In preparation for WYN's 2Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.
GS LODGING, GAMING, RESTAURANTS AND LEISURE CONFERENCE (JUNE 4)
- “We've been generating between $600 million or $700 million of free cash flow or $1 billion of available cash flow because we've stated that we are not afraid to lever up if we have additional EBITDA that will allow us to borrow more and still maintain our bottom of investment grade rating. So, that's been a heavy focus of our business over the last couple of years. Also, a heavy focus on growth, all of our businesses are growing and they have different attributes that are growing both domestically as well as internationally.”
- “Europe represents about 15% of our overall EBITDA. The largest business we have there is Vacation Rental business… largely focused in Northern Europe. Our three largest markets for product is the UK, Holland and Denmark, and those three countries plus Germany represent the four main source markets for us. It was very resilient during the last downturn. We continue to see a stable environment for our rental businesses over in Europe. We've said that that's what we expected. When we entered the year, we said that's what we saw through the first quarter after the first quarter call, and now with April and May in the books, we'll see the exact same thing."
- “We had expected kind of a mid-single digit VPG growth and we ended up with a, I think, 11% VPG growth for the first quarter. We're not suggesting that that's the pace that we're going to remain at going forward.”
- “We're continuing to see great growth in that Chinese market. I think we're doing an okay job there. I think we could frankly be doing a better job and that's not a knock on anybody who is doing the effort over there. It's just the opportunity is so large and I think we have the opportunity to even be doing better than we're doing right now. Super 8, eight is a lucky number in China, so we got lucky with that brand. Wyndham is growing very rapidly. Our pipeline on Wyndham is tremendous. Howard Johnson is actually a stronger brand in its product quality and presence in China than it is in the U.S. Last time I was over in Shanghai and stayed at our Howard Johnson in Shanghai it's a beautiful, beautiful product."
- "I don't see us ever going back to the model we had before where we were building at a pace of $600 million of build a year in order to fuel the kind of growth that that business was on. Right now, we're spending $125 million a year to finish the development of inventory that we already have on our balance sheet. And that's a pace that we'll be at for the next eight to 10 years. And then after that we may go more heavily on this WAAM model and not even have that much development in the future."
1Q CONFERENCE CALL YOUTUBE (APRIL 25)
- "Vacation Ownership had an outstanding quarter, supported by strong consumer travel in the U.S. and continuing progress in optimizing marketing efficiencies. And Exchange and Rental was highly effective in managing a difficult operating environment in Europe, as well as limited growth in the broader timeshare industry."
- "Our board has approved an additional $750 million to be added to our share repurchase authorization. We continue to believe that share repurchase offers a compelling return, and with the $750 million increase as of market close yesterday, we have $940 million available in our share repurchase program."
- "We expect our European vacation rental business to remain stable overall due to the strength and resiliency of our portfolio of established brands and customer bases as well as our strong experienced management teams."
- "Since our last conference in September of 2010, there's been an obvious improvement in the mood and outlook of our franchisees and partners. Many of our suppliers saw increased order and lead activity, and almost without exception, the owners and managers I spoke with strongly felt that things were improving. And hotel owners are looking to invest in their hotels as well. So in addition to the numbers we are seeing, this is great confirmation that for us, the lodging and recovery is firmly established."
- "Wyndham Hotel Group continues to make progress in executing its Apollo initiatives, which is a series of technology projects focused on improving our value proposition to franchisees. Our franchisees will be able to measure our results by the number of direct room nights we deliver to overall bookings, primarily through online strategy. Our goal is to capture the maximum amount of online traffic and then convert these online visitors to stay-in guest. Remember that the launch of our new hotel brand websites and improved content were the first step in our Apollo plan to drive more room nights through our online direct distribution channels. Preliminary results have exceeded our expectations with brand booking increases averaging over 10%."
- "In 2011, we piloted TripAdvisor ratings and reviews on wyndhamrewards.com. Industry research indicates that up to 50% of consumers will not book a hotel without reading a review. Making ratings and reviews readily available on our own brand sites ensures consumers don't have to leave our site to get that information and ultimately book us. We saw an approximate 30% increase in bookings during the pilot period. This past quarter, we rolled out TripAdvisor to the majority of our websites and will be fully implemented by the end of May. In conjunction with the rollout, we launched WynReview, a suite of tools and services designed to help our franchisees manage their online ratings and reviews. We expect our affiliation with TripAdvisor, one of the first in the industry, to drive conversions as well as support brand quality."
- "We are also excited about our new mobile websites. By the end of next year it is expected that more people will access the Internet using a mobile device than a computer. Research indicates that nearly 65% of mobile bookings are made on the day of arrival, many within five miles of the hotel. Based on the narrow booking window of our consumers as well as the distribution of our hotels, we feel this represents a significant opportunity for us to capture the on-road connected traveler."
- "In the second quarter, we expect to launch two significant initiatives. First, in North America, we will consolidate 23 Rental websites into a single improved site. Second, in Europe, we will integrate the inventory and reservation platform of our UK cottages, parts and lodges brands into a common property management system, a change the will enable further yield management and operational efficiencies."
- "The strength of RCI's technology continues to pay off with online transaction penetration growing to over 40%, up more than 400 basis points from last year."
- "We recently signed our first WAAM agreement for our WorldMark by Wyndham product. Located in the South Mountain region of Arizona near Scottsdale, our fifth WAAM deal is a purpose-filled timeshare project that will nicely complement our three existing Arizona locations within in the WorldMark portfolio. We expect to start sales on this product in the fourth quarter."
- "We expect VPG growth to moderate somewhat throughout the year as we lap the rollout of the credit prescreening program. Consistent with last year, we expect to add 27,000 new owners in 2012."
- "We believe that our Hotel business will have good margin progress by the end of the year – but at least on – at this quarter basis, we had higher marketing spend than we had last year."
- VOI mix: “It's about 65%-ish upgrades and 35% new owners”