Wyndham has lowered its revenue projections for the year following weaker-than-expected travel demand in March. But executives say recent softness may be temporary, and they were upbeat about growth opportunities tied to infrastructure projects.
The hotel franchisor now expects this year’s global revenue per available room (RevPAR) to range between a 2% decline and 1% growth, down from its previous outlook of 2-3% growth. The adjustment came after first-quarter RevPAR rose only 0.6% year-over-year.
While acknowledging a disappointing March performance, Wyndham President and CEO Geoff Ballotti pointed to a significant improvement in the final week of April, when RevPAR jumped 400 basis points to run about a full point ahead of the prior year.
“We’re optimistic, and I think our franchisees are as well, that the uncertainty that’s out there could be relatively short-lived,” Ballotti said on a Thursday earnings call.
Wyndham’s infrastructure-related hotel demand dipped about 150 basis points in the first quarter compared to the end of last year as the Trump administration held up some disbursements.
Ballotti said a recent meeting with hotel and airline CEOs and Transportation Secretary Sean Duffy provided reassurance that the Trump administration plans to resume and accelerate spending.
“More importantly, as Secretary Duffy said, the dollars the administration actually wants faster spending on is highway and bridge construction,” Ballotti said. “Big, beautiful highways. Big beautiful bridges.”
Wyndham forecasted last year that the infrastructure spending would drive over $3 billion in room revenue to their hotels over the next 8 to 10 years.
“There is just too much economic growth, there’s too much job creation, there’s too much economic stimulus to boost GDP for this, as Secretary Duffy put it to us, not to happen in terms of making the transportation infrastructure stronger,” Ballotti said.
The CEO also noted that a recent White House cabinet meeting focused on “getting those funds flowing when it comes to things like our nation’s airports and air traffic control.” Additionally, Wyndham expects to benefit from the administration’s energy policy aimed at expanding oil and gas exploration.
The U.S. isn’t the only market where infrastructure spending could benefit Wyndham.
“In India, infrastructure spending is exploding and hotel supply just can’t keep up,” Ballotti said. “We’re the company building more franchise hotels there than anyone else.”
When analysts questioned how tariff policies might affect hotel development and onperations, Wyndham’s leadership struck a positive note.
“Most of our new construction is stick construction as opposed to steel and aluminum construction, and happily, the administration exempted Canadian lumber from the new tariffs,” Ballotti said.
As for hotel operations, there is uncertainty about whether high tariffs will linger on China or be reinstated on countries like Vietnam. These markets provide a lot of the fixtures, furniture, equipment, and electronics that Wyndham and other hoteliers rely on to outfit their properties.
The company is working on “a shift in sourcing” such as by “bringing production closer to home” and “negotiating with suppliers to share the increased costs.”
“We’re mandating at least one domestic sourcing solution for all important supply categories,” he said.
A case in point: In designing a prototype for a new version of its Days Inn brand, the company is having the furniture, fixtures, and equipment be “sourced entirely from North Carolina or Texas.”
Executives also suggested that any potential negative effects from tariffs could be offset by increased re-shoring of manufacturing domestically, which could create new demand for hotel rooms near factory locations.
They said that Wyndham’s U.S. properties primarily serve domestic travelers, reducing exposure to any potential decline in international visitors tied to Trump administration policies.
Executives acknowledged continued softness in April, with U.S. RevPAR down 3% year-over-year, similar to March performance. However, CFO Michele Allen cited “positive momentum” in travel intent, pointing to increased Google search volumes for hotel and travel keywords in late April.
Allen suggested the March and early April trends “were more of a just a short-term reaction to the uncertainty” and expected improvement “as the shock wears off.”
Leisure travel demand fell more sharply than business travel in the first quarter, with weekend occupancy declining while weekday rates maintained relative strength. Executives expressed hope that vacationers would regain confidence and resume booking summer trips at normal levels soon.
International results were mixed, with European RevPAR growing 6% while China saw an 8% decline due to persistent pricing pressure despite steady demand.
Executives said Wyndham’s franchise-centric business model and lengthy development pipeline provide some insulation from broader economic uncertainty.
Some observers are optimistic that the U.S. would cut taxes, deregulate energy production, and succeed in tariff negotiations, which together would restore consumer and business confidence. Hilton CEO Christopher Nassetta articulated that view on Tuesday.
But with U.S. consumer confidence in April at the lowest point since 2011, some hoteliers worry they might face headwinds on domestic demand. Plus, a sharp pullback in Canadian tourism might outweigh an increase from other tourists taking advantage of a weaker dollar.
Truist analysts have modeled a recession scenario where Wyndham’s RevPAR could fall 5% year-on-year in the second half of 2025 and continue declining through mid-2026.
This 7.5 percentage point gap between reality and expectations would translate to a $34 million hit to EBITDA. Truist estimated that each percentage point decline in RevPAR would cost Wyndham about $4.5 million in adjusted earnings.
Credit card fees represent another risk factor. Wyndham initially expected approximately $330 million from credit card and ancillary revenues in 2025, and even a modest 5% decline could materially affect profitability, based on Truist’s guess that the company enjoys 70% margins on fees paid by the card issuers.
Despite recent headwinds, Wyndham’s expansion maintained its torrid pace. The company opened a record 15,000 rooms in the first quarter, up 13% year-over-year, and its development pipeline reached a new high of 254,000 rooms, a 5% increase from the previous year.
Management is maintaining its net room growth target of 3.6% to 4.6% for the full year. The company’s system-wide room count reached 907,200 at quarter-end, up 4% year-over-year.
“We’re not seeing that slow down,” Ballotti said regarding development momentum. “Domestically our conversion pipeline was up double digits versus last year.”
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
Read the full methodology behind the Skift Travel 200.
Get breaking travel news and exclusive hotel, airline, and tourism research and insights at Skift.com.
Add Comment