PARSIPPANY, NJ—In the first quarter, Wyndham Hotels & Resorts reported a net income of $21 million and saw revenues increase 55% to $468 million.
“Our first quarter results were consistent with our expectations and included double-digit growth in adjusted EBITDA despite our decision to incur a higher proportion of our 2019 marketing expenses in the early part of the year,” said Geoffrey A. Ballotti, CEO, Wyndham. “We remain enthusiastic about our prospects for growth, the synergies we expect from the La Quinta acquisition, and our leading presence in the economy and midscale segments of the lodging industry.”
Highlights include:
- Revenues increased 55% compared with first quarter 2018, to $468 million.
- Net income was $21 million for the first quarter; adjusted net income was $51 million.
- Diluted earnings per share were $0.22 and adjusted diluted EPS were $0.52.
- Adjusted EBITDA increased 21% compared with the prior-year quarter, to $111 million.
- Global RevPAR increased 7% year-over-year, and 1% in constant currency and excluding our 2018 acquisitions and divestitures.
- U.S. RevPAR increased 13% year-over-year, and 1% excluding our 2018 acquisitions and divestitures.
- System-wide rooms grew 12% year-over-year, and 3% excluding our 2018 acquisitions and divestitures.
Revenues were $468 million, compared with $302 million in the first quarter of 2018. Results reflect $169 million of incremental revenues from La Quinta. Excluding the impact from 2018 acquisitions and divestitures, revenues were consistent with last year in constant currency, primarily due to higher license, royalty and other fees, offset by lower cost-reimbursement revenues.
Net income was $21 million, or $0.22 per diluted share, compared to $39 million, or $0.40 per diluted share, in the first quarter of 2018. Prior-year results predate the company’s spin-off and the acquisition of La Quinta and therefore included substantially lower separation-related, interest and corporate expenses.
Adjusted net income was $51 million, or $0.52 per diluted share, compared with $55 million, or $0.55 per diluted share, in the first quarter of 2018. First quarter earnings comparisons were impacted by the acquisition of La Quinta, higher interest expense, the timing of marketing expenses and the absence of $4 million of net hurricane-related insurance proceeds received during first quarter 2018. The timing-related increase in marketing expenses alone, measured relative to marketing, reservation and loyalty revenues, reduced first quarter 2019 adjusted net income by $12 million or $0.12 per diluted share. Full reconciliations of GAAP results to our non-GAAP adjusted measures for all reported periods appear in the tables to this press release.
First quarter adjusted EBITDA was $111 million, compared with $92 million in the first quarter of 2018. Management estimates that first quarter results reflect approximately $33 million of adjusted EBITDA from La Quinta. Excluding the impact from 2018 acquisitions and divestitures, adjusted EBITDA decreased 13% in constant currency, primarily due to the timing of marketing expenses, which suppressed growth by 16 percentage points, and the absence of the net hurricane-related insurance proceeds received in first quarter 2018, which suppressed growth by four percentage points.
Consistent with the company’s expectations, first quarter adjusted EBITDA represented 18% of the company’s projected full-year adjusted EBITDA.
As of March 31, the company’s hotel system consisted of approximately 9,200 properties and approximately 812,000 rooms, a 12% increase compared with the first quarter of 2018. Room count grew 3% year-over-year, excluding our 2018 acquisitions and divestitures. The company’s development pipeline consisted of 1,400 hotels and approximately 181,000 rooms, a 23% year-over-year room increase, including over 25,000 La Quinta pipeline rooms and the removal of 2,000 Knights Inn pipeline rooms. The company also increased its pipeline sequentially by 1% compared to fourth quarter 2018. Approximately 54% of the company’s development pipeline is international and 73% is new construction.
