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Wyndham Hotels & Resorts Should Outperform Its Peers In H2 2020

Jun. 08, 2020 12:34 PM ETWyndham Hotels & Resorts, Inc. (WH)7 Comments
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Ploutos Investing


  • Wyndham Hotels & Resorts’ Q1 2020 was impacted by the pandemic.
  • The company’s focus on domestic leisure travellers should be advantageous as domestic travel should recover first.
  • Wyndham has ample liquidity to go through this challenging time.

Investment Thesis

Wyndham Hotels & Resorts (NYSE:WH) had a challenging Q1 2020 due to the outbreak of COVID-19 that happened towards the end of the quarter. The company’s focus on economy and midscale units with leisure domestic travellers will be beneficial as domestic travel will gradually recover towards the second half of 2020 once the COVID-19 outbreak recedes. Wyndham has a strong balance sheet that should help it to go through this challenging time. Given the possibility of multiple waves of pandemic in the next few years, this stock is only suitable for investors willing to ride out any short-term volatilities.

ChartData by YCharts

Recent Developments: Q1 2020 Highlights

Wyndham delivered a poor Q1 2020 as the company saw its domestic and international revenue per available room ("RevPAR") declined by 18% and 33% respectively. Much of this was impacted by freezing demand towards the end of the quarter due to the outbreak of COVID-19. As a result, it adjusted EBITDA declined by 4% year over year to $107 million. Similarly, its adjusted diluted EPS also declined by 4% year over year. This brings its adjusted diluted EPS to $0.50 per share.

Source: Q1 2020 Infographic

Earnings And Growth Analysis

The impact of COVID-19 is gradually receding

The outbreak of COVID-19 is having a big impact on Wyndham’s business. As can be seen from the charts below, its RevPAR has declined by 71% year over year and the occupancy ratio has dipped to 23% in mid-April. Fortunately, management noted in its latest conference call that they are now seeing an improvement in its occupancy rate. In fact, the occupancy rate has improved to 31% in early May. As can be seen from the right chart below, Wyndham’s occupancy rate is also much better than the average occupancy rate of 7% of other higher-end hotels.

This article was written by

Ploutos Investing profile picture
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Comments (7)

Smith travel research reporting occupancy was up to 41.7% last week. Rev per available room at $37. Good for Wyndham Hotels, less so good for Marriott, Hilton or Hyatt, or any hotels located near airports.

Choice Hotels, which has locations similar to Wyndham, but fewer economy, is reporting strength in their extended stay offerings.

Wish we knew if we were going to have a vaccine or a relapse going into 2021...
Ploutos Investing profile picture
Thanks for sharing. Hope a vaccine can be developed quickly.
Vaccine isn't the answer.

Reliable and properly tested vaccine is only the start of the answer.

Getting vaccine in sufficient quantity to the people is next.

Getting the people to actually take the vaccine is going to be the real headache. Last figure I saw was something around 40-50% of US said they would not take a vaccine.


I fear that this Autumn-Winter Season is going to be very bad. Just look what has already happened in the GA schools.

Think I will hold off on the Travel Industry for a bit. Beside I have a fair percentage of 'Damn Stupid' investment money in a Pot Stock - Khiron.
I have been considering them as well, but not sure if I'll add Wydham or Choice. Choice Hotels also has a solid balance sheet, a less checkered history and some pretty good brands, although not as much in Economy.

Wyndham, on the other hand, is fairly new as a spinoff and if they get it right this time, they could be a winner. They have strong institutional support and have had no problem in privately placing their debt. Look for leverage to be going up in the near future though.
Ploutos Investing profile picture
Thanks for sharing.
mdt123 profile picture
Great analysis! I reached the same conclusions - local vacations, cheaper hotels, low capital risk - make them much better bet than a Marriott or Hilton for quick recovery. Made an initial investment last week and already seeing results. Lot more to go I think...
Ploutos Investing profile picture
Thank you for sharing. I hope your investment goes well!
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