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Wyndham’s international RevPAR dropped by 3.5% during the third quarter, thanks in part to fast growth of the company’s lower-rated Super 8 brand in China. Growth of lower-rated brands beyond the United States’ shores dragged down revenue per available room for Wyndham Worldwide Corporation. The company reported third-quarter global RevPAR growth of 4.6%. Domestic RevPAR was up 8.4%, but international RevPAR finished the quarter down 3.5%. Year to date through 23 October, the company’s stock price was up 7.6%. By comparison, the R.W. Baird/STR Hotel Stock Index was up 14.3%. Wyndham Chairman and CEO Stephen P. Holmes said during an earnings call Friday that performance in China was one culprit behind the slowdown. Excluding China, international RevPAR for the company is up 1%. Unfavorable exchange rates also played a role. An analyst asked Holmes whether there were any specific markets in China that were particularly weak. Holmes, who was in China a week ago visiting some of the company’s properties, said Wyndham has notched across-the-board increases in Chinese markets. What is happening, however, is that Wyndham is adding its lower-rated Super 8 brand in the country at a faster clip than other brands, which impacted the RevPAR figures. During the next 18 months, average daily rate should begin to show some lift in China, he said. China will be a growth market for the company, Holmes added. “We are growing in a market that will undoubtedly have a long-term positive impact on the company,” he said. Foreign markets are likely to play a key role in Wyndham’s future, as 57% of the company’s development pipeline is located outside the U.S. As of 30 September, Wyndham’s hotel system consisted of approximately 7,590 properties comprising 655,300 rooms, which represents 2.7% growth when compared to the same quarter a year ago. The development pipeline includes more than 960 hotels and more than 116,000 rooms, of which 66% is new construction. While growth outside the U.S. is a focus, Holmes expressed optimism over the company’s home North American market. Growth will come via merger-and-acquisition deals as well as internal growth. “We feel very excited and bullish about North America,” he said. Share repurchase Also Friday, company officials announced that its Board of Directors approved a $1-billion increase in the company’s share repurchase authorization. During the quarter, Wyndham repurchased 2 million shares for $161 million. Between 1 October through 23 October, an additional 600,000 shares were repurchased for $50 million. The remaining authorization, including the $1-billion increase, was $1.1 billion as of 23 October. Holmes was asked whether the company would continue to increase the pace of buybacks. It’s too early to tell, Holmes answered. He did say, however, the company wants to put its cash to use. “There is no reason to sit with cash on our balance sheet,” he said. |
