# WYNDHAM HOTELS & RESORTS, INC. (WH) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from WYNDHAM HOTELS & RESORTS, INC.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1722684/000172268425000005/wh-20241231.htm
Accession: 0001722684-25-000005
Filing date: 2025-02-13
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/WH/
All MD&A years: /company/WH/mda/
Previous year: /company/WH/mda/fy2023/ (FY 2023)
Next year: /company/WH/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(Unless otherwise noted, all amounts are in millions, except share and per share amounts)

References herein to “Wyndham Hotels,” the “Company,” “we,” “our” and “us” refer to Wyndham Hotels & Resorts, Inc. and its consolidated subsidiaries.

The Company is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in over 95 countries around the world.

Our primary segment is hotel franchising which principally consists of licensing our lodging brands and providing related services to third-party hotel owners and others.

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Beginning with the first quarter of 2023, as a result of the changes in our Hotel Management segment including the exit from the select-service management business, the sale of our two owned hotels and the exit from substantially all of its U.S. full-service management business, the Hotel Management segment no longer met the quantitative thresholds to be disclosed as a reportable segment. As a result, we aggregated, on a prospective basis, the remaining hotel management business, which is predominately the full-service international managed business within our Hotel Franchising segment.

The Consolidated Financial Statements presented herein have been prepared on a stand-alone basis. The Consolidated Financial Statements include our assets, liabilities, revenues, expenses and cash flows and all entities in which we have a controlling financial interest.

SELECTED FINANCIAL DATA

The following selected historical consolidated statement of income/(loss) data for the years ended December 31, 2024, 2023 and 2022 and the selected historical consolidated balance sheet data as of December 31, 2024 and 2023 are derived from the audited Consolidated Financial Statements of Wyndham Hotels & Resorts included elsewhere in this report. The selected historical consolidated statement of income/(loss) data for the years ended December 31, 2021 and 2020 and the selected historical consolidated balance sheet data as of December 31, 2022, 2021 and 2020 are derived from audited consolidated financial statements of Wyndham Hotels & Resorts businesses that are not included in this report.

The selected historical consolidated financial data below should be read together with the audited Consolidated Financial Statements of Wyndham Hotels & Resorts, including the notes thereto and the other financial information included elsewhere in this report.

