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These excerpts taken from the WYN 10-Q filed May 7, 2009. Lodging
Net revenues and EBITDA decreased $16 million (9%) and
$11 million (24%), respectively, during the first quarter
of 2009 compared to the first quarter of 2008 primarily
reflecting lower royalty, marketing and reservation revenues and
a decline in property management reimbursable revenues,
partially offset by incremental net revenues generated from the
July 2008 acquisition of USFS. In addition, EBITDA reflects
lower marketing expenses and decreased expenses primarily
related to a decline in property management reimbursable
revenues, partially offset by increased expenses resulting from
the USFS acquisition, organizational realignment initiatives and
ancillary services provided to franchisees.
The acquisition of USFS contributed incremental net revenues and
EBITDA of $5 million and $2 million, respectively.
Excluding the impact of this acquisition, net revenues declined
$21 million reflecting (i) a $12 million decrease
in domestic royalty, marketing and reservation revenues
primarily due to a RevPAR decline of 15%,
(ii) $5 million of lower reimbursable revenues earned
by our property management business, (iii) a
$2 million decrease in international royalty, marketing and
reservation revenues resulting from a RevPAR decrease of 18%, or
6% excluding the impact of foreign exchange movements, partially
offset by a 13% increase in international rooms and (iv) a
$2 million net decrease in other revenue. The RevPAR
decline was largely driven by a decline in industry occupancy as
well as price reductions. The $5 million of lower
reimbursable revenues earned by our property management business
primarily relates to payroll costs that we incur and pay on
behalf of property owners, for which we are fully reimbursed by
the property owner. As the reimbursements are made based upon
cost with no added margin, the recorded revenue is offset by the
associated expense and there is no resultant impact on EBITDA.
Such amount decreased as a result of a reduction in variable
labor costs at our managed properties due to lower occupancy.
In addition, EBITDA was positively impacted by a decrease of
$9 million in marketing expenses primarily due to lower
marketing spend across our brands, including decreased costs
associated with our Wyndham Rewards loyalty program. Such
decrease was partially offset by (i) $3 million of
costs relating to organizational realignment initiatives (see
Restructuring Plan for more details) and
(ii) $3 million of increased costs primarily
associated with ancillary services provided to franchisees, as
discussed above.
As of March 31, 2009, we had 6,993 properties and
approximately 588,500 rooms in our system. Additionally, our
hotel development pipeline included 1,000 hotels and
approximately 108,600 rooms, of which 39% were international and
54% were new construction as of March 31, 2009.
Lodging
We continued the operational realignment of our lodging
business, which began during 2008, to enhance its global
franchisee services, promote more efficient channel management
to further drive revenue at franchised locations and managed
properties and position the Wyndham brand appropriately and
consistently in the marketplace. As a result of these
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changes, we recorded $3 million in costs primarily related
to the elimination of certain positions and the related
severance benefits and outplacement services that were provided
for impacted employees.
These excerpts taken from the WYN 10-K filed Feb 27, 2009. Lodging
We enter into agreements to franchise our lodging franchise
systems to independent hotel owners. Our standard franchise
agreement typically has a term of 15 to 20 years and
provides a franchisee with certain rights to terminate the
franchise agreement before the term of the agreement under
certain circumstances. The principal source of revenues from
franchising hotels is ongoing franchise fees, which are
comprised of royalty fees and other fees relating to marketing
and reservation services. Ongoing franchise fees typically are
based on a percentage of gross room revenues of each franchised
hotel and are accrued as earned and upon becoming due from the
franchisee. An estimate of uncollectible ongoing franchise fees
is charged to bad debt expense and included in operating
expenses on the Consolidated and Combined Statements of
Operations. Lodging revenues also include initial franchise
fees, which are recognized as revenue when all material services
or conditions have been substantially performed, which is either
when a franchised hotel opens for business or when a franchise
agreement is terminated as it has been determined that the
franchised hotel will not open.
Our franchise agreements also require the payment of fees for
certain services, including marketing and reservations. With
such fees, we provide our franchised properties with a suite of
operational and administrative services, including access to
(i) an international, centralized, brand-specific
reservations system, (ii) advertising,
(iii) promotional and co-marketing programs,
(iv) referrals, (v) technology, (vi) training and
(vii) volume purchasing. We are contractually obligated to
expend the marketing and reservation fees we collect from
franchisees in accordance with the franchise agreements; as
such, revenues earned in excess of costs incurred are accrued as
a liability for future marketing or reservation costs. Costs
incurred in excess of revenues are expensed as incurred. In
accordance with our franchise agreements, we include an
allocation of costs required to carry out marketing and
reservation activities within marketing and reservation expenses.
We also provide property management services for hotels under
management contracts. Our standard management agreement
typically has a term of up to 20 years. Our management fees
are comprised of base fees, which are typically calculated based
upon a specified percentage of gross revenues from hotel
operations, and incentive fees, which are typically calculated
based upon a specified percentage of a hotel’s gross
operating profit. Management fee revenue is recognized when
earned in accordance with the terms of the contract. We incur
certain reimbursable costs on behalf of managed hotel properties
and reports reimbursements received from managed properties as
revenue and the costs incurred on their behalf as expenses.
