Wyndham Hotels & Resorts

Wyndham's second-quarter revenue per available room, or revPAR, decreased 1%, with US (77% of total royalty fees) up 2% and international declining 6%. The company increased its US revPAR outlook to 2% growth from 0% for the second half of 2026. Comparable adjusted EBITDA increased 3%.

Why it matters: We expect total revPAR to accelerate into 2027, driven by healthy US lodging demand for data center workers, and dissipating Iran War and Revo franchisee insolvency (3% of total royalty fees) headwinds internationally. We think infrastructure spending (20% of sales) will provide demand tailwinds for Wyndham the next several years. US revPAR accelerated from 0% last quarter, with more than 400 hotels within a 10-mile radius of data center projects outperforming other domestic properties by 200 basis points. Europe, Middle East, and Africa (8% of total royalty fees) revPAR declined 6% due to transitory factors (war and an insolvency). Importantly, unit growth in the region was 10%, illustrating that third-party owners continue to gravitate to Wyndham's brand advantage.

The bottom line: We don't expect to change our $96 per share fair value estimate for narrow-moat Wyndham materially. We see shares as attractive, trading at about a 20% discount to our valuation, as we believe investors are underappreciating an improving US demand landscape. Wyndham's brand prowess is intact. Its pipeline rose for a 24th consecutive quarter, up 4%, with its 261,000 rooms representing a 30% fee premium to the existing portfolio. This supports our forecast for 4% average annual unit growth through 2030, above the industry's long-term lift of 2%. Travelers are also seeking the company's brands, with loyalty members increasing 9% to 126 million and booking more than 50% of total room nights. Helped by infrastructure spending and our expectation for economic growth, we see revPAR growth of 3%-4% in 2027 and 2028.

After reviewing Wyndham's second-quarter results, we have increased our fair value estimate to $98 per share from $96 for the time value of money. Our valuation implies a 2027 enterprise value/adjusted EBITDA of 13 times. The key drivers of our financial model are revPAR and unit growth, as well as consolidated operating expenses.

Wyndham's second-quarter revenue per available room, or revPAR, decreased 1%, with US (77% of total royalty fees) up 2% and international declining 6%. The company increased its US revPAR outlook to 2% growth from 0% for the second half of 2026. Comparable adjusted EBITDA increased 3%. We believe the company's revPAR will improve to flat levels in 2026 and 3% growth in 2027, from a 3% decrease in 2025. We see improved revPAR in 2026 and 2027, helped by easier comparisons (2025's government shutdown and the April 2 tariffs), the tailwinds of this year's World Cup and US economic stimulus, and the start of a multiyear AI, onshoring, and infrastructure spending cycle. Specifically, we see US infrastructure spending driving about 1 percentage point of annual revPAR for Wyndham over the next several years, aiding the 90% of Wyndham's US portfolio that are near interstates.

Additionally, ancillary opportunities are taking hold at Wyndham, aided by the expansion of co-branded credit cards and technology that helps streamline upselling of hotel stays, bookings, and loyalty onboarding. We estimate ancillary revenue growth of 12% in 2026, reaching 24% of total sales.

We forecast total room growth to average about 3% per year over the next 10 years, driven by improving loyalty, technology, and distribution, which incentivize third-party owners to join Wyndham. We also think the company's new extended-stay brand, ECHO, can contribute around 1 percentage point of unit growth in a few years. Our revPAR and unit growth forecast result in total average annual revenue growth of 5% over the next 10 years.

We forecast total operating expense to average 6.6% of total revenue over the next 10 years, below the 8.0% reported in 2019, as management executes on removing costs and has a higher mix of franchised assets. As a result of our revenue and operating forecast, we project operating margins to reach 44% in 2035 from 23% in the prepandemic year of 2019, benefiting from scaling of demand, cost efficiencies, and a mix shift to high margin franchisee versus owned and managed business.

Finally, Wyndham could continue to be acquisitive, as it has averaged about one transaction annually over the past several years. That said, given the uncertain nature of the timing of any such deals, we currently do not factor in future acquisitions into our model.

We think Wyndham’s strong position in the economy and midscale scale segments produces a narrow economic moat driven by a lasting brand intangible asset and switching cost advantages. We believe Wyndham’s moat is illustrated by its enduring unit growth demand from third-party owners, guest satisfaction ranking of its brands, room and loyalty scale, and contract length of franchisee relationships.

