of Deutsche Bank.

Steve Pizzella, Analyst, Deutsche Bank: Good morning and thank you for taking our questions. Wanted to focus more on the credit card. You noted ancillary fees through 19% into 2Q. And in the deck, I believe you expect low teens growth for 2025 overall. How should we think about the acceleration of the second half of this year and into 2026?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Hey, Steve. We were really, really pleased with the performance of our ancillary revenues in the second quarter. They were, as you mentioned, up 19%, right in line with the acceleration that we had expected. And a large portion of that growth came from our co branded credit card program. In the first half, we saw a 5% increase in new accounts alongside a 2% lift in average spend per cardholder.

These are really strong indicators of engagement, and we expect that momentum to continue throughout the remainder of the year. On a year to date basis, we’re at that 13%, which again is right in line with our low teens full year expectation, and we expect that the back half is going to produce similar results.

Steve Pizzella, Analyst, Deutsche Bank: Okay, great. Thank you.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Thank you.

Operator: And we’ll go next now to Lizzie Dove of Goldman Sachs.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Hi, there. Thanks for taking the question. I just wanted to ask about the key money environment, what you’ve been seeing recently, whether it’s gotten more competitive, whether more kind of money per deal has been required now? Thanks. Hi, Lizzie.

I’d say it’s pretty consistent. We’re really pleased with how successful the teams have been penetrating the midscale and above space, bringing in higher fee par deals, strategies working. And we can’t think of a better place. We’re really thrilled to be putting some of our excess free cash flow to work here. Our openings are up 4% year to date.

Our contract signings are up again at 23% year to date. We’re at every table, and this tool is helping us win deals. The DAN deals this year so far have brought in BPAR that’s 36% higher than our existing system. So there’s real value in this money that we’re deploying. And I think it’s a pretty consistent environment.

Thanks.

Operator: Thank you. We’ll go next now to Michael Bellisario of Baird.

Michael Bellisario, Analyst, Baird: Thanks. Good morning everyone.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Surprised you’re on a call Michael. No No, number

Michael Bellisario, Analyst, Baird: not yet. Patiently or maybe impatiently waiting. Jeff, you haven’t talked about Echo Suites yet. Maybe just what’s the latest and greatest there in terms of signings and starts for that brand? And then also maybe just the latest update on the growth trajectory for the brand with your multiunit owners who are the initial developers versus maybe thinking about doing more one off deals going forward?

Thanks.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Sure. Yes, we’re doing more one off deals. The team continues to execute. And when you look at the new construction executions, which were up if I talk broad pipeline up 9% to prior year, driving that new construction pipeline, which I think a lot of folks think is slowing down. It’s not for us.

Our new construction pipeline is up 4% year over year, a record 1,500 hotels. Echo played a role in that. Our new construction Echo pipeline this quarter grew another 3% to prior quarter. We signed 1,600, 1,600 new rooms with those individual developers. We’re at roughly we’re north of 30,000 rooms and we’re growing that pipeline.

We’ve seen recent openings in Texas, let’s see Tennessee, Virginia last week Reno. Oh! And yesterday, we just opened another Echo Suites, I hear, in Katy, Texas. Unfortunately, I couldn’t be there. But we had new signings this quarter in Oregon, in Utah, in Washington.

Again, it was multiple new developers. And we’ve got nearly a dozen open, another dozen or so under construction and another 30 sites in active development in really strong markets like yet coming soon Sterling, Virginia Fort Worth, Texas off the top of my head Pasadena and Naples, Florida, great new unit that will be opening there. Performance to date is pacing on track. And we have several of these hotels already achieving RevPAR index levels of over 100. They’re not all there yet.

They’re ramping towards that. But what is exciting to us is that these developers are putting midscale, upper midscale and in some cases upscale competitors in their market in their comp sets as they continue to look to push that average daily rate in RevPAR and most importantly extended stay occupancy levels to a level that we haven’t seen before in any of our brands. And we’ve said all along we’d have 300 opened by 02/1932. And with over I think now over two eighty executed contracts in our pipeline And that interest in conversations with new developers, both multi units still interested, but more so now that the big multi unit territories are locked down, continuing to express interest to continue to build on a one off basis, we’re feeling very good about that number.

