Wyndham Hotels & Resorts officials are increasingly optimistic for the rest of 2026, despite just a mild increase in their full-year outlook and a weak quarter for the company's international portfolio.
During Wyndham's second-quarter earnings call, President and CEO Geoff Ballotti said he's confident about the overall health of the U.S. consumer. He added Wyndham has seen an increase in average distance traveled by customers for drive-to demand and he emphasized that tax policy has boosted the possibility of discretionary spending.
"About 10% of the $60 billion of tax refunds will be spent on travel, [the U.S. Travel Association] is estimating, and middle-income guests are going to be spending," he said, noting wage growth is "robust enough certainly to support increased leisure spending."
During the second quarter, Wyndham recorded a 1% year-over-year decline in revenue per available room.
But Wyndham kept growing its global hotel portfolio during the quarter; system-wide rooms grew 4% year over year.
The company saw divergent performance in U.S. and international hotel markets. Domestically, hotel RevPAR grew 2% in the quarter compared to a 6% drop outside the U.S.
In terms of rooms growth, the growth profile flipped, with flat rooms growth in the U.S. year over year compared to 10% growth internationally.
Wyndham only slightly revised its full-year projections upward, with a new outlook of flat to 1% RevPAR growth, compared to previous projections of down 1% to up 1%. Rooms growth expectations stayed the same at a range of 4% to 4.5%.
Ballotti said Wyndham's international hotel revenue performance was "weighed down by Europe, by Latin America and by the Caribbean."
He tied weakness in Latin America to "continued softness in Mexico," but added the company is more optimistic about performance in Mexico in the second half of the year.
Wyndham also continues to rework its overall hotel portfolio, Ballotti said.
"We're very focused on replacing those lower-quality, lower [fees per available room] rooms with higher-quality and higher FeePAR rooms and accretive markets that reflect the record franchisee owner satisfaction that we're seeing and the record guest satisfaction that we're seeing," he said.
For the first half of the year, Wyndham removed roughly 27,200 rooms from its hotel portfolio, more than two-thirds of which were in the U.S., compared to adding 31,700 rooms for the same period.
Key openings in the quarter for the company include the Wyndham Jacksonville Hotel and Conference Center; the Winfield Lofts, in Los Angeles; and the Hotel Troy, Trademark Collection by Wyndham, near the company's New Jersey headquarters.
Revo impact
In reporting for the second quarter, Wyndham officials noted a significant impact to results and accounting from the insolvency of Berlin-based franchisee Revo Hospitality Group. Wyndham specifically excluded that portfolio from its reported metrics in its most recent report, and Ballotti said issues with Revo are a large contributor to Wyndham's overall performance outlook drop in Europe — along with persistent conflicts in the Middle East.
"But excluding the Middle East and Revo, our performance in [Europe, the Middle East and Africa] was up 5%," he said. "We saw strength this summer, and continue to see it in Spain, which was up in the quarter 26%."
Revo filed for bankruptcy in German courts in January, and at that point had more than 38,125 hotel rooms in approximately 260 hotels in 12 European countries across various brands. Wyndham officials did not specify how much of Revo's portfolio carried Wyndham flags, but described the company as a "large European franchisee."
Wyndham Chief Financial Officer Amit Sripathi said during the earnings call that Wyndham has taken possession of two Revo properties and expects the insolvency process is "nearing conclusion."
Sripathi added Wyndham expects to retain some of the Revo portfolio and plans to "enter into franchise agreements with the new operators."
Second-quarter performance
Wyndham's adjusted earnings before interest, taxes, depreciation and amortization was up 9% year over year, coming in at $212 million for the quarter, according to its earnings release. Net income increased 17% to $102 million.
During the quarter, Wyndham made $54 million in share repurchases and paid a quarterly cash dividend of $0.43 per share, combining for $86 million returned to shareholders.
As of press time, Wyndham's stock was trading at $73.40 a share, down 2.5% year to date. The NYSE composite was up 7.5% for the same period.