Wyndham Hotels & Resorts is continuing a major expansion push despite what its CEO described as the distraction of a takeover bid from Choice Hotels International.
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The hotel operator reported 3.5% growth in system-wide rooms for the year, the most in the company's history, including the addition of 500 new hotels and 66,000 rooms to its system.
It also increased its contracts with legacy brands by 8% over 2022. It had $320M in revenue in the fourth quarter, up $10M from the same period a year earlier, and announced that its board had approved a 9% increase to its quarterly dividend.
“Despite the distraction, uncertainty and misperceptions caused by Choice and their slanted and constant communications to our franchisee base, room openings accelerated and our global development pipeline grew by 10% to an all-time high of 240,000 rooms,” Wyndham CEO Geoff Ballotti said in a statement.
Wyndham generated a $50M profit in Q4, down $6M from the same period a year earlier. It attributed the decline to a higher tax rate, higher interest expenses, the impact of hyperinflation in Argentina and transaction-related expenses incurred by the unsolicited takeover offer from Choice Hotels.
Choice has been seeking to buy Wyndham since May and went directly to shareholders in October with a $90-per-share offer that was a 30% premium on the company’s stock price. Wyndham has consistently rebuffed the offers, leading to Choice launching a hostile takeover attempt in December.
Choice’s latest move was the January nomination of eight people to stand for election on Wyndham’s board of directors. Ballotti characterized that push as having “the sole purpose of advancing its inadequate, hostile and risk-laden offer,” CoStar reported.
Ballotti said a merger would draw regulatory scrutiny for its size, adding that the takeover attempt has already drawn interest from the Federal Trade Commission as well as state attorneys general in Washington, Colorado, Kansas and Vermont.
In addition to the record growth in portfolio size, Wyndham grew its Echo Suites extended stay platform development pipeline by nearly 60% year-over-year with 98 new contracts, including a July deal with Canadian developer MasterBUILT Hotels to add 60 new locations in the country.
Around 70% of its development pipeline is in the mid-scale and above segments, with 58% of its pipeline being for international properties and around 34% of its upcoming hotels having broken ground.
The firm reported a 5% increase in revenue per available room for full-year 2023, but its RevPAR, the hotel industry's chief performance metric, dipped by 1% in Q4 from the same period in 2022.
Wyndham said its RevPAR was up 44% in Q4 compared to the same period of 2019, prior to the pandemic impacting travel patterns. It turned a $289M profit for the full year and bought back $397M worth of shares.
The fourth-quarter and annual results were released on Wednesday, and its stock has since remained relatively flat. It was trading at $79.38 early Friday, up less than 0.4% since the financial disclosure.
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