Wyndham’s Latest Annual Report: 8 Things We Learned

17.02.2024 - 14:04 / skift.com / Sean Oneill

Wyndham is the world’s largest hotel franchisor, and we found a handful of noteworthy details in its annual 10-K filing.

Five years ago, as of December 2018, it had 9,177 hotels. At the end of last year, it just had one more hotel.

How is that possible? Wyndham has seen hotels leave its system, and it has added ones. Over time, the mix has shifted to hotels with more rooms, expanding the total number of rooms under management. The group managed nearly 809,000 rooms five years ago. It now manages 7.7% more, at 871,794.

Wyndham plans to grow its system by between 3% and 4% in 2024.

It has an ambition to speed up to a “3% to 5% pace” annually by 2026. It thinks it can do this by getting better at retaining franchisees, even though it already has leading retention rates. It also thinks it can speed up its growth by “expanding into adjacent market segments [with new brands] and new geographies.”

When the U.S.-based company went public in 2018, about 70% of its hotels were U.S.-based.

By the end of last year, however, only 57% of Wyndham’s hotels were U.S.-based.

In September 2022, Wyndham completed its acquisition of the Vienna House hotel brand. It disclosed the price for the 41 franchised European hotels as being $44 million.

The company’s 10-K revealed a bit more color. Vienna House’s trademark was valued at $28 million, while its 20-year franchise agreements were valued at $16 million.

Expanding internationally can involve the occasional snafu. A case in point is Wyndham’s growth in Argentina. Inflation in Argentina has spiked recently, hitting 211% in December.

Wyndham incurred foreign currency exchange losses related to Argentina of $14 million last year.

Doesn’t Wyndham hedge against foreign currency exchange risks? Yes, but last year it lost $3 million on those contracts across the currencies it hedges against (Canada’s, China’s, Europe’s, Britain’s, and Argentina’s). The losses on both fronts were unusually unlucky for the company compared to recent years’ performance.

For the first time, Wyndham has included a risk disclosure about its use of AI technology. I expect other hotel groups to add similar language to their financial filings as time goes on.

“We may use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability,” its filing said.

Possible problems the filing highlighted:

A lot is made by the major hotel groups about their desire to sell their assets and only manage brands. But Wyndham is far ahead on the path than some of its comparably-sized rivals. As of the end of 2022, it had sold the two remaining hotels it had owned, fully exited from managing select-service hotels, and had