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Press Release

Wyndham Worldwide Reports Second Quarter 2017 Results
Strong Top-Line Momentum
Increases Full-Year EPS Guidance
Announces Plan To Become Two Publicly Traded Hospitality Companies

PARSIPPANY, N.J., Aug. 2, 2017 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2017.  Earlier today the Company also announced its plan to separate into two publicly traded hospitality companies.

SECOND QUARTER 2017 OPERATING RESULTS
Second quarter revenues were $1.5 billion, up 5% compared with the prior year period. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.

Net income for the second quarter of 2017 was $78 million compared with $156 million for the second quarter of 2016, reflecting a non-cash impairment charge on the write-down of undeveloped land detailed in Table 7 of this press release.  Diluted earnings per share (EPS) were $0.75 compared with $1.39 for the prior year period.  

Adjusted net income for the second quarter of 2017, which excludes charges in both 2016 and 2017 as detailed in Table 7 of this press release, was $159 million compared with $156 million for the second quarter of 2016, reflecting strong top-line momentum across the Company, partially offset by a higher provision for loan losses and higher legal fees at Wyndham Vacation Ownership.  Adjusted diluted EPS was $1.53 compared with $1.40 per share in the prior year period, further reflecting the benefit of the Company's share repurchase program.      

Second quarter EBITDA was $214 million, compared with $340 million in the prior year period, reflecting the previously referenced non-cash impairment charge on the write-down of undeveloped land detailed in Table 8 of this press release.  Adjusted EBITDA, which excludes charges in both 2017 and 2016 as detailed in Table 8 of this press release, was $350 million, compared with $340 million in the prior year period, primarily reflecting strong top-line momentum across the Company, partially offset by a higher provision for loan losses and higher legal fees at Wyndham Vacation Ownership.  Adjusted EBITDA increased 4% on a currency-neutral basis.

"With summer closing in on the half-way point, all of our businesses are performing well," said Stephen P. Holmes, chairman and CEO. "Our hotel group is seeing constant currency RevPAR growth both domestically and internationally, our vacation rentals business is benefiting from continued strong booking trends, and sales sharply accelerated at our vacation ownership business as we continue to execute on our new owner growth strategy. This strong topline momentum further reflects how these businesses are poised for continued success as stand-alone public companies."

For the six months ended June 30, 2017, net cash provided by operating activities was $663 million, compared with $706 million in the prior year period. The decrease primarily reflects higher inventory spending and the timing of working capital.

Free cash flow was $581 million for the six months ended June 30, 2017, compared with $616 million for the same period in 2016, primarily reflecting the changes in net cash provided by operating activities.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

SECOND QUARTER 2017 BUSINESS UNIT RESULTS

Hotel Group
Revenues were $345 million in the second quarter of 2017, compared with $334 million in the second quarter of 2016.  EBITDA was $106 million in the second quarter compared with $101 million in the prior year quarter, growing 6% on a currency-neutral basis.  Results reflect higher franchise fees and growth in the Wyndham Rewards credit card program.  

Second quarter domestic same-store RevPAR increased 2.8% compared with the second quarter of 2016.  In constant currency, global system-wide, same-store RevPAR increased 3.3%.

As of June 30, 2017, the Company's hotel system consisted of over 8,100 properties and approximately 705,700 rooms, a 3.3% net room increase compared with the second quarter of 2016.  The development pipeline increased to nearly 1,230 hotels and over 150,800 rooms, an 18% year-over-year room increase, of which 57% were international and 67% were new construction.

Destination Network
Revenues were $405 million in the second quarter of 2017, compared with $384 million in the second quarter of 2016, an increase of 5%.  

Vacation rental revenues were $220 million compared with $202 million in the prior year quarter.  In constant currency and excluding acquisitions, vacation rental revenues increased 9%, reflecting a 7.8% increase in transaction volume and a 0.