Management fee revenues are recorded as a component of franchise
fee revenues and reimbursable revenues are recorded as a
component of service fees and membership revenue on the
Consolidated and Combined Statements of Operations. The costs,
which principally relate to payroll costs for operational
employees who work at the managed hotels, are reflected as a
component of operating expenses on the Consolidated and Combined
Statements of Operations. The reimbursements from hotel owners
are based upon the costs incurred with no added margin; as a
result, these reimbursable costs have little to no effect on our
operating income. Management fee revenue and revenue related to
payroll reimbursements were $5 million and
$100 million, respectively, during 2008, $6 million
and $92 million, respectively, during 2007 and
$4 million and $69 million, respectively, during 2006.
We also earn revenue from administering the Wyndham Rewards
loyalty program. We charge our franchisee/managed property owner
a fee based upon a percentage of room revenue generated from
member stays at participating hotels. This fee is accrued as
earned and upon becoming due from the franchisee.
Within our Lodging segment, we measure operating performance
using the following key operating statistics: (i) number of
rooms, which represents the number of rooms at lodging
properties at the end of the year, (ii) RevPAR,
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which is calculated by multiplying the percentage of available
rooms occupied for the year by the average rate charged for
renting a lodging room for one day and (iii) royalty,
marketing and reservation revenues, which are typically based on
a percentage of the gross room revenues of each franchised hotel.
Lodging
Net revenues increased $28 million (4%) and EBITDA
decreased $5 million (2%), respectively, during 2008
compared to 2007 primarily reflecting higher international
royalty, marketing and reservation revenues, incremental net
revenues generated from the July 2008 acquisition of USFS,
increased revenue from our Wyndham Rewards loyalty program and
incremental property management reimbursable revenues, partially
offset by lower domestic royalty, marketing and reservation
revenues. Such net revenue increase was more than offset in
EBITDA by increased expenses, particularly associated with a
strategic change in direction related to our Howard Johnson
brand, ancillary services provided to franchisees, incremental
property management reimbursable revenues, the acquisition of
USFS and organizational realignment initiatives, partially
offset by savings from cost containment initiatives.
The acquisition of USFS contributed incremental net revenues and
EBITDA of $12 million and $3 million, respectively.
Apart from this acquisition, the increase in net revenues
includes (i) $17 million of incremental international
royalty, marketing and reservation revenues resulting from
international RevPAR growth of 2%, or 1%
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excluding the impact of foreign exchange movements, and a 13%
increase in international rooms, (ii) $10 million of
incremental revenue generated by our Wyndham Rewards loyalty
program primarily due to increased member stays,
(iii) $8 million of incremental reimbursable revenues
earned by our property management business and (iv) a
$16 million increase in other revenue primarily due to fees
generated upon execution of franchise contracts and ancillary
services that we provide to our franchisees. Such increases were
partially offset by a decrease of $35 million in domestic
royalty, marketing and reservation revenues due to a domestic
RevPAR decline of 5% and incremental development advance note
amortization, which is recorded net within revenues. The
domestic RevPAR decline was principally driven by an overall
decline in industry occupancy levels, while the international
RevPAR growth was principally driven by price increases,
partially offset by a decline in occupancy levels. The
$8 million of incremental reimbursable revenues earned by
our property management business primarily relates to payroll
costs that we incur and pay on behalf of property owners, for
which we are fully reimbursed by the property owner. As the
reimbursements are made based upon cost with no added margin,
the recorded revenue is offset by the associated expense and
there is no resultant impact on EBITDA.
EBITDA further reflects (i) a $16 million non-cash
impairment charge primarily due to a strategic change in
direction related to our Howard Johnson brand that is expected
to adversely impact the ability of the properties associated
with the franchise agreements acquired in connection with the
acquisition of the brand during 1990 to maintain compliance with
brand standards, (ii) $15 million of increased costs
primarily associated with ancillary services provided to
franchisees, as discussed above, and (iii) $4 million
of costs relating to organizational realignment initiatives (see
Restructuring Plan for more details). Such cost increases were
partially offset by (i) $10 million of savings from
cost containment initiatives, (ii) $2 million of
income associated with the assumption of a lodging-related
credit card marketing program obligation by a third-party,
(iii) $2 million of income associated with the sale of
a non-strategic asset, (iv) $2 million of lower
employee incentive program expenses compared to 2007 and
(v) a net decrease of $1 million in marketing expenses
primarily relating to lower marketing spend across our brands,
partially offset by incremental expenditures in our Wyndham
Rewards loyalty program.
As of December 31, 2008, we had 7,043 properties and
approximately 592,900 rooms in our system. Additionally, our
hotel development pipeline included approximately 990 hotels and
approximately 110,900 rooms, of which 42% were international and
55% were new construction as of December 31, 2008.
Lodging
Net revenues and EBITDA increased $64 million (10%) and
$15 million (7%), respectively, during 2007 compared with
2006 primarily reflecting strong RevPAR gains across the
majority of our brands, the success of our Wyndham Rewards
loyalty program and incremental property management reimbursable
revenues. Such increases were partially offset in EBITDA by
increased expenses, particularly for marketing activities.
