Why a potential recession doesn’t scare Wyndham

PARSIPPANY, New Jersey — If a recession is coming, Wyndham says historical performance is on its side.

“Whatever demand scenario may transpire, our brands have always outperformed in periods of economic downturn relative to the overall industry,” said Wyndham Hotels & Resorts President and CEO Geoff Ballotti, who mentioned the company’s strong performance after 9/11, after the Great Recession and during COVID, in his opening statement during the company’s first-quarter earnings call on Thursday.

Ballotti said the company’s track record of outperforming the industry during economic downturns isn’t coincidental.

“It reflects the structural advantages of our select-service model and the nature of the demand that we serve with limited reliance on white-collar corporate and group travel, which tends to contract most during economic downturns,” he said.

Wyndham announced last week that it opened a first-quarter record 14,800 rooms, representing a 13% year-over-year increase, but it also cut 2025 guidance more than expected.

Wyndham adjusted its full-year 2025 RevPAR guidance from +2-3% to -2% to +1%. The company said the updated range “reflects a variety of potential outcomes for the remainder of the year, from a more optimistic scenario in which the softness seen in March and April proves to be temporary, to a more cautious view that contemplates persistent pressure on demand throughout the remainder of the year.”

For several reasons, Ballotti said his team is still optimistic about the rest of 2025, even with a potential recession.

“Our businesses are anchored by a stable and resilient base of essential frontline blue-collar workers, a guest segment that continues to drive consistent demand, even as broader corporate discretionary travel budgets tighten,” he said. “This segment has shown resilience through prior cycles, and we expect it to do the same in any macroeconomic setup.”

Ballotti also said Wyndham isn’t as impacted as other hotel companies with a decrease in international inbound (less than 3% of its bookings come from international inbound, including less than 2% from Canada).

“Approximately 90% of our footprint is concentrated in drive-to markets where leisure demand is less impacted by the cost and the complexity of air travel,” he said.

Wyndham is often a beneficiary of trade-down demand from leisure and business travel.

“We outperform in times of economic distress because our model is different. During economic down cycles, we’ve continued to grow our system amid softer demand environments,” he said.

The company made slight downward adjustments to its other 2025 guidance but didn’t change its year-over-year room growth estimate of 3.6% to 4.6%.

“Our continued momentum on the development front speaks volumes, reflecting not only the strength of our value proposition to owners but also the confidence they have in our ability to perform in any range of market conditions,”  Ballotti said. “We’ve been here before and each time, we’ve stayed grounded in what we do best, growing our system, supporting our franchisees and advancing the strategic initiatives that strengthen our business over time, which is exactly what we’re focused on doing right now.”

Wyndham said demand in China is steady (like at the Wyndham Grand Shanxi Xiaohe Xincheng), but RevPAR declined 8% YOY.

Other Q1 highlights

• The company said global RevPAR grew 2% in constant currency YOY, reflecting 2% growth in the U.S. and 3% internationally. In the U.S., RevPAR growth included 100 basis points of benefit from hurricanes and the timing of the Easter holiday. Excluding those factors, Wyndham’s U.S. RevPAR grew 60 bps YOY.
• Wyndham said that RevPAR growth was strongest internationally in the EMEA (+6% YOY) and Latin America (+25% YOY). The company said demand remained steady in China, but RevPAR declined 8% YOY.
• Through Q1, system-wide net rooms growth was 4%, including 1% growth in the U.S. and 7% growth internationally.
• Wyndham’s global pipeline included approximately 2,140 hotels and 254,000 rooms, which included 5% growth in the U.S. and 4% internationally. Approximately 77% of the pipeline is new construction, with 35% of those projects already having broken ground.
• The company awarded 181 development contracts globally, an increase of 6% YOY.
• Fee-related and other revenues increased 4% YOY.
• Net income of $61 million compared to $16 million in Q124; adjusted net income increased 5% YOY to $67 million.
• Adjusted EBITDA increased 3% year-over-year to $145 million, or 9% on a comparable basis
• Fee-related and other revenues grew 4% to $316 million, which reflects higher royalties and franchise fees and higher ancillary revenues
• Wyndham returned $109 million to shareholders through $76 million of share repurchases and quarterly cash dividends of $0.41 per share

  What analysts said

  Analyst Michael Bellisario of R.W. Baird said the first quarter results matched expectations but the 2025 guidance was “cut a bit more than expected, which could pressure [Wyndham] shares near-term.”

  “Global RevPAR growth was +2%, which was below our +3% estimate on slower U.S. trends, particularly in March,” he said. “Earnings – adjusted for greater marketing/reservation/loyalty over-spend during the quarter – were in line with Baird/Street expectations. In our view, the bigger focus will be the full-year guidance reduction, which was a bit bigger than expected. Adjusted EBITDA estimates likely will come down ~1% for 2025E.”

  Analyst Patrick Scholes of Truist Securities said Wyndham’s earnings were a miss partly driven by marketing fund variability.

  “RevPAR guidance being lowered is not a surprise at this moment. Similar to Hilton, we believe the low-end of guidance is the more likely scenario. We are also not surprised to see net rooms growth guidance maintained, though we believe pressure will show up in 2026/2027,” he said. “Importantly for [Wyndham], declines in RevPAR are relatively less impactful to EBITDA due to its pure asset-lite franchise model.”