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[[GREPCENT_TABLE]]
[["","","As of or For the Year Ended December 31,"],["($ in millions, except per share amounts and RevPAR)","","2024","","2023","","2022","","2021","","2020"],["Statement of Income/(Loss) data:"],["Revenues"],["Fee-related and other revenues","","$","1,404","","","$","1,384","","","$","1,354","","","$","1,245","","","$","950"],["Cost reimbursement revenues","","","4","","","","13","","","","144","","","","320","","","","350"],["Net revenues","","","1,408","","","","1,397","","","","1,498","","","","1,565","","","","1,300"],["Expenses"],["Marketing, reservation and loyalty expense","","","564","","","","569","","","","524","","","","450","","","","419"],["Cost reimbursement expense","","","4","","","","13","","","","144","","","","320","","","","350"],["Other expenses","","","345","","","","312","","","","272","","","","349","","","","577"],["Total expenses","","","913","","","","894","","","","940","","","","1,119","","","","1,346"],["Operating income/(loss)","","","495","","","","503","","","","558","","","","446","","","","(46)"],["Interest expense, net","","","124","","","","102","","","","80","","","","93","","","","112"],["Early extinguishment of debt","","","3","","","","3","","","","2","","","","18","","","","\u2014"],["Income/(loss) before income taxes","","","368","","","","398","","","","476","","","","335","","","","(158)"],["Provision for/(benefit from) income taxes","","","79","","","","109","","","","121","","","","91","","","","(26)"],["Net income/(loss)","","$","289","","","$","289","","","$","355","","","$","244","","","$","(132)"],["Per share data:"],["Diluted earnings/(loss) per share","","$","3.61","","","$","3.41","","","$","3.91","","","$","2.60","","","$","(1.42)"],["Cash dividends declared per share","","","1.52","","","","1.40","","","","1.28","","","","0.88","","","","0.56"],["Balance Sheet data:"],["Cash","","$","103","","","$","66","","","$","161","","","$","171","","","$","493"],["Total assets (a)","","","4,223","","","","4,033","","","","4,123","","","","4,269","","","","4,644"],["Total debt (a)","","","2,463","","","","2,201","","","","2,077","","","","2,084","","","","2,597"],["Total liabilities (a)","","","3,573","","","","3,287","","","","3,161","","","","3,180","","","","3,681"],["Total stockholders\u2019 equity","","","650","","","","746","","","","962","","","","1,089","","","","963"],["Other financial data:"],["Royalties and franchise fees","","$","555","","","$","532","","","$","512","","","$","461","","","$","328"],["License and other fees","","","119","","","","112","","","","100","","","","79","","","","84"],["Total adjusted EBITDA (b)(c)","","","694","","","","659","","","","650","","","","590","","","","336"],["Operating statistics:"],["Total Company"],["Number of properties (d)","","","9,286","","","","9,178","","","","9,059","","","","8,950","","","","8,941"],["Number of rooms (e)","","","903,000","","","","871,800","","","","842,500","","","","810,100","","","","795,900"],["RevPAR (f)","","$","42.91","","","$","43.10","","","$","41.88","","","$","35.95","","","$","24.51"],["Average royalty rate (g)","","","3.95","%","","","3.89","%","","","3.94","%","","","4.06","%","","","3.97","%"],["United States"],["Number of properties (d)","","","5,979","","","","6,036","","","","6,081","","","","6,139","","","","6,175"],["Number of rooms (e)","","","501,800","","","","497,600","","","","493,800","","","","490,600","","","","487,300"],["RevPAR (f)","","$","50.37","","","$","50.42","","","$","50.72","","","$","45.19","","","$","30.20"],["Average royalty rate (g)","","","4.69","%","","","4.59","%","","","4.62","%","","","4.62","%","","","4.52","%"]]
[[/GREPCENT_TABLE]]

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(a)    Reflects the impact of the adoption of the new accounting standard in 2020 for the measurement of credit losses on financial instruments.

(b)    “Adjusted EBITDA” is defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. We believe that adjusted EBITDA is a useful measure of performance and, when considered with U.S. Generally Accepted Accounting Principles (“GAAP”) measures, gives a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Adjusted EBITDA is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. During the first quarter of 2021, the Company modified the definition of adjusted EBITDA to exclude the amortization of development advance notes

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to reflect how the Company’s chief operating decision maker reviews operating performance beginning in 2021. The Company has applied the modified definition of adjusted EBITDA to all periods presented.

(c)    The reconciliation of net income/(loss) to adjusted EBITDA is as follows:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

______________________

(a)    Adjusted EBITDA has been recasted to conform with the current year presentation. Amounts may not foot due to rounding.

(d)    Represents the number of affiliated hotels at the end of the period.

(e)    Represents the number of rooms at the end of the period which are (i) either under franchise and/or management agreements and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided.

(f)    Represents revenue per available room and is calculated by multiplying the average occupancy rate by the average daily rate.

(g)    Represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues.

In presenting the financial data above in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Financial Condition, Liquidity and Capital Resources–Critical Accounting Policies,” for a detailed discussion of the accounting policies that we believe require subjective and complex judgments that could potentially affect reported results.

RESULTS OF OPERATIONS

Discussed below are our key operating statistics, consolidated results of operations and the results of operations for our reportable segment. The reportable segment presented below represents our operating segment for which discrete financial information is available and used on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segment, we also consider the nature of services provided by our operating segment. Management evaluates the operating results of our reportable segment based upon net revenues and adjusted EBITDA. Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. Adjusted EBITDA is reported on a consolidated basis, as Hotel Franchising adjusted EBITDA and corporate adjusted EBITDA are reported at a segment level. We believe that Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are useful measures of performance and, when considered with U.S. Generally Accepted Accounting Principles (“GAAP”) measures, gives a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. Our presentation of Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

We generate royalties and franchise fees, management fees and other revenues from hotel franchising and hotel management activities, as well as fees from licensing our “Wyndham” trademark, certain other trademarks and intellectual property. In addition, pursuant to our franchise and management contracts with third-party hotel owners, we generate

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marketing, reservation and loyalty fee revenues and cost reimbursement revenues that over time are offset, respectively, by the marketing, reservation and loyalty costs and property operating costs that we incur.