The increase in net revenues includes (i) $23 million
of incremental reimbursable revenues earned by our property
management business, (ii) an $18 million (4%) increase
in royalty, marketing and reservation revenues, which was
primarily due to RevPAR growth of 4%,
(iii) $12 million of incremental revenue generated by
our Wyndham Rewards loyalty program primarily due to increased
member stays and (iv) an $11 million increase in other
revenue primarily due to fees generated upon execution of
franchise contracts and ancillary services that we provide to
our franchisees. The $23 million of incremental
reimbursable revenues earned by our property management business
primarily relates to payroll costs that we incur and pay on
behalf of property owners, for which we are reimbursed by the
property owner. As the reimbursements are made based upon cost
with no added margin, the recorded revenue is offset by the
associated expense and there is no resultant impact on EBITDA.
The $18 million increase in royalty, marketing and
reservation revenues was substantially driven by price
increases, as well as occupancy increases, reflecting the
beneficial impact of management and marketing initiatives and an
increased focus on quality enhancements, including strengthening
our brand standards, as well as an overall improvement in the
economy and midscale lodging segments, which are the segments
where we primarily compete.
EBITDA further reflects (i) $15 million of higher
expenses primarily resulting from incremental revenues received
from our franchisees, as discussed above,
(ii) $5 million of increased information technology
costs related to developing a more robust infrastructure to
support current and future global growth and (iii) an
increase of $6 million in other expenses primarily related
to expanding our international operations and providing
ancillary services to our franchisees. The $15 million of
increased marketing spend is reflective of (i) incremental
expenditures in our Wyndham Rewards loyalty program,
(ii) higher fees received from our franchisees (where we
are contractually obligated to expend these fees for marketing
purposes) and (iii) additional campaigns in international
regions that we have targeted for growth.
As of December 31, 2007, we had approximately 6,540
properties and approximately 550,600 rooms in our system.
Additionally, our hotel development pipeline included
approximately 930 hotels and approximately 105,000 rooms, of
which approximately 32% were international and approximately 44%
were new construction as of December 31, 2007.
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Lodging
We realigned the operations of our lodging business to enhance
its global franchisee services, promote more efficient channel
management to further drive revenue at franchised locations and
managed properties and position the Wyndham brand appropriately
and consistently in the marketplace. As a result of these
changes, certain positions were eliminated and severance
benefits and outplacement services were provided for impacted
employees resulting in costs of $4 million. We expect
additional costs of approximately $1 million to
$3 million during the first quarter of 2009.
Lodging
The Company enters into agreements to franchise its lodging
franchise systems to independent hotel owners. The
Company’s standard franchise agreement typically has a term
of 15 to 20 years and provides a franchisee with certain
rights to terminate the franchise agreement before the term of
the agreement under certain circumstances. The principal source
of revenues from franchising hotels is ongoing franchise fees,
which are comprised of royalty fees and other fees relating to
marketing and reservation services. Ongoing franchise fees
typically are based on a percentage of gross room revenues of
each franchised hotel and are accrued as earned and upon
becoming due from the franchisee. An estimate of uncollectible
ongoing franchise fees is charged to bad debt expense and
included in operating expenses on the Consolidated and Combined
Statements of Operations. Lodging revenues also include initial
franchise fees, which are recognized as revenue when all
material services or conditions have been substantially
performed, which is either when a franchised hotel opens for
business or when a franchise agreement is terminated as it has
been determined that the franchised hotel will not open.
The Company’s franchise agreements also require the payment
of fees for certain services, including marketing and
reservations. With such fees, the Company provides its
franchised properties with a suite of operational and
administrative services, including access to (i) an
international, centralized, brand-specific reservations system,
(ii) advertising, (iii) promotional and co-marketing
programs, (iv) referrals, (v) technology,
(vi) training and (vii) volume purchasing. The Company
is contractually obligated to expend the marketing and
reservation fees it collects from franchisees in accordance with
the franchise agreements; as such, revenues earned in excess of
costs incurred are accrued as a liability for future marketing
or reservation costs. Costs incurred in excess of revenues are
expensed as incurred. In accordance with its franchise
agreements, the Company includes an allocation of costs required
to carry out marketing and reservation activities within
marketing and reservation expenses.
The Company also provides property management services for
hotels under management contracts. The Company’s standard
management agreement typically has a term of up to
20 years. The Company’s management fees are comprised
of base fees, which are typically calculated based upon a
specified percentage of gross revenues from hotel operations,
and incentive fees, which are typically calculated based upon a
specified percentage of a hotel’s gross operating profit.
Management fee revenue is recognized when earned in accordance
with the terms of the contract. The Company incurs certain
reimbursable costs on behalf of managed hotel properties and
reports reimbursements received from managed properties as
revenue and the costs incurred on their behalf as expenses.
Management fee revenues are recorded as a component of franchise
fee revenues and reimbursable revenues are recorded as a
component of service fees and membership revenue on the
Consolidated and Combined Statements of Operations. The costs,
which principally relate to payroll costs for operational
employees who work at the managed hotels, are reflected as a
component of operating expenses on the Consolidated and Combined
Statements of Operations. The reimbursements from hotel owners
are based upon the costs incurred with no added margin; as a
result, these reimbursable costs have little to no effect on the
Company’s operating income. Management fee revenue and
revenue related to payroll reimbursements were $5 million
and $100 million, respectively, during 2008,
$6 million and $92 million, respectively, during 2007
and $4 million and $69 million, respectively, during
2006.