Michael Bellisario, Analyst, Baird: And then just one follow-up. I guess when do you expect to

Brent Montour, Analyst, Barclays: take the brand international? And that’s all for me. Thanks.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Yes. We are talking. In fact, we’re meeting with our divisional presidents next week about Latin America, perhaps Mexico being the first, but probably in the next year.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: And we already have agreements in place in Canada?

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Yes. Yes. It’s an international country.

Operator: We’ll Thank go next now to Patrick Scholes of Truist.

Patrick Scholes, Analyst, Truist: Hi. Good morning, Jeff and Michelle.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Hey, Patrick. Good morning, sir.

Patrick Scholes, Analyst, Truist: Good morning. I’m wondering if you can lay out what you see as the range of the various possible outcomes with the China notice of default. To be clear, I’m not asking what you see as the most likely or the most desirous, but really, what are the possible outcomes that you see in this current scenario? Thank you.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Yes. Patrick, it’s this is an active compliance process. So I don’t think it would be appropriate for us to discuss those details publicly. But we can say, of course, this could lead to a variety of outcomes, including termination of the master.

Patrick Scholes, Analyst, Truist: Okay. Is it possible any of those outcomes could end up being a net positive for you folks?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Sure. It’s just too early to speculate on potential outcomes, but I can definitely see a few paths where this could be a positive for Wyndham, for the sub licensees and even potentially for the master.

Patrick Scholes, Analyst, Truist: Okay. We’ll leave it at that. Thank you.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Thanks, Patrick.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Thank you.

Operator: We’ll go next now to Dan Politzer of JPMorgan.

Dan Politzer, Analyst, JPMorgan: Hey, good morning, everyone. Thanks for taking my question. Wanted to touch on the net rooms growth. This is an area where you do have some visibility. How are you thinking about this the kind of growth rate as you think about 2026?

Is that level 4% to 4.5% achievable? And then any kind of semblance just given the momentum of Echo Suite that you talked about on how to think about kind of the breakdown of growth between U. S. And international? And then just similarly, one quick housekeeping with the Michelle, for the net rooms growth outlook this year, you raised the low end by 40 basis points, but kept the high end.

Were there any kind of changes other than the MFA that just because it seemed like it would kind of affect both ends of the range? Thanks.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Okay. There’s a lot in there to unpack. Let me see if I can remember all the questions. I’ll start with the last one. I’d say, no, our net room growth outlook today reflects increased confidence as we move halfway through the year.

We have greater clarity around production for the year, more visibility, better kind of quality information. And so we feel as confident as ever in being able to achieve that net room growth guidance. And then which also, by the way, does reflect a 20 basis point increase at the midpoint of the guide as a result of the changes we made for the Super eight Master licensee. It’s still too early to really talk about 2026, but I’d say our term growth objective has always been 3% to 5%, and we’re clearly above that 3% in 2025, and we would expect that we can continue to deliver on those growth targets. We’ve got a record pipeline with a significant portion of that new construction pipeline with already kind of being in the ground and under construction.

We’ve got continued momentum in the midscale and extended stay, which are really positive fundamentals and where demand remains strong and financing is still very much available. And we’ve got greater contribution from international markets, but most importantly, fee par international markets, again, under that direct franchising base and again, with more accelerated growth coming out of the higher fee par regions such as EMEA. So we feel like there’s really high quality net room growth happening here and that should continue well into 2026 and beyond.

Operator: Thank you. We’ll go next now to Stephen Grambling of Morgan Stanley.

Brent Montour, Analyst, Barclays: Hey, thanks so much. Two quick follow ups. First on Lizzie’s question around key money. Just given the success here, do you generally anticipate potentially loosening up the purse strings? I guess, in the past, talked about it as an eyedropper to deploy more?

