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WYN delivers an in-line quarter and stays steadfast in its buyback program

“We’re off to a great start this year, with an 18% increase in adjusted earnings per share. Our operating momentum is strong and our capital allocation philosophy is disciplined. This winning combination will
continue to enhance our growth and shareholder value, this year and in years to come.”

- Stephen P. Holmes, chairman and CEO


  • In the hotel group they had their best group openings ever, due to some large conversions.  Expect this to be a driving force going over.  They are doing particularly well with their Wyndham brand.  
  • Part of their success in the Lodging group is due to the Apollo initiative. More than 1/2 of the room nights booked are through their direct channel.
  • WAAM is changing their VOI strategy.  Recently signed a purchase and sale agreement for their WAAM 3.0 program - where they have a financial partner making investments for their future use. In the first instance their partner will purchase land in Las Vegas.  Expect to close on the deal 2Q13.  Proceeds to WYN will be $80MM. 
  • Think that the majority of their VOI sales will be in an asset light strategy
  • Their enhanced technology capability is helping them gain share in the exchange business
  • They consolidated their rental product on one website where customers can view all their inventory on one site
  • They are in the process of rolling out enhanced pricing tools in their UK Cottages businesses allowing them to yield manage more effectively. 
  • International RevPAR was flat and was negatively impacted by China - where economy brands are growing faster than other brands
  • Feel like their results in the exchange and rental business were good in the face of economic challenges in Europe
  • Rail acquisitions contributed $7MM of rental revenues but had no impact on EBITDA because of seasonality.  
  • VOI: Excluding the Shell acquisition, EBITDA would have been up $5MM. VPG was down due to difficult comparisons due to an upgrade program last year. Expect to come in at the low end of their guidance range in this segment. 
  • ABS front: completed a $300MM securitization (1.77% rate/ 90% exchange rate)
  • Added a $120MM debt associated with the Alex hotel.. even though legally it is their partner, they still had to consolidate. Their leverage was a little bit above their target range.
  • Expect around $5.45 of FCF in 2013.
  • Currency movements are causing a $10MM lowering of their guidance given last quarter 
  • Expect 87-90 cents of EPS in 2Q13. YoY comparisons will be challenging across all of their business. 


  • WAAM 3.0: similar to WAAM 2.0 in that they will provide financing to the end consumer. However, they are bringing in an partner to take down inventory.  Additional deals that they are working on now could be with the same partner or another partner. 
  • Owned hotel segment's ancillarily jumped a lot but most of that is pass-through, low margin revenue.
  • Is Rio Mar EBITDA positive? Yes - about $3MM
  • VOI- is that flatting out/ reaching maturity? VPG being down is not necessarily an alarming signal - it could be due to mix and the fact that they are pushing new sales vs. upgrades. 
  • Will margins be compressed if they focus more on new customers? If the mix of new customers increases that will lower margins but its just one of the levers....they just have a tough comparison from last year.
  • Their WAAM 3.0 partner is a financial partner. Inventory and land on their balance will decrease as they sell it to their partner who will complete it and deliver the finished inventory.  Their margins shouldn't be impacted negatively - if anything, this turns more into a fee for service business and more just in time. It will make the business less capital intensive.
  • Promotion lasted 3 Q's last year for upgrades. They will continue to seek out customers with higher than 700 FICO scores.
  • Tightened underwriting criteria wasn't really a factor in VOI.  They have made inroads in slowing defaults associated with the cease and desist activities.
  • WAAM 2.0: still be out there and they will continue to pursue opportunistic deals but may flip some 2.0 to 3.0 deals. The deal in NY is a 2.0 deal (Alex).
  • The WAAM 3.0 project is the LV project that they started a while ago. They will get $80MM upfront  $65MM for the building and $15MM for the land. Then as the inventory is completed and they need it they will take it down over time.The $80MM sale should close in 2Q13 as soon as some zoning issues are complete. The $80MM is above and beyond their core forecast of $750MM. The $80MM is about 1/3 of what they have on their balance sheet.
  • Exchange and rental outlook in Europe? Southern European product is moving really well.. indicated that Northerners are booking well. Northern to Northern travel has been slower.  They have seen a pattern of closer in bookings for this business. Think that their yield management system will help manage this pattern. The first quarter, you are booking Spring which isn't really a busy quarter. So it's too early to tell how the year will shake out since the summer is really the bulk of their business.
  • SS EBITDA would have been fairly flat to down slightly if you back out the Shell acquisition
  • Settled for less than they had reserved for and got reimbursed for some things as well... that was already in the forecast. What wasn't in there was the $10MM FX headwind.
  • Inventory spend in 1Q: $23MM
  • Any impact from the sequester? They don't see a big impact from it. 


  • In 1Q13, WYN repurchased 2.4 million shares of its common stock for $140 million. From April 1 through April 23, 2013, the Company repurchased an additional 620,000 shares for $39 million. The
    Company has $328 million remaining on its current share repurchase authorization.
  • The increase in adjusted net income reflects stronger operating results primarily in our Lodging and Vacation Ownership businesses. EPS also benefited from the Company’s share repurchase program, which decreased weighted average share count by 7% year-over-year
  • Reported net income included several items that are excluded from adjusted net income. The net effect of these items reduced first quarter 2013 net income by $71 million... primarily related to the early extinguishment of debt
  • The growth of free cash flow largely reflects favorable working capital utilization
  • Lodging
    • Results reflect RevPAR gains, a larger system size and revenues associated with the Wyndham Rio Mar in Puerto Rico, which became a Company-owned hotel in the 4Q12.
    • Domestic RevPAR increased 6%
    • Total systemwide RevPAR increased 4%, reflecting proportionally greater growth of lower RevPAR
      hotels in China
    • Company’s hotel system consisted of approximately 7,380 properties and over 631,800 rooms, a 4% room increase YoY
    • The development pipeline included 950 hotels and approximately 110,000 rooms, of which 55% were international and 59% were new construction.
  • Vacation Exchange and Rentals
    • In constant currency and excluding the impact of acquisitions, revenues increased 1%.
    • Exchange revenue per member increased 3%, while the average number of members remained flat
    • Excluding acquisitions, vacation rental revenues were flat, reflecting a 6% increase in the average net price per vacation rental offset by a 5% decrease in transaction volume.
  • Vacation Ownership
    • Excluding the acquisition of Shell Vacations Club, revenues increased by 2%.
    • 10% increase in tour flow offset by an 8% decrease in volume per guest.
    • The increase in EBITDA was The increase was primarily due to the favorable resolution of a lawsuit and the Shell acquisition
  • Balance Sheet items
    • Cash & equivalents: $217MM
    • Long term debt: $3.0BN
    • VOI receivables, net: $2.8BN
    • VOI inventory: $1.1BN
    • Securitized VOI debt: $2.0BN