The Company also earns revenue from administering its Wyndham
Rewards loyalty program. The Company charges its
franchisee/managed property owner a fee based upon a percentage
of room revenue generated from member stays at participating
hotels. This fee is accrued as earned and upon becoming due from
the franchisee.
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This excerpt taken from the WYN 10-Q filed Nov 10, 2008. Lodging
Net revenues and EBITDA increased $34 million (6%) and
$5 million (3%), respectively, during the nine months ended
September 30, 2008 compared to the same period during 2007
primarily reflecting incremental property management
reimbursable revenues, higher international royalty, marketing
and reservation revenues, increased revenue generated by our
Wyndham Rewards loyalty program and the July 2008 acquisition of
USFS, partially offset by lower domestic royalty, marketing and
reservation revenues. Such net increase was partially offset in
EBITDA by increased expenses, particularly for expenses
associated with: incremental property management reimbursable
revenues, marketing activities, ancillary services provided to
franchisees, the acquisition of USFS and organizational
realignment initiatives.
The acquisition of USFS contributed incremental net revenues and
EBITDA of $6 million and $2 million, respectively.
Apart from this acquisition, the increase in net revenues
includes (i) $15 million of incremental reimbursable
revenues earned by our property management business,
(ii) $14 million of incremental international royalty,
marketing and reservation revenues resulting from international
RevPAR growth of 8%, or 4% excluding the impact of foreign
exchange movements, and a 16% increase in international rooms,
(iii) $9 million of incremental revenue generated by
our Wyndham Rewards loyalty program primarily due to increased
member stays and (iv) a $14 million increase in other
revenue primarily due to fees generated upon execution of
franchise contracts and ancillary services that we provide to
our franchisees. These fees were partially offset by a decrease
of $24 million in domestic royalty, marketing and
reservation revenues due to a domestic RevPAR decline of 3% and
incremental development advance note amortization, which is
recorded net within revenues. The domestic RevPAR decline was
principally driven by an overall decline in industry occupancy
levels, while the international RevPAR growth was principally
driven by price increases. The $15 million of incremental
reimbursable revenues earned by our property management business
primarily relates to payroll costs that we incur and pay on
behalf of property owners, for which we are reimbursed by the
property owner. As the reimbursements are made based upon cost
with no added margin, the recorded revenue is offset by the
associated expense and there is no resultant impact on EBITDA.
EBITDA further reflects (i) a net increase of
$9 million in marketing expenses primarily relating to
incremental expenditures in our Wyndham Rewards loyalty program,
partially offset by the timing of our marketing spend,
(ii) $7 million of increased costs primarily
associated with ancillary services provided to franchisees, as
discussed above, and (iii) $4 million of costs
relating to organizational realignment initiatives (see
Restructuring Plan for more details). Such increases were
partially offset by (i) $4 million of savings from
cost containment initiatives, (ii) $2 million of
income associated with the assumption of a lodging-related
credit card marketing program obligation by a third-party and
(iii) $2 million of income associated with the sale of
a non-strategic asset.
This excerpt taken from the WYN 10-Q filed Aug 8, 2008. Lodging
Net revenues and EBITDA increased $32 million (9%) and
$4 million (4%), respectively, during the six months ended
June 30, 2008 compared to the same period during 2007
primarily reflecting incremental property management
reimbursable revenues, higher international royalty, marketing
and reservation revenues and increased revenue generated by our
Wyndham Rewards loyalty program. Such increases were partially
offset in EBITDA by increased expenses, particularly for
expenses associated with incremental property management
reimbursable revenues, marketing activities and ancillary
services provided to franchisees.
The increase in net revenues includes (i) $15 million
of incremental reimbursable revenues earned by our property
management business, (ii) $10 million of incremental
international royalty, marketing and reservation revenues
resulting from international RevPAR growth of 14%, or 6%
excluding the impact of foreign exchange movements, and a 15%
increase in system size, (iii) $6 million of
incremental revenue generated by our Wyndham Rewards loyalty
program primarily due to increased member stays and (iv) a
$14 million increase in other revenue primarily due to fees
generated upon execution of franchise contracts and ancillary
services that we provide to our franchisees. These fees were
partially offset by a decrease of $13 million in domestic
royalty, marketing and reservation revenues due to a domestic
RevPAR decline of 3% and incremental development advance note
amortization, which is recorded net within revenues. The
domestic RevPAR decline was principally driven by an overall
decline in industry occupancy levels, while the international
RevPAR growth was principally driven by price increases. The
$15 million of incremental reimbursable revenues earned by
our property management business primarily relates to payroll
costs that we incur and pay on behalf of property owners, for
which we are reimbursed by the property owner. As the
reimbursements are made based upon cost with no added margin,
the recorded revenue is offset by the associated expense and
there is no resultant impact on EBITDA.
EBITDA further reflects (i) $11 million of higher
marketing expenses primarily relating to incremental
expenditures in our Wyndham Rewards loyalty program and
(ii) $4 million of higher costs primarily associated
with ancillary services provided
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to franchisees, as discussed above. Such amounts were partially
offset by $2 million of income associated with the
assumption of a lodging-related credit card marketing program
obligation by a third-party.
