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Wyndham 2Q Profit Rises, Boosts Full-Year Outlook

CNBC.com and wires
Wednesday, 27 Jul 2011 | 1:47 PM ET
Suitcase on bed in hotel room.
Johannes Kroemer | The Image Bank | Getty Images
Suitcase on bed in hotel room.

Wyndham Worldwide Corp. said Wednesday its profit rose 20 percent in the second quarter as the hotel company saw leisure travel continue to gain momentum.

While lodging companies struggled during the recession because consumers were pulling back on their discretionary spending, many people have started to travel again — even if just for short-stay trips — as economic conditions gradually get better.

"People are dedicated to their vacations," Chief Executive Stephen Holmes told CNBC Wednesday, "and during the downturn those people still went on vacation."

He said Wyndham's "economy midscale" level of hotels did very well in the quarter despite economic choppiness but he wouldn't say if that was because vacationers "traded down" to cheaper hotels.

"We don’t ask when somebody checks into a Days Inn if they really wanted to check into a Four Seasons" hotel, he told CNBC.

The Parsippany, N.J., hotel company, which franchises hotels such as Ramada and Days Inn, also lifted its outlook for full-year adjusted earnings and revenue above analysts' expectations.

Wyndham reported net income of $114 million, or 67 cents per share, for the three months ended June 30, up from $95 million, or 51 cents per share, a year ago.

Adjusted earnings were 64 cents per share, which removes a $13 million tax benefit. That topped the 56 cents per share that analysts surveyed by FactSet expected.

Wyndham CEO on Earnings
Discussing Q2 earnings at the hotel company and its outlook for the second half of the year, with Stephen Holmes, Wyndham Worldwide chairman/CEO.

Revenue improved to $1.09 billion from $963 million as the company made more from servicing and membership and franchise fees. It also pulled in more revenue from all of its business segments, which include lodging, vacation exchange and rentals and vacation ownership. The company credited acquisitions with helping its results.

The performance beat Wall Street's revenue estimate of $1.05 billion.

Revenue per available room, a gauge known as revpar that is a key indicator or a hotel operator's health, increased 9.7 percent in the quarter.

For the year, Wyndham anticipates adjusted earnings between $2.32 and $2.40 per share, up from a range of $2.15 to $2.25 per share. The company foresees revenue between about $4.2 billion and $4.3 billion. Its prior guidance called for revenue in a range of approximately $4 billion to $4.2 billion.

Analysts predict earnings of $2.26 per share on revenue of $4.18 billion.

"Given the results we believe the [U.S.] recovery is continuing very well," Holmes told CNBC.

The Associated Press contributed to this report.

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