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This excerpt taken from the WYN 10-K filed Feb 27, 2009. Wyndham
Hotel Group Overview
Wyndham Hotel Group, our lodging business, franchises hotels in
the upscale, midscale, and economy segments of the lodging
industry and provides hotel management services to owners of
luxury, upscale and midscale hotels. Through steady organic
growth and acquisition of established lodging franchise systems
over the past 18 years, our lodging business has become the
world’s largest lodging franchisor as measured by the
number of franchised hotels. Our lodging business has over 7,000
franchised hotels, which represents almost 593,000 rooms on six
continents (including over 4,000 rooms from 14 unmanaged,
affiliated and managed, non-proprietary hotels). Our lodging
business has a strong presence across the economy and midscale
segments of the lodging industry and a developing presence in
the upscale segment, thus providing individual consumers who are
traveling for leisure or business with options across various
price points. Our franchised hotels operate under one of our
lodging brands, which are Wyndham Hotels and Resorts, Wingate by
Wyndham, Hawthorn, Ramada, Baymont, Days Inn, Super 8, Microtel,
Howard Johnson, Travelodge and Knights Inn. The breadth and
diversity of our lodging brands provide potential franchisees
with a range of options for affiliating their properties with
one or more of our brands. As of December 31, 2008, our
franchised hotels represented approximately 10.2% of
U.S. hotel room inventory.
In 2008, our franchised hotels sold 8.5% or approximately
86.2 million, of the one billion hotel room nights sold in
the United States. In 2008, our franchised hotels sold
approximately 19.7% of all hotel room nights sold in the United
States in the economy and midscale segments. Our franchised
hotels are dispersed internationally, which reduces our exposure
to any one geographic region. Approximately 79% of the hotel
rooms, or over 470,000 rooms, in our franchised hotels are
located throughout the United States, and approximately 21% of
the hotel rooms, or approximately 123,000 rooms, are located
outside of the United States. In addition, our franchise systems
are
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dispersed among numerous franchisees, which reduces our exposure
to any one lodging franchisee. Of our approximately
6,100 lodging franchisees, no one franchisee accounts for
more than 2% of our franchised hotels. Our lodging business
franchises under two models. In North America, we generally
employ a direct franchise model whereby we contract with and
provide services and assistance with reservations directly to
independent owner-operators of hotels. In other parts of the
world, we employ either a direct franchise model or a master
franchise model whereby we contract with a qualified,
experienced third party to build a franchise enterprise in such
third party’s country or region.
Our lodging business provides our franchised hotels with a suite
of operational and administrative services, including access to
a central reservations system, advertising, promotional and
co-marketing programs, referrals, technology, training and
volume purchasing. We also provide our franchisees, as well as
our managed hotels, with the Wyndham Rewards loyalty program,
which is the world’s largest hotel rewards program as
measured by the number of participating hotels. As of
December 31, 2008, we were providing hotel management
services to 34 hotels associated with either the Wyndham Hotels
and Resorts brand, the Ramada brand or the CHI joint venture.
Our hotel management business offers owners of hotels
professional oversight and comprehensive operations support.
Our lodging business derives the majority of its revenues from
franchising hotels. The sources of revenues from franchising
hotels are initial franchise fees, which relate to services
provided to assist a franchised hotel to open for business under
one of our brands, and ongoing franchise fees, which are
comprised of royalty fees, marketing and reservation fees and
other related fees. The royalty fees are intended to cover the
use of our trademarks and our operating expenses, such as
expenses incurred for franchise services, including quality
assurance and administrative support, and to provide us with
operating profits. The marketing and reservation fees are
intended to reimburse us for expenses associated with operating
a central reservations system, advertising and marketing
programs and other related services. Because franchise fees
generally are based on percentages of the franchisees’
gross room revenues, expanding our portfolio of franchised
hotels and growing RevPAR at franchised hotels are important to
our revenue growth.
We also earn revenue providing hotel management services, which
revenues include management fees, service fees and reimbursement
revenues. Our management fees are comprised of base fees, which
typically are calculated based upon a specified percentage of
gross revenues from hotel operations, and incentive fees, which
typically are calculated based upon a specified percentage of a
hotel’s gross operating profit. Service fees include fees
derived from accounting, design, construction and purchasing
services and technical assistance provided to managed hotels.
Reimbursement revenues are intended to cover expenses incurred
by the hotel management business on behalf of the managed
hotels, primarily consisting of payroll costs for operational
employees who work at the hotels. We also earn revenue from the
Wyndham Rewards program when a member stays at a participating
hotel. These revenues are derived from a fee charged to the
franchisee/managed property owner based upon a percentage of
room revenue generated from such stay.
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