This excerpt taken from the WYN 10-Q filed May 8, 2008. Lodging
Net revenues and EBITDA increased $18 million (12%) and
$1 million (2%), respectively, during the first quarter of
2008 compared to the first quarter of 2007 primarily reflecting
incremental property management reimbursable revenues and fees
generated upon execution of franchise contracts and other
services provided to franchisees. Such increases were offset in
EBITDA by increased expenses, particularly for expenses
associated with incremental property management reimbursable
revenues and marketing activities.
The increase in net revenues includes (i) $12 million
of incremental reimbursable revenues earned by our property
management business, (ii) $3 million of incremental
revenue generated by our TripRewards loyalty program primarily
due to increased member stays and (iii) a $4 million
increase in other revenue primarily due to fees generated upon
execution of franchise contracts and ancillary services that we
provide to our franchisees. Royalty, marketing and reservation
revenues decreased by $1 million despite RevPAR growth of
3% and a 2% increase in the number of rooms primarily due to
(i) a higher mix of international properties, which
generally carry lower royalty and marketing and reservation
rates than domestic properties, and (ii) incremental
development advance note amortization, which is recorded net
within revenues. The $12 million of incremental
reimbursable revenues earned by our property management business
primarily relates to payroll costs that we incur and pay on
behalf of property owners, for which we are reimbursed by the
property owner. As the reimbursements are made based upon cost
with no added margin, the recorded revenue is offset by the
associated expense and there is no resultant impact on EBITDA.
The growth in RevPAR was driven by price increases, reflecting
the beneficial impact of management and marketing initiatives
and an increased focus on quality enhancements, including
strengthening our brand standards.
EBITDA further reflects $5 million of higher marketing
expenses primarily relating to (i) incremental expenditures
in our TripRewards loyalty program and (ii) additional
campaigns in international regions that we have targeted for
growth.
As of March 31, 2008, we had approximately 6,550 properties
and approximately 551,100 rooms in our system. Additionally, our
hotel development pipeline included approximately 930 hotels and
approximately 106,900 rooms, of which approximately 35% were
international and approximately 45% were new construction as of
March 31, 2008.
This excerpt taken from the WYN 10-K filed Feb 29, 2008. Lodging
The Company enters into agreements to franchise its lodging
franchise systems to independent hotel owners. The
Company’s standard franchise agreement typically has a term
of 15 to 20 years and provides a franchisee with certain
rights to terminate the franchise agreement before the term of
the agreement under certain circumstances. The principal source
of revenues from franchising hotels is ongoing franchise fees,
which are comprised of royalty fees and other fees relating to
marketing and reservation services. Ongoing franchise fees
typically are based on a percentage of gross room revenues of
each franchised hotel and are accrued as earned and upon
becoming due from the franchisee. An estimate of uncollectible
ongoing franchise fees is charged to bad debt expense and
included in operating expenses on the Consolidated and Combined
Statements of Income. Lodging revenues also include initial
franchise fees, which are recognized as revenue when all
material services or conditions have been substantially
performed, which is either when a franchised hotel opens for
business or when a franchise agreement is terminated as it has
been determined that the franchised hotel will not open.
The Company’s franchise agreements also require the payment
of fees for certain services, including marketing and
reservations. With such fees, the Company provides its
franchised properties with a suite of operational and
administrative services, including access to (i) an
international, centralized, brand-specific reservations system,
(ii) advertising, (iii) promotional and co-marketing
programs, (iv) referrals, (v) technology,
(vi) training and (vii) volume purchasing. The Company
is contractually obligated to expend the marketing and
reservation fees it collects from franchisees in accordance with
the franchise agreements; as such, revenues earned in excess of
costs incurred are accrued as a liability for future marketing
or reservation costs. Costs incurred in excess of revenues are
expensed. In accordance with the Company’s franchise
agreements, the Company includes an allocation of costs required
to carry out marketing and reservation activities within
marketing and reservation expenses.
The Company also provides property management services for
hotels under management contracts. The Company’s standard
management agreement typically has a term of up to
20 years. The Company’s management fees are comprised
of base fees, which are typically calculated based upon a
specified percentage of gross revenues from hotel operations,
and incentive fees, which are typically calculated based upon a
specified percentage of a hotel’s gross operating profit.
Management fee revenue is recognized when earned in accordance
with the terms of the contract. The Company incurs certain
reimbursable costs on behalf of managed hotel properties and
report reimbursements received from managed properties as
revenue and the costs incurred on their behalf as expenses.
Management fee revenues are recorded as a component of franchise
fee revenues and reimbursable revenues are recorded as a
component of service fees and membership revenue on the
Consolidated and Combined Statements of Income. The costs, which
principally relate to payroll costs for operational employees
who work at the managed hotels, are reflected as a component of
operating expenses on the Consolidated and Combined Statements
of Income. The reimbursements from hotel owners are based upon
the costs incurred with no added margin; as a result,
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these reimbursable costs have little to no effect on the
Company’s operating income. Management fee revenue and
revenue related to payroll reimbursements were $6 million
and $92 million, respectively, during 2007, $4 million
and $69 million, respectively, during 2006 and
$1 million and $17 million, respectively, during the
period October 11, 2005 (date of Wyndham Hotels and Resorts
brand acquisition, which includes management contracts) through
December 31, 2005.
