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Wyndham (WYN) Benefits From Acquisitions & Reward Programs


Wyndham Worldwide Corporation WYN is a leading hospitality company engaged in offering individual and business customers a range of hospitality products and services, across various accommodation alternatives and price ranges, through its premier portfolio of global brands.

The company’s fourth-quarter 2017 adjusted earnings came in at $1.49 per share and improved 9.6% year over year. Net revenues from continuing operations were $1.2 billion, which rose 4% from the prior-year quarter backed by increased contribution from all its segments.

Notably, the company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 4.1%. Over the past 30 days, the consensus mark for the current quarter has moved up 7.6% to $1.27.

In a year’s time, shares of the company have rallied 43.8% compared with the industry’s gain of 47.2%.

Acquisitions to Strengthen Domestic and Global Footprint

Wyndham Hotel Group is constantly trying to expand globally through acquisitions. In January 2018, the company announced a definitive merger agreement with La Quinta Holdings Inc, a midscale hospitality company. This buyout is expected to help Wyndham significantly improve its hotel management business and strengthen its brand presence internationally.

La Quinta has an asset-light, fee-for-service business structure, which consists of nearly 900 managed and franchised hotels. After the acquisition, Wyndham Hotel Group is likely to expand to 21 brands and over 9,000 hotels across 75 countries. La Quinta, being one of the largest midscale brands in the industry, is expected to drive Wyndham Hotel Group's midscale presence and help it enter the fast-growing upper-midscale segment. Additionally, the company anticipates the deal to result in $55 million to $70 million in annual cost savings, thus improving revenues by the end of 2019.

Wyndham Worldwide Corp Revenue (TTM)

In October 2017, Wyndham’s Hotel Group completed acquisition of AmericInn hotel brand and its management company, Three Rivers Hospitality. This acquisition has added 200 hotels across 21 states, predominately in the Midwestern US, Ohio Valley and Mountain states.

Loyalty and Rewards Program to Boost Occupancy

In order to survive in the tough economic environment, Wyndham is continuously devising new ways to enhance guest experience and raise occupancy. These efforts include emphasis on marketing campaigns, digital experiences, websites, on-property amenities, travel perks, and marketing partnerships. Notably, Wyndham Rewards offers one of the most generous reward program payouts in the industry.

Currently, there are about 55 million members in Wyndham Rewards, reflecting an increase of 5.8% over prior year. In 2017, the company made Wyndham Rewards points redemption available to nearly 100 Wyndham Vacation Ownership properties, to generate new marketing opportunities between the two businesses. Benefits of Wyndham Rewards program will soon be offered to AmericInn franchisees and guests. On completion of the La Quinta acquisition, Wyndham plans to expand this program to 13 million members of the La Quinta Returns Loyalty Program.

Zacks Rank and Key Picks

Wyndham carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Hilton Grand Vacations HGV, Marriot Vacations Worldwide VAC and Choice Hotels CHH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Grand Vacations, Marriot Vacations and Choice Hotel’s earnings for 2018 are projected to increase 43.7%, 20.1% and 26.4%, respectively.

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