Or what are the guardrails investors should be thinking about with that deployment?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: I hope our development team isn’t listening. Yes, Jeff has referred to it as an eyedropper. I’d say we are always very judicious in how we deploy our capital. And we want to make sure that any key money that we’re deploying is returning the proper economic value to our shareholders. And any deals would be assessed kind of through that lens.

I don’t anticipate needing to increase the key money meaningfully beyond the levels contemplated in our current outlook. Our strategy hasn’t changed, right? So we still want to prioritize investment in high quality growth and make sure that those returns are meeting or exceeding our hurdle rates. And I think we’re fortunate enough to be able to be judicious, but also opportunistic.

Operator: Thank you. We’ll go next now to Ian Zaffino of Oppenheimer.

David Katz, Analyst, Jefferies: Hey, good morning. This is Isaac Salazan Thanks for taking all the questions. I think we’ve covered a lot already, but my question is just on the positive RevPAR trends you’re seeing in the Midwest and industrial markets. If you could just touch on if that mix is being driven by both ADR and occupancy?

Or is there anything to call out as far as sizing the occupancy uplift from infrastructure? Thanks.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: It’s been more rate has been, as I said earlier, steady. Our rate in the quarter and rate July to date has been flat to last year. And I think to the infrastructure point, we are beginning to see some reacceleration in those Midwest states and really across the country in spending. Our global sales, our Wyndham sales infrastructure room nights that are contracted, we’re seeing them pick up. They’re up about three times what the consumed is.

And that’s business on the books that’s pacing ahead. And if you look at the eight Midwest states that we noted in our investor presentation, which combined saw second quarter RevPAR growth of I think it was over 500 basis points, over 100 basis points of that was driven by hotels near large infrastructure projects. And so while infrastructure as we’ve been talked on the last call and this call slower than what we saw in the 4Q, it is similar to what we saw more broadly then. And we believe that as those national priorities continue to crystallize that business should pick up. I mean the headlines and the administration’s focus is on getting the balance of those allocations out and spent.

And the priority now appears to be certainly faster highway projects starts, faster bridge and transportation starts. And then on the flip side of that, we continue to see very strong public and private data center construction starts, energy construction starts, semiconductor investment starts. And that’s giving our teams a lot to go after. They’ve identified 150 planned data center projects within 15 miles of a Wyndham hotel. And they’re hunting these projects using a combination of reporting and technology and networking with contractors.

And I believe we have a slide in there for the top 10 data center projects under construction. The RPI for our hotels within 10 miles of those was up 500 basis points better year to date than those hotels and markets further away from the project. So every day a new data center project is being announced. And we still continue to view this as a great multiyear tailwind for our hotels, our owners and our sales teams.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Yes. And in those Midwest states you mentioned, Jeff, I think we’re up about 100 basis points in RevPAR the infrastructure market.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Exactly, Michel.

Operator: Thank you. We’ll go next to Brignall of Redburn.

Michael Bellisario, Analyst, Baird: Thank you very much for taking the question. Following up on the pipeline question and the nug questions that have been asked, could you just give a little bit more on your retention rate, both in terms of the existing estate, which has obviously been on a positive trajectory as we go through the year, maybe looking into outer years, how you’re thinking about that, if there’s any new thoughts? And then within the pipeline, if there’s anything you can say on any dropouts of pipeline projects or whether that’s still all proceeding as you would hope. Obviously, ones will be for outer years. And then there are a few questions yesterday on Hilton’s call about the positive expectations they had for Q4.

Now the cadence of RevPAR is a little different because of the tier that you are in relative to them. But Q4 seems like a relatively tough compare for in The U. S. So just any thoughts that you have there your expectations would be great. Thank you.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Okay, Alex. I will start and then Michelle could fill in anything that I missed and I’ll let her talk about the Q4 RevPAR expectations. You asked about pipeline and pipeline fallouts. We’re not seeing anything. As Michelle rightly alluded to, we’re seeing an increase in starts and just great additions to that pipeline.