Our Annual Report on Form 10-K for the year ended December 31, 2023 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2022 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

OPERATING STATISTICS - 2024 VS. 2023

The table below presents our operating statistics for the years ended December 31, 2024 and 2023. “Rooms” represent the number of hotel rooms at the end of the period which are either under franchise and/or management agreements and properties under affiliation agreements for which we receive a fee for reservation and/or other services provided. “RevPAR” represents revenue per available room and is calculated by multiplying average occupancy rate by average daily rate. “Average royalty rate” represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues. These operating statistics are drivers of our revenues and therefore provide an enhanced understanding of our business. Refer to the section below for a discussion as to how these operating statistics affected our business for the periods presented.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2024","","2023","","Change"],["Rooms"],["United States","501,800","","","497,600","","","1","%"],["International","401,200","","","374,200","","","7","%"],["Total rooms","903,000","","","871,800","","","4","%"],["RevPAR"],["United States","$","50.37","","","$","50.42","","","\u2014","%"],["International (a)","33.59","","","33.21","","","1","%"],["Global RevPAR (a)","42.91","","","43.10","","","\u2014","%"],["Average Royalty Rate"],["United States","4.69","%","","4.59","%","","10 bps"],["International","2.49","%","","2.37","%","","12 bps"],["Global average royalty rate","3.95","%","","3.89","%","","6 bps"]]
[[/GREPCENT_TABLE]]

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(a)Excluding currency effects, international RevPAR increased 8% and global RevPAR increased 2%.

Rooms as of December 31, 2024 increased 4% compared to the prior year, driven by 1% growth in the U.S. and 7% growth internationally. As expected, these increases included 4% growth in the higher RevPAR midscale and above segments in the U.S., along with 7% combined growth in our higher RevPAR EMEA and Latin America regions.

Excluding currency effects, global RevPAR for the year ended December 31, 2024 increased 2% compared to the prior year, including flat RevPAR in the U.S. due to stable occupancy and rate, and 8% growth internationally driven by sustained pricing power.

Global average royalty rate for the year ended December 31, 2024 was 3.95%. Global average royalty rate increased 6 basis points compared to the prior year, including 10 basis points in the U.S. and 12 basis points internationally.

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YEAR ENDED DECEMBER 31, 2024 VS. YEAR ENDED DECEMBER 31, 2023

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Net revenues during 2024 increased by $11 million, or 1%, compared to the prior year primarily driven by:

•$23 million of higher royalty and franchise fees primarily due to net room growth, as well as increased royalty rates and franchise fees; and

•$16 million of higher license and other ancillary revenues driven primarily by higher credit card and licensing fees; partially offset by

•$15 million of lower marketing, reservation and loyalty revenues primarily due to the absence of pass-through revenues associated with the 2023 global franchisee conference, partially offset by global net room growth;

•$9 million of lower cost-reimbursement revenues, which have no impact on net income; and

•$4 million of lower management fees, partially due to the exit of our U.S. management business.

Total expenses during 2024 increased $19 million, or 2%, compared to the prior year, primarily driven by:

•    $36 million of higher transaction-related expenses primarily due to the failed hostile takeover attempt in 2024;

•$15 million of restructuring costs; and

•$12 million of impairment charges primarily related to development advance notes; partially offset by

•$13 million of lower operating costs primarily due to lower foreign currency losses, primarily related to highly inflationary countries, and an insurance recovery;

•$10 million of lower separation-related costs, primarily due to the reversal of a reserve in 2024 related to the expiration of a tax matter associated with our spin-off;

•$9 million of lower cost-reimbursement expenses, which have no impact on net income;

•$5 million of lower marketing, reservation and loyalty expenses primarily due to the absence of $18 million in expenses related to the 2023 global franchisee conference, partially offset by higher 2024 spend driven by increased marketing revenue; and

•$5 million of lower depreciation and amortization.

