Analyst Note| Dan Wasiolek |
Our $68 Wyndham fair value estimate won’t materially change (despite incorporating a 5-point lift in the U.S. corporate tax rate starting in 2022), as the hotelier’s performance continues to lead the travel recovery in the U.S., harmonizing with our view since the outset of the pandemic. Specifically, Wyndham’s second-quarter global revenue per available room, revPAR, reached 83% of 2019 levels, near our 85% estimate, improving from the 69% mark in the prior quarter. The U.S. (61% of rooms) continues to lead the recovery, with revPAR rebounding to 95% of 2019 levels, matching our forecast, while surpassing the industry’s 77% mark. Wyndham continues to benefit from its lower-priced portfolio (over 90% of U.S. hotels are economy and midscale) located in drive-to destinations (87% of U.S. hotels), which are tied to leisure travelers (around 70% of prepandemic demand). And we expect demand for Wyndham’s hotels to continue to improve, despite the surge of the Delta variant, as it remains our stance that the desire to travel will prove unwavering. This view is supported by the resilience of U.S. travel demand during the case spikes around the July 4, Labor Day, and Thanksgiving holidays in 2020. As a result, we model Wyndham’s back-half global revPAR reaching over 90% of 2019 levels, slightly above management's guidance for roughly 90%.