The Company also earns revenue from administering its
TripRewards loyalty program. When a member stays at a
participating hotel, the Company charges its franchisee/managed
property owner a fee based upon a percentage of room revenue
generated from such stay. This fee is accrued as earned and upon
becoming due from the franchisee.
This excerpt taken from the WYN 10-Q filed Nov 8, 2007. Lodging
Net revenues and EBITDA increased $40 million (8%) and
$12 million (7%), respectively, in the nine months ended
September 30, 2007 compared with the same period in 2006
primarily reflecting strong RevPAR gains across the majority of
our brands, incremental property management reimbursable
revenues, incremental revenue generated by our TripRewards
loyalty program and the April 2006 acquisition of the Baymont
Inn & Suites brand. Such increases were partially
offset in EBITDA by increased expenses.
The acquisition of the Baymont Inn & Suites brand
contributed incremental net revenues and EBITDA of
$3 million and $2 million, respectively. Apart from
this acquisition, net revenues in our lodging business increased
$37 million (7%) in the nine months ended
September 30, 2007 compared with the same period in 2006.
Such increase includes (i) a $12 million (3%) increase
in royalty, marketing and reservation revenues, which was
primarily due to organic RevPAR growth of 4%,
(ii) $11 million of incremental reimbursable revenues
earned by our property management business and
(iii) $10 million of incremental revenue generated by
our TripRewards loyalty program due to increased member stays.
The $12 million increase in royalty, marketing and
reservation revenues was substantially driven by price and
occupancy increases reflecting the beneficial impact of
management and marketing initiatives and an increased focus on
quality enhancements, including strengthening our brand
standards, as well as an overall improvement in the economy and
midscale lodging segments, which are the segments where we
primarily compete. The $11 million of incremental
reimbursable revenues earned by our property management business
primarily relates to payroll costs that we incur and pay on
behalf of property owners, for which we are reimbursed by the
property owner. As the reimbursements are made based upon cost
with no added margin, the recorded revenue is offset by the
associated expense and there is no resultant impact on EBITDA.
EBITDA further reflects (i) $6 million of incremental
expenses relating to enhanced marketing and reservation efforts,
(ii) $4 million of increased employee-related costs
primarily as a result of higher incentive and benefit costs and
(iii) $4 million of increased information technology
costs related to developing a more robust infrastructure to
support current and future growth. The $6 million of
incremental marketing and reservation spend is reflective of
(i) additional fees received from our franchisees (where we
are contractually obligated to expend these fees for marketing
purposes), (ii) additional campaigns in international
regions that we have targeted for growth and
(iii) incremental expenditures in our TripRewards loyalty
program.
As part of our long-term strategic plan, we continue to invest
in the Wyndham Hotels and Resorts brand through enhanced
marketing efforts. During the nine months ended
September 30, 2007, we spent $7 million above the
marketing and reservation fees we received from franchisees,
which is substantially comparable to the amount we spent during
the same period in 2006.
This excerpt taken from the WYN 10-Q filed Aug 9, 2007. Lodging
Net revenues and EBITDA increased $18 million (6%) and
$10 million (11%), respectively, in the six months ended
June 30, 2007 compared with the same period in 2006
primarily reflecting strong RevPAR gains across the majority of
our brands and the April 2006 acquisition of the Baymont
Inn & Suites brand, which were partially offset in
EBITDA by increased employee and information technology costs,
all of which are discussed in more detail below.
The acquisition of the Baymont Inn & Suites brand
contributed incremental net revenues and EBITDA of
$3 million and $2 million, respectively. Apart from
this acquisition, net revenues in our lodging business increased
$15 million (4%) in the six months ended June 30, 2007
compared with the same period in 2006. Such increase was
primarily due to organic RevPAR growth of 3%, which was driven
by both price and occupancy increases reflecting (i) the
beneficial impact of management and marketing initiatives and a
sharper focus on quality enhancements, including strengthening
our brand standards, as well as (ii) an overall improvement
in the economy and midscale lodging segments, which are the
segments where we primarily compete. Additionally, our
TripRewards loyalty program generated an incremental
$5 million in net revenues due to increased member stays.
Our property management business also generated an incremental
$2 million of incremental reimbursable revenues primarily
relating to payroll costs that we incur and pay on behalf of
property owners and for which we are reimbursed by the property
owner. As the reimbursements are made based upon cost with no
added margin, the recorded revenue is offset by the associated
expense and there is no resultant impact on EBITDA.
EBITDA further reflects (i) $5 million of increased
employee-related costs primarily as a result of higher incentive
costs and higher benefit costs and (ii) $2 million of
increased information technology costs related to developing a
more robust infrastructure to support current and future growth.
Although a delay in certain marketing programs has caused a
$2 million decrease in our marketing spend, we continue to
invest in the Wyndham Hotels and Resorts brand through enhanced
marketing efforts. During the six months ended June 30,
2007, we invested $5 million above the marketing fees we
received from franchisees, which is comparable to the amount we
spent during the same period in 2006.