Interest expense, net during 2024 increased $22 million, or 22%, compared to the prior year primarily due to a higher average debt balance.

Early extinguishment of debt was $3 million in both 2024 and 2023 related to the repricing and refinancing of our term loan B, respectively.

Our effective tax rate decreased to 21.5% in 2024 from 27.4% in 2023. During 2024, the effective tax rate was lower primarily due to tax credits received in Puerto Rico and a non-taxable reversal of a separation-related reserve. The 2023 effective tax rate was higher primarily from a foreign tax assessment that we are currently challenging.

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As a result of these items, net income during 2024 was unchanged year-over-year.

A reconciliation of net income to adjusted EBITDA for Hotel Franchising segment, Corporate and Total Company is represented below:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Following is a discussion of the results of our Hotel Franchising segment and Corporate for 2024 compared to 2023:

[[GREPCENT_TABLE]]
[["","Net Revenues","","Adjusted EBITDA"],["","2024","","2023","","% Change","","2024","","2023","","% Change"],["Hotel Franchising","$","1,408","","","$","1,397","","","1","%","","$","767","","","$","727","","","6","%"],["Corporate","\u2014","","","\u2014","","","\u2014","","","(73)","","","(68)","","","(7","%)"],["Total Company","$","1,408","","","$","1,397","","","1","%","","$","694","","","$","659","","","5","%"]]
[[/GREPCENT_TABLE]]

Hotel Franchising

Net revenues during 2024 increased $11 million, or 1% compared to the prior year as discussed above.

Adjusted EBITDA during 2024 increased $40 million compared to the prior-year period primarily driven by:

•$29 million of higher fee-related revenues, before development advance note amortization, as discussed above;

•$5 million of lower general and administrative costs primarily due to operational efficiencies and an insurance recovery; and

•$5 million of lower marketing, reservation and loyalty expenses primarily due to the absence of $18 million in expenses related to the 2023 global franchisee conference, partially offset by higher 2024 spend driven by increased marketing revenue.

Corporate

Adjusted EBITDA during 2024 was unfavorable by $5 million compared to the prior year.

DEVELOPMENT

On December 31, 2024, our global development pipeline consisted of approximately 2,100 hotels and 252,000 rooms, representing another record-high level and a 5% year-over-year increase, including 7% growth in the U.S and 4% internationally. Approximately 70% of our pipeline is in the midscale and above segments and 17% is in the extended stay segment. Approximately 58% of our pipeline is international. Additionally, approximately 78% of our pipeline is new construction, of which approximately 35% has broken ground.

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RESTRUCTURING

During 2024, we approved a restructuring plan focused on enhancing our organizational efficiency. As a result, during 2024, we incurred $15 million of restructuring expenses relating to 135 employees primarily in our Hotel Franchising segment. The following table presents activity for the year ended December 31, 2024:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

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(a)Reported within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

(b)Represents non-cash payments in Company stock.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Condition

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2024","","2023","","Change"],["Total assets","$","4,223","","","$","4,033","","","$","190"],["Total liabilities","3,573","","","3,287","","","286"],["Total stockholders\u2019 equity","650","","","746","","","(96)"]]
[[/GREPCENT_TABLE]]

Total assets increased $190 million from December 31, 2023 to December 31, 2024 primarily related to increases in development advance notes in support of our growth strategy, cash and accounts receivables. Total liabilities increased $286 million year-over-year primarily related to a $262 million increase in our outstanding debt. Total equity decreased $96 million year-over-year primarily due to $308 million of stock repurchases and $123 million of dividends declared, partially offset by our net income.

Liquidity and Capital Resources

Historically, our business generates sufficient cash flow to support current operations, future growth initiatives, and dividend payments to stockholders, while also enabling us to create additional value for our stockholders in the form of share repurchases.

As of December 31, 2024, our liquidity approximated $765 million. Given the minimal capital needs and flexible cost structure of our business, we believe that our existing cash, cash equivalents, cash generated through operations and our expected access to financing facilities, together with funding through our revolving credit facility, will be sufficient to fund our operating activities, anticipated capital expenditures and growth needs.

