- Rental transaction volume is growing for the summer
- Lodging
- Strong growth in Wingate brand (highest customer satisfaction)
- Microtel brand - leadership in economy/budget segment
- Migrating 4,500 franchisees to new revenue mgmt system. Full implementation of new mgmt system in late 2016.
- New revised loyalty programs: 7% increase in loyalty bookings. Reward redemptions are up 60% YoY
- $4m benefit in increase in licensing fee rate paid to Wyndham
- Strong Pacific/Atlantic performance
- Weak occupancy in oil-producing regions
- SS managed NA REVPAR increased double digits YoY
- Excluding China and FX, global REVPAR grew 4%
- Rental
- Launched niche brands in UK
- 2Q: Included $3m loss due to sell of Canvas Holidays in 2014
- Had some mix impact as a large portion of membership was from timeshare club which generates lower revenues
- Denmark Days, UK Cottage, Wyndham Rentals in US were strong
- Vacation Ownership
- Favorable product mix which resulted in higher yields
- Modified sales approach to owners with a hybrid model
- 60% tours in specialist presenter/group format
- Opened 6 new sales centers (e.g. NYC, St. Thomas Las Vegas)
- Sees tremendous upside in timeshare business
- FX reduced revs by $48m and $12m in EBITDA
- FCF 2Q: $428m (flat YoY), expect 1st 9 months FCF to be lower YoY in 2015 due to inventory shifts and FX headwinds
- FX headwinds: $25m for FY 2015 EBITDA
- Lower WAAM fee-for-service (1.0) - continued to shift to WAAM 2.0 (just-in-time model). Expect this to continue
- FY GUIDANCE:
- 25bps reduction in FY tax rate 36.5%
- 2015 REVPAR: 2-4% (down from 4%-6%) - will be at lower end of range and FX issues and the sale of Parc 55 to Hilton. - But this sale closed in February 2015. Should've been known when they last gave guidance
- WVO: 1-3%
- 3Q EPS: $1.65-1.68
- Rental: Canvass brand had $18m EBITDA contribution in 3Q 2014. Credit card transaction of $4m in 3Q 2014
- 3Q Interest expense: $32m (early termination of interest rate swaps in 2Q)
- May issue some more debt for the rest of the year
- 3Q: $13m FX headwinds
Q & A
- VPG - not a consistent metric, can be volatile.
- Hybrid - Specialist-presenter model - targeted towards in-house customers (who have already own a timeshare)
- 60% of tours is the right balance
- WVO: Breakout: 2/3, 1/3 - new owner/existing owner
- Citycenter hotel to Hilton: worth a little under 100bps in REVPAR
- VPG: will be positive going forward. Constantly changing marketing programs
- Vacation rental pricing seasonality: summer is highest
- Rentals: European booking shorter stays? Have not seen that.
- Acquisition: constantly looking for Rentals and Lodging opportunities
- Pipeline a little stronger than in the past but expectations are pretty high
- No reset button on brands. Franchisees are reinvesting in their properties.
- Domestic REVPAR vs STR underperformance: feel they performed in-line with economy segment
- Exchange rev/member: Change in composition of exchange membership: going to clubs and transact less
- New yield mgmt system: will take time to roll out since these owners are new to this technology.
- Health of consumer: saw an improvement in close rate in timeshare sales. Don't know if consumer will feel stronger in 2H 2015. Hotel/timeshare and European rental business seeing good reaction from consumer in July.
- Summer European rental pricing has been healthy
- Sales team: may be providing too many tours