This excerpt taken from the WYN 10-Q filed May 10, 2007. Lodging
Net revenues and EBITDA increased $8 million (6%) and
$4 million (10%), respectively, during the first quarter of
2007 compared with the first quarter of 2006 primarily
reflecting the April 2006 acquisition of the Baymont
Inn & Suites brand and strong RevPAR gains across the
majority of our other brands, which were partially offset in
EBITDA by a slight increase in various expenses, all of which
are discussed in more detail below. Additionally, the first
quarter EBITDA comparison is negatively impacted by our
continued marketing investment in the Wyndham Hotels &
Resorts brand.
The acquisition of the Baymont Inn & Suites brand
contributed incremental net revenues and EBITDA of
$3 million and $2 million, respectively. Apart from
this acquisition, net revenues in our lodging business increased
$5 million (3%) during the first quarter of 2007 as
compared to the first quarter of 2006. Such increase was
primarily due to (i) organic RevPAR growth of 3%, which was
driven by both price and occupancy increases, and (ii) a
$2 million increase in net revenues generated by our
TripRewards loyalty program due to an increased member base. The
price and occupancy increases are reflective of an overall
improvement in the economy and midscale lodging segments, which
are the segments where we primarily compete, but also reflect
the beneficial impact of management and marketing initiatives
and a sharper focus on quality enhancements, including
strengthening our brand standards.
We continue to invest in the Wyndham Hotels & Resorts
brand through enhanced marketing efforts. During first quarter
2007, we invested $2 million above the marketing fees we
received from franchisees as compared to $1 million
invested in first quarter 2006 above the fees we received.
EBITDA was also negatively impacted by (i) $1 million
of increased information technology costs related to developing
a more robust infrastructure to support current and future
growth and (ii) $1 million of increased
employee-related costs primarily as a result of higher incentive
costs and higher benefit costs.
As of March 31, 2007, we had 6,450 properties and 539,311
rooms in our franchise system. Additionally, our hotel
development pipeline includes approximately 820 hotels and
approximately 95,000 rooms, of which approximately 21% are
international and approximately 42% are new construction.
This excerpt taken from the WYN 10-K filed Mar 7, 2007. Lodging
The Company enters into agreements to franchise its lodging
franchise systems to independent hotel owners. The
Company’s standard franchise agreement typically has a term
of 15 to 20 years and provides a franchisee with certain
rights to terminate the franchise agreement before the term of
the agreement under certain circumstances. The principal source
of revenues from franchising hotels is ongoing franchise fees,
which are comprised of royalty fees and other fees relating to
marketing and reservation services. Ongoing franchise fees
typically are based on a percentage of gross room revenues of
each franchised hotel and are accrued as earned and upon
becoming due from the franchisee. An estimate of uncollectible
ongoing franchise fees is charged to bad debt expense and
included in operating expenses on the Consolidated and Combined
Statements of Income. Lodging revenues also include initial
franchise fees, which are recognized as revenue when all
material services or conditions have been substantially
performed, which is either when a franchised hotel opens for
business or when a franchise agreement is terminated as it has
been determined that the franchised hotel will not open.
The Company’s franchise agreements also require payment of
fees for other services, including marketing and reservations.
With such fees, the Company provides its franchised properties
with a suite of operational and administrative services,
including access to an international, centralized,
brand-specific reservations system, advertising, promotional and
co-marketing programs, referrals, technology, training and
volume purchasing. The Company is contractually obligated to
expend the marketing and reservation fees it collects from
franchisees in accordance with the franchise agreements; as
such, revenues earned in excess of costs incurred are accrued as
a liability for future marketing or reservation costs. Costs
incurred in excess of revenues are expensed. In accordance with
the Company’s franchise agreements, the Company includes an
allocation of certain overhead costs required to carry out
marketing and reservation activities within marketing and
reservation expenses.
The Company also provides property management services for
hotels under management contracts. The Company’s management
fees are comprised of base fees, which are typically calculated
based upon a specified
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percentage of gross revenues from hotel operations, and
incentive management fees, which are typically calculated based
upon a specified percentage of a hotel’s gross operating
profit. Management fee revenue is recognized when earned in
accordance with the terms of the contract. The Company incurs
certain reimbursable costs on behalf of managed hotel properties
and report reimbursements received from managed properties as
revenue and the costs incurred on their behalf as expenses.
Management fees and reimbursement revenue are recorded as a
component of service fees and membership revenue on the
Consolidated and Combined Statements of Income. The costs, which
principally relate to payroll costs for operational employees
who work at the managed hotels, are reflected as a component of
operating expenses on the Consolidated and Combined Statements
of Income. The reimbursements from hotel owners are based upon
the costs incurred with no added margin; as a result, these
reimbursable costs have little to no effect on the
Company’s operating income. Management fee revenue and
revenue related to payroll reimbursements were $4 million
and $69 million, in 2006, respectively, and $1 million
and $17 million, respectively, for the period
October 11, 2005 (date of Wyndham Hotels and Resorts brand
acquisition, which includes management contracts) through
December 31, 2005.