As of December 31, 2024, we were in compliance with the financial covenants of our credit agreement and expect to remain in such compliance. As of December 31, 2024, we had a term loan B with a principal outstanding balance of $1.5 billion maturing in 2030, a term loan A with a principal outstanding balance of $364 million maturing in 2027, $500 million senior unsecured notes due in August 2028 and a five-year revolving credit facility maturing in 2027 with a maximum aggregate principal amount of $750 million, of which $88 million was outstanding.

The interest rate per annum applicable to our term loan B is equal to, at our option, either a base rate plus an applicable rate of 0.75% or the Secured Overnight Financing Rate (“SOFR”) plus an applicable rate of 1.75%. Our revolving credit facility and term loan A are subject to an interest rate per annum equal to, at our option, either a base rate plus a margin ranging from 0.50% to 1.00% or SOFR plus a 0.10% SOFR adjustment, plus a margin ranging from 1.50% to 2.00%, in either case based upon our total leverage ratio and the total leverage of our restricted subsidiaries. As of December 31, 2024 the margin on our term loan A was 1.75%.

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As of December 31, 2024, we had pay-fixed/receive-variable interest rate swaps which hedge the interest rate exposure on $1.4 billion, effectively representing over 94% of the outstanding amount of our term loan B. The interest rate swaps have weighted average fixed rates (plus applicable spreads) ranging from 3.31% to 3.84% based on various effective dates for each of the swap agreements, with $475 million expiring in the fourth quarter of 2027, $600 million expiring in the second quarter of 2028 and $350 million expiring in the third quarter of 2028.

As of December 31, 2024, our credit rating was Ba1 from Moody’s Investors Service and BB+ from both Standard and Poor’s Rating Agency and Fitch Ratings. A credit rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity or any future credit rating. Our liquidity and access to capital may be impacted by our credit ratings, financial performance and global credit market conditions.

CASH FLOW

The following table summarizes the changes in cash, cash equivalents and restricted cash during the years ended December 31, 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

During 2024, net cash provided by operating activities decreased $86 million compared to the prior year primarily due to $47 million of transaction-related payments related to the unsuccessful hostile takeover attempt and $37 million of higher development advance notes provided to franchisees in support of system growth. Net cash used in investing activities decreased $1 million compared to the prior year primarily due to the purchase of our corporate headquarters, partially offset by lower loan advances. Net cash used in financing activities decreased $227 million compared to the prior year primarily due to $163 million of higher net debt borrowings, $83 million of lower stock repurchases and $22 million of stock options exercises, partially offset by a $34 million finance lease payment associated with the purchase of our corporate headquarters.

During 2023, net cash provided by operating activities decreased $23 million compared to the prior year primarily due to higher development advance notes provided to franchisees in support of system growth and higher interest expense, partially offset by higher cash generated from net income. Net cash used in investing activities was $66 million in 2023 compared to cash provided by investing activities of $179 million in 2022. The change of $245 million was primarily due to the absence of the proceeds received in 2022 from the sales of our owned hotels and the termination fee from CorePoint Lodging associated with the exit of our select-service management business. Net cash used in financing activities decreased $182 million compared to the prior year primarily due to $137 million of net borrowings primarily from our revolving credit facility, which was used for investments in the business and share repurchases. Stock repurchases decreased $55 million as 2022 benefited from the deployment of the proceeds received in connection with the sale of the owned hotels and exit of the select-service management business.

Capital Deployment

Our first priority is to invest in the business. This includes deploying capital to attract high quality assets into our system, investing in select technology improvements across our business that further our strategic objectives and competitive position, brand refresh programs to improve quality and protect brand equity, business acquisitions that are accretive and strategically enhancing to our business, and/or other strategic initiatives. We also expect to maintain a regular dividend payment. Excess cash generated beyond these needs is expected to be available for enhanced stockholder return in the form of stock repurchases.

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During 2024, we spent $34 million on capital expenditures, related to information technology, including digital innovation, and $15 million for the purchase of our corporate headquarters. During 2025, we anticipate spending approximately $40-45 million on capital expenditures.

