PARSIPPANY, New Jersey—Wyndham Worldwide Corporation will “aggressively” chase systemwide rooms growth, the company’s chairman and CEO said during a second-quarter earnings call Wednesday.
While noting the company will only chase deals that are “strategically and economically appealing,” Stephen P. Holmes said the company is looking at several growth avenues. As an example, he mentioned entering into multi-unit conversion and new construction deals.
Acquisitions remain a possibility, Holmes said. “The acquisition pipeline, whether the environment is stressed or not stressed, has been pretty consistent … What has to change is the expectations of the other side.”
Holmes also pointed to Wyndham’s recent deal with Hospitality Properties Trust to brand 20 hotels under the Wyndham Hotels and Resorts and Hawthorn Suites by Wyndham flags. CFO Tom Conforti said the hotels, comprising 3,022 rooms, will enter the Wyndham system 1 August. Four of the hotels will be branded under the Wyndham Hotels and Resorts brand while the remaining 16 will be under the Hawthorn brand.
As of 30 June, the company’s hotel system consisted of more than 7,170 properties and approximately 608,300 rooms. The development pipeline included approximately 900 hotels and 113,900 rooms.
Conforti said the company opened 15,500 rooms and terminated more than 16,000 rooms. Terminations were higher than usual as the company kicked out lower performing properties, Conforti said.
Some of the terminations were a function of natural attrition, Holmes said. “Also, a significant amount of it is what we consider to be self-inflicted.”
Asia/Pac development
The Asia/Pacific region, and China in particular, is a focus for growth, Holmes said. The company has approximately 60,000 rooms in China, and the goal is for the company’s China footprint to rival its U.S. footprint.
“It’s a high-level focus for us,” Holmes said of China.
As for how deals are structured in China, Holmes said there are several deal structures in place. For example, the company has entered into managed agreements with its Ramada franchise while pursuing master franchise agreements with Days Inn and Super 8 hotels.
“It’s an amalgamation of different approaches,” Holmes said.
FTC lawsuit update
Holmes also gave an update during the call regarding the Federal Trade Commission’s recent lawsuit that was filed over a series of data breaches that occurred between 2008 and 2010. The FTC sued Wyndham for allegedly misstating what security practices were in place to guard against such breaches.
Holmes said a limited amount of customer data might have been accessed. Safeguarding customer information is the company’s top priority, Holmes said.
“The FTC lawsuit is without merit, and we will vigorously defend against the charges,” he said.