With the company's 8,400 properties being franchise and management contracts, Wyndham depends heavily on its brand to attract unit growth from third-party owners. These owners gravitate to Wyndham’s portfolio of 869,000 rooms (trailing only Marriott, Hilton, and InterContinental), which allows them to team up to spend $600 million yearly toward marketing, reservations, distribution, and loyalty, which far exceeds the amounts any boutique or independent hotel owner can afford. To this point, we think Wyndham derives about 70% of its reservations from its direct the advantages of its brand awareness and scale. Additionally, we believe Wyndham hoteliers pay just a low-double digit percentage commission to online travel agencies, compared with the 20%-plus paid by some independent hotel owners.

In our view, Wyndham's enduring unit growth offers a clear sign that its brand is resonating with third-party owners. To this point, Wyndham's unit growth even remained positive during the downturn in 2008 and 2009, up 7.7% and 0.8%, respectively. Looking forward, we expect Wyndham to maintain around 3% annual net unit growth during the next 10 years, pacing ahead of estimated US industry growth of 1%-2%, as it benefits from a large and fragmented global hotel market and US infrastructure spending that plays into its off-interstate portfolio.

Wyndham’s brand is also popular with travelers, supported by high customer satisfaction ratings as measured by J.D. Power, which ranks several of the company's brands in the top five within its core economy and midscale segments. Individuals also flock to Wyndham’s hotels, as illustrated by its solid loyalty program, which offers an immediate demand channel for third-party owners and further validates the company’s intangible brand advantage. As of March 31, 2026, its loyalty program hosted 126 million members, trailing only wide-moats Marriott, InterContinental, and Hilton. Travelers are drawn to Wyndham’s loyalty program, as it provides the ability to use and accumulate points across 869,000 hotel rooms. Overall, loyalty members account for more than 40% of room nights globally (and about half domestically), which is generally in line with its narrow-moat peers, although below the 60%-plus of wide-moat peers Marriott and Hilton.

In addition to Wyndham’s solid brand, third-party owners sign contracts typically for 10 to 20 years, providing a switching-cost advantage. Terminating these contracts requires significant expenditures to renovate and rebrand a property to meet new brand specifications, resulting in disruption and loss of sales for the owner, as well as cessation fees that must be paid by the owner.

Wyndham’s solid relationship with both owners and travelers has translated to its global revenue share staying at 2% since 2018, making it the fifth-largest globally. Wyndham has maintained revenue share in the top position within economy hotels and is the eighth-biggest player in the midscale segment. Regionally, it has maintained the number five revenue share position in the US and ranks 14th and 10th in Western Europe and Asia-Pacific, respectively.

While we have strong conviction in awarding Wyndham a narrow moat, we stop short of awarding the company the wide moat and the network advantage we believe Marriott, Hilton, and InterContinental possess for several reasons. To begin, Wyndham’s room and loyalty scale fall below these wide-moat peers, both from a regional—wide-moat peers have strong revenue share in all major geographies, not just the US, and segment perspective—wide-moat peers offer hotels across more price points, not just lower cost options. In turn, these wide-moat peers are able to spend between $3 billion and $19 billion on marketing, distribution, loyalty, and reservation systems annually versus $600 million for Wyndham, leading to stronger unit growth prospects for the former, in our view. Further, unlike Marriott, Hilton, and InterContinental, Wyndham’s portfolio is concentrated in the economy and midscale segments, which see higher termination rates, are characterized by lower service quality and amenities, and are facing increasing competition. An additional factor in not ascribing Wyndham a wide moat is that Marriott and Hilton have launched brands in its core economy and midscale markets in recent years, presenting increased competition in obtaining third-party owners. These headwinds are exacerbated by the ongoing alternative of individual hosts found on platforms like narrow-moat Airbnb, which taken together dent our confidence in Wyndham’s ability to generate excess economic rents for the next two decades. Finally, Wyndham lacks upscale and luxury exposure, which could lead to its loyalty base graduating out to more complete platform offerings found at wide-moat peers as household incomes grow.

The La Quinta brand offers long-term growth opportunity to around 2,000 units from 893 at the end of 2025.

The $1.5 trillion in US infrastructure spending from an act passed in 2021 stands to benefit Wyndham's off-interstate portfolio during the next several years.

Wyndham Hotels’ EBITDA is generated by service-for-fee operations, which are less capital-intensive than owned assets, leading to healthy ROIC.

Home and vacation rentals present an increasing competitive threat, and the advancement of technology and its use by next-generation travelers increase the access and awareness of these properties.

Wyndham’s US hotels represent 58% of total rooms, exposing the company to an economic downturn in the US. The last recession led to revenue declining 12.4% in 2009.

Marriott, Hilton, Hyatt, and InterContinental are increasingly entering Wyndham's core economy and midscale segments, presenting competition for unit growth.