In addition, during 2024, we invested $109 million in development advance notes (net of repayments), and we anticipate spending approximately $110 million on development advance notes in 2025. These investments play a crucial role in attracting higher “FeePAR” hotels into our system, strengthening our portfolio with more premium properties. We may also provide other forms of financial support, such as enhanced credit support, to drive our business growth and strengthen our competitive position.

We have outstanding development advances and loans with a large franchisee currently negotiating with its lenders regarding a potential sale of its business. Both the development advance notes and loans are secured with guarantees and collateral from our current franchisee, adding an additional layer of protection. The development advance notes and loans are expected to be assumed by the purchaser when the sale is finalized, which is expected by the end of February 2025, mitigating risk to our assets. However, if the sale does not proceed as planned, the franchisee’s lenders may seek concessions, which could require us to pursue the underlying guarantees and collateral and also impact the recoverability of a portion of our assets.

During 2024, we incurred $43 million of transaction-related costs associated with the failed hostile takeover attempt. During 2024, we paid $47 million, including amounts incurred in 2023, for this transaction.

We expect all our cash needs to be funded from cash on hand and cash generated through operations, and/or availability under our revolving credit facility.

Contractual Obligations

Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, purchase commitments and lease payments. See Note 11 - Long-Term Debt and Borrowing Arrangements and Note 18 - Leases to the Consolidated Financial Statements contained in Part IV of this report for more information. As of December 31, 2024, we had future long-term interest payment obligations of approximately $606 million, of which $132 million is payable within twelve months. As of December 31, 2024, we had purchase commitments primarily consisting of non-cancelable obligations for marketing and technology related services of $142 million, of which $72 million is payable within twelve months.

Stock Repurchase Program

In May 2018, our Board approved a share repurchase plan pursuant to which we were authorized to purchase up to $300 million of our common stock. Our Board has increased the capacity of the program by $300 million in 2019, $800 million in 2022, $400 million in 2023 and $400 million in 2024. Under the plan, we may, from time to time, purchase our common stock through various means, including, without limitation, open market transactions, privately negotiated transactions or tender offers, subject to the terms of the tax matters agreement entered into in connection with our spin-off.

Under our current stock repurchase program, we repurchased approximately 4.1 million shares at an average price of $75.63 for a cost of $308 million during 2024. Since inception of our stock repurchase program, we repurchased 24.8 million shares at an average price of $67.32 per share for a cost of $1.7 billion. As of December 31, 2024, we had $538 million of remaining availability under our program.

Dividend Policy

We declared cash dividends of $0.38 per share in each of the first, second, third and fourth quarters of 2024 ($123 million in aggregate). In January 2025, the Board approved an increase in the quarterly cash dividend to $0.41 per share.

The declaration and payment of future dividends to holders of our common stock is at the discretion of our Board and depends upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Foreign Earnings

Although the one-time mandatory deemed repatriation tax during 2017 and the territorial tax system created as a result of U.S. tax reform generally eliminate U.S. federal income taxes on dividends from foreign subsidiaries, we continue to assert

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that all of our undistributed foreign earnings of $143 million will be reinvested indefinitely as of December 31, 2024. In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes and U.S. taxes on currency transaction gains and losses, the determination of which is not practicable due to the complexities associated with the hypothetical calculation.

LONG-TERM DEBT COVENANTS

Our credit facilities contain customary covenants that, among other things, impose limitations on indebtedness; liens; mergers, consolidations, liquidations and dissolutions; dispositions, restricted debt payments, restricted payments and transactions with affiliates. Events of default in these credit facilities include, among others, failure to pay interest, principal and fees when due; breach of a covenant or warranty; acceleration of or failure to pay other debt in excess of a threshold amount; unpaid judgments in excess of a threshold amount; insolvency matters; and a change of control. The credit facilities require us to comply with a financial covenant to be tested quarterly, consisting of a maximum first-lien leverage ratio of 5.0 times. The ratio is calculated by dividing consolidated first lien indebtedness (as defined in the credit agreement) net of consolidated unrestricted cash as of the measurement date by consolidated EBITDA (as defined in the credit agreement), as measured on a trailing four-fiscal-quarter basis preceding the measurement date. As of December 31, 2024, our annualized first-lien leverage ratio was 2.7 times.