This excerpt taken from the WYN 10-Q filed Nov 14, 2006. Lodging
Revenues and EBITDA increased $120 million (31%) and
$10 million (7%), respectively, in the nine months ended
September 30, 2006 compared with the same period in 2005
primarily reflecting the October 2005 acquisition of the
franchise and property management businesses of the Wyndham
Hotels and Resorts brand and strong RevPAR gains across our
legacy brands, which were partially offset in EBITDA by our
strategic decision to increase brand recognition and drive brand
bookings through more extensive marketing campaigns,
particularly for our Wyndham brand.
The franchise business of the Wyndham brand contributed
incremental revenues of $36 million to the nine months
ended September 30, 2006 while EBITDA remained flat as we
continued to execute a key strategy to promote the Wyndham brand
name and drive brand bookings through enhanced marketing
efforts. Additionally, within the property management business
of the Wyndham brand, we generated $59 million in revenues,
of which $53 million related to reimbursable payroll costs
that we incur and pay on behalf of property owners. As the
reimbursements are made based upon cost with no
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added margin, the recorded revenue is offset by the associated
expense and there is no resultant impact on EBITDA. The
operating results of our lodging business also reflect the
acquisition of Baymont Inn & Suites, which was acquired
in April 2006 and contributed incremental revenues and EBITDA of
$7 million and $4 million, respectively.
Apart from these acquisitions, revenues in our lodging business
increased $18 million (5%) in nine months ended
September 30, 2006. Such increase was primarily due to
RevPAR growth of 9%, partially offset by a 3% decline in
weighted average rooms available, as well as the absence of a
$7 million gain recognized in the first quarter of 2005 on
the sale of an investment no longer deemed to be strategic. The
RevPAR growth and rooms decline both reflect (i) increases
in price and occupancy principally attributable to the
beneficial impact of management initiatives implemented in prior
periods, such as the strategic assignment of personnel to field
locations designed to assist franchisees in improving their
operating performance and an overall improvement in the economy
lodging segment, (ii) our termination of underperforming
properties throughout 2005 that did not meet our required
quality standards or their financial obligations to us and
(iii) the expiration of franchise agreements and certain
franchisees exercising their right to terminate their agreements.
As previously discussed, a strategic growth initiative of our
lodging business is to increase brand awareness and drive brand
bookings. To this end, during the nine months ended
September 30, 2006, we increased our marketing spend by
$14 million (8%) (excluding the impact of the acquisitions
discussed above) reflecting (i) additional fees received
from our franchisees (where we are contractually obligated to
expend these fees for marketing purposes), (ii) additional
campaigns in international regions that we have targeted for
growth and (iii) incremental investments in our TripRewards
loyalty program. In addition, expenses also increased
$1 million as a result of our separation from Cendant.
This excerpt taken from the WYN 8-K filed Jul 19, 2006. Lodging The Company enters into agreements to franchise its lodging franchise systems to independent hotel owners. The Company’s standard franchise agreement typically has a term of 15 to 20 years and provides a franchisee with certain rights to terminate the franchise agreement before the term of the agreement under certain circumstances. The principal source of revenues from franchising hotels is ongoing franchise fees, which are
F-25
Table of Contentscomprised of royalty fees and other fees relating to marketing and reservation services. Ongoing franchise fees typically are based on a percentage of gross room revenues of each franchisee and are accrued as the underlying franchisee revenues are earned and due from the franchisees. An estimate of uncollectible ongoing franchise fees is charged to bad debt expense and included in operating expenses on the Combined Statements of Income. Lodging revenues also include initial franchise fees, which are recognized as revenue when all material services or conditions have been substantially performed, which is when a franchised hotel opens for business or a franchise agreement is terminated as it has been determined that the franchised hotel will not open. The Company’s franchise agreements require the payment of fees for certain services, including marketing and reservations. With such fees, the Company provides its franchised properties with a suite of operational and administrative services, including access to an international, centralized, brand-specific reservations system, advertising, promotional and co-marketing programs, referrals, technology, training and volume purchasing. The Company is contractually obligated to expend the marketing and reservation fees it collects from franchisees in accordance with the franchise agreements; as such, revenues earned in excess of costs incurred are accrued as a liability for future marketing or reservation costs. Costs incurred in excess of revenues are expensed. In accordance with the Company’s franchise agreements, the Company includes an allocation of certain overhead costs required to carry out marketing and reservation activities within marketing and reservation expenses. The Company also provides property management services for hotels under management contracts. Management fees are comprised of base fees, which typically are calculated based upon a specified percentage of gross revenues from hotel operations, and incentive management fees, which typically are calculated based upon a specified percentage of a hotel’s operating profit or the amount by which a hotel’s operating profit exceeds specified targets. Management fee revenue is recognized when earned in accordance with the terms of the contract. The Company incurs certain reimbursable costs on behalf of managed hotel properties and reports reimbursements received from managed properties as revenue and the costs incurred on their behalf as expenses. The revenue is recorded as a component of service fees and membership on the Combined Statements of Income. The costs, which principally relate to payroll costs at managed properties where the Company is the employer, are reflected as a component of operating expenses on the Combined Statements of Income. The reimbursements from hotel owners are based upon the costs incurred with no added margin; as a result, these reimbursable costs have little to no effect on the Company’s operating income. In 2005, management fee revenue and revenue related to payroll reimbursements were $1 million and $17 million, respectively. | EXCERPTS ON THIS PAGE: |
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