Our teams from an execution standpoint are really adding to it. As we talked about two twenty nine contracts signed in the quarter, 40% up to last year and domestic rooms executed. We’re really happy about what’s happening in The U. S. Is now pacing 7% ahead of same time last year, but no fallouts.

You asked about retention, and we’re really pleased with the steady progress that we’ve seen since spin. And really nothing different in terms of our narrative on retention. We’ve always said that we’ve had a long term retention goal in these segments we operate in of about 96%. And when we spun out, we were in the 93 s. We’ve moved it to the 94 s to 95% s last year.

And right now at sixthirty, we’re running 95.8% on our rolling twelve month retention rate, which is how we look at it. Importantly, we have the highest net promoter scores and quality scores our brands have ever seen or enjoyed. Our overall satisfaction rate with our brands domestically was up three fifty basis points year on year. So a huge shout out to our DFO teams, our directors of franchise operations who are out there across the country every day. Saying goodbye to franchisees that aren’t living up to our quality standards after trying to work with them to get there, but continually improving the quality and improving along those lines along with everything else we’re doing, especially on the technology front, our retention rates.

Michelle, you want to talk about Q4?

Patrick Scholes, Analyst, Truist: Michelle?

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Yes, sure. Undoubtedly, it is a tougher comp. Last year, we benefited from hurricane related relief efforts, elevated demand that we saw in the Gulf Coast and the Southeast market. That was about 150 basis points. So that is a headwind to the fourth quarter comp in The U.

S. And that’s already reflected in our guidance for the full year. And we’re certainly not expecting to repeat at that same level.

Operator: Thank you. We’ll go next now to Meredith Jensen of HSBC.

Michelle Allen, CFO and Head of Strategy, Wyndham Hotels and Resorts: Yes. Hi. Thanks. I was wondering if you might speak to the slide that discusses the $550,000,000 that could potentially go to shareholder returns or business development? I know you mentioned sort of earmarked for t money, but sort of what you’re thinking in terms of opportunities there and what that might be?

Sure. I think that slide really represents the art of the possible with respect to this year’s capital allocation. Look at our excess free cash flow and then the leverage capacity that we had, we would have about $550,000,000 to deploy in the year. I think about $110,000,000 of is earmarked for key money. And so that leaves a considerable amount remaining for whether it’s share repurchase or what we call strategic transactions further investment in the business.

And I think about half of that has been deployed already including for opportunistic share repurchases. As we’ve always said, investing in our business is our top priority. We are doing that primarily through the DAN program today. Continue to allocate capital toward those higher quality deals that help us grow our system and then increase our fee part, which is a key pillar of our long term strategy. So as we look to the back half of the year, I think you can expect us to continue to balance an active deal environment with opportunistic share repurchases and that’s how we would expect to deploy our capital this year.

Operator: Thank you. And it appears we have no further questions this morning. Mr. Bilotti, I’d like to turn things back to you for any closing comments.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Well, thank you very much, Leo, and thanks everyone for your questions and for your interest in Wyndham Hotels and Resorts. Michelle, Matt and I look forward to talking to you and hopefully seeing many of you in the weeks and months ahead. In the meantime, we’d like to remind all of you golf fans to tune in to the Wyndham Championship next week. It is the final tournament of the PGA Tour’s regular season before the playoffs begin. It’s become a playoff in and of itself where there is an awful lot at stake.

Coverage begins one week from today, July 30, next Thursday on the Golf Channel and continues over the weekend on CBS with Jim Nance and his incredible crew and where you’ll be able to catch our new linear TV advertising spots where we’re very proud of where there’s a Wyndham, there’s a way. Have a great rest of your summer everyone and thanks again for joining us today.

Operator: Thank you, Mr. Blotti. Thanks, Ms. Allen. Again, ladies and gentlemen, this does conclude today’s Wyndham Hotels and Resorts second quarter twenty twenty five earnings conference call.

Please disconnect your line at this time and have a wonderful day. Goodbye.

Jeff Bellotti, CEO, Wyndham Hotels and Resorts: Thanks, Bob.

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