PARSIPPANY, New Jersey—Seeking to boost its pipeline growth, Wyndham Worldwide Corporation has mezzanine financing available for developers, executives said during the company’s first-quarter earnings call Wednesday.
Wyndham’s Chairman and CEO Stephen P. Holmes declined to say how much capital could be had by potential developers. The company a couple years ago made $200 million in mezzanine financing available, but Wyndham has yet to provide “anything close” to that amount.
“It really depends on opportunity,” Holmes said during the conference call. The company historically does a lot of mezzanine financing, he said.
He added, “We feel we have great momentum with the Wyndham brand right now, and feel we have more opportunities than ever to bring (development deals) in.”
As of 31 March, Wyndham’s pipeline consisted of 108,200 rooms, a 6% increase. 220 new deals were added to the pipeline during the first quarter, up 12%. System rooms total approximately 609,300, flat year over year.
Holmes said one reason for the flat room growth is that the company has been removing product from its system.
“We’ve been weeding out … franchisees who have not been investing in their properties,” Holmes said. He did not identify how many hotels were removed, though he said “a lot” of hotels were terminated.
The company also is seeing a wealth of conversion opportunities, he said. “Our (conversion) pipeline is up,” he said. “There is good flow of applications.”
Development remains a key focus for Wyndham, Holmes said. “A business without growth has diminishing value.”
Q1 performance
Company officials said they were pleased with how Wyndham’s hotels performed during the quarter. U.S. revenue per available room was up 9% during the quarter, with international RevPAR increasing by 3%. The international RevPAR growth was led primarily by China, Holmes said. European RevPAR slowed during the quarter.
Company officials continue to see global economic recovery in line with expectations, Holmes said.
Wyndham’s economy hotels performed especially well during the quarter, Holmes said. He attributed the performance in part to the weeding out of underperforming properties and technological enhancements designed to capture direct bookings.
Still, Holmes acknowledged the benefits of using online travel agencies.
“We do business with the OTAs,” he said. “We put product through them. We view them as partners. As for the last-minute deal-making done by the OTAs, frankly, our hotels do the same thing.”