The indenture, as supplemented, under which the senior notes due 2028 were issued, contains covenants that limit, among other things, our ability and that of certain of our subsidiaries to (i) create liens on certain assets; (ii) enter into sale and leaseback transactions; and (iii) merge, consolidate or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.

As of December 31, 2024, we were in compliance with the financial covenants described above.

SEASONALITY

While the hotel industry is seasonal in nature, periods of higher revenues vary property-by-property and performance is dependent on location and guest base. Based on historical performance, revenues from franchise contracts are generally higher in the second and third quarters than in the first or fourth quarters due to increased leisure travel during the spring and summer months. Our cash from operating activities may not necessarily follow the same seasonality as our revenues and may vary due to timing of working capital requirements and other investment activities. The seasonality of our business may cause fluctuations in our quarterly operating results, earnings, profit margins and cash flows. As we expand into new markets and geographical locations, we may experience increased or different seasonality dynamics that create fluctuations in operating results different from the fluctuations we have experienced in the past.

COMMITMENTS AND CONTINGENCIES

We are involved in claims, legal and regulatory proceedings and governmental inquiries related to our business. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to us with respect to earnings and/or cash flows in any given reporting period. As of December 31, 2024, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $11 million in excess of recorded accruals. However, we do not believe that the impact of such litigation should result in a material liability to us in relation to our financial position or liquidity. For a more detailed description of our commitments and contingencies see Note 13 - Commitments and Contingencies to the Consolidated Financial Statements contained in Part IV of this report.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

In presenting our financial statements in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our business activities are in environments where we are paid a fee for a service performed, and therefore the results of the majority of our

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recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

Impairment of Long-Lived Assets

We evaluate goodwill and other indefinite and definite long-lived assets for impairment annually, or more frequently if circumstances indicate that an impairment has occurred prior to our annual assessment date. For goodwill, we may elect to perform this test through either a qualitative assessment or by utilizing a quantitative impairment test. We also evaluate the recoverability of each of our definite-lived intangible assets by performing a qualitative assessment to determine if circumstances indicate that impairment may have occurred. Such qualitative assessments require management judgement and include factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, our historical share price as well as other industry-specific considerations.

Application of a quantitative impairment assessment of our goodwill and other indefinite-lived intangible assets requires judgment in the assumptions used to determine fair value. The fair value of goodwill and each other indefinite-lived intangible asset is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which are dependent on internal forecasts, discount rates and to a lesser extent, estimation of long-term rates of growth. The estimates used to calculate the fair value of our goodwill and other indefinite-lived intangible assets change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of such fair values.

Loyalty Program

We operate the Wyndham Rewards loyalty program. Wyndham Rewards members primarily accumulate points by staying in hotels operated under one of our brands and by purchasing everyday services and products with their Wyndham Rewards co-branded credit card.

We earn revenue related to the issuance of these loyalty points from these programs which we recognize, net of redemptions, over time based upon loyalty point redemption patterns, including an estimate of loyalty points that will expire or will never be redeemed.

As members earn points through the Wyndham Rewards loyalty program, we record a liability for the estimated future redemption costs, which is calculated based on (i) an estimated cost per point and (ii) an estimated redemption rate of the overall points earned, which is determined with the assistance of a third-party actuarial firm through historical experience, current trends and the use of an actuarial analysis. The estimated cost per point and estimated redemption rate used in the determination of the liability for the estimated future redemption costs require management judgement. Changes in the estimated cost per point and/or the estimated redemption rate used in the determination of the liability could result in a material change to the liability recorded and our results of operations.

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.

For tax positions we have taken or expect to take in our tax return, we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold. A change in the assumptions and estimates utilized could materially impact our results of operations.

RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS

For a detailed description of recently adopted and new accounting pronouncements see Note 2 - Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in Part IV of this report.

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OFF-BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons in 2024, 2023 and 2022 that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.