Q1 results: Wyndham reports global RevPAR decline of 23%
Wyndham’s results show a 23% drop in global RevPAR (Picture: Wyndham)
Wyndham Hotels & Resorts has posted a 23% drop in global RevPAR for Q1 2020 as it counts the cost of Covid-19.
With Covid-19 bringing hotel operations around the world to a screeching halt, it’s no wonder that the financial performance of many of the industry’s biggest names is less than dazzling for the early part of 2020.
We look at Wyndham’s recently released figures for Q1 and see how the company is navigating these trying times.
Counting losses in Q1 2020
In Q1 2020, Wyndham recorded a net income of US$22 million, which marks a 5% year-on-year increase. The adjusted income of US$47 million, however, showed an 8% decrease on the same time last year.
EBITDA in Q1 dropped by 4% compared to 2019, hitting US$107 million. Overall, Wyndham’s revenues fell by 12% to US$410 million year-on-year.
Most strikingly of all, the company reported a staggering 23% decrease in RevPAR (revenue per available room), resulting from reduced demand and hotel shutdowns around the world.
“During the most challenging crisis the hotel industry has ever endured, our highest priority has remained the wellbeing and safety of our guests, owners and team members. We have taken the difficult but prudent measures to reduce our costs and bolster our liquidity while providing support and relief for our franchisees to help them weather this downturn,” said Geoffrey A. Ballotti, Wyndham’s chief executive officer.
“Nearly 5,900 of our 6,300 hotels in the US remain open, and with nearly 90% of those properties located outside of major cities in drive-to destinations that cater to a leisure customer base, we believe that our asset-light business is well-positioned for a quick recovery when travel demand returns.”
Slowing portfolio growth
In the first three months of 2020, Wyndham opened 58 new hotels, adding 6,200 rooms to its portfolio. This represents a 47% year-on-year decrease, which is partly due to openings being delayed in China and lower conversion volumes in the US in March. Overall, the new openings still resulted in 2% year-over-year portfolio growth.
Mitigation measures to maintain liquidity
To ensure Wyndham could navigate the Covid-19 crisis, drastic cost-cutting measures were taken.
This included eliminating approximately 440 positions in regional and corporate offices, indefinitely suspending the CEO’s salary and the board of directors’ cash compensation, reducing investment spend and cancelling any non-essential business travel. Altogether, cost-cutting measures for Q1 have resulted in around US$255 million of cash savings.
As of March 31, 2020, Wyndham reports having US$749 million of cash on hand and US$2.9 billion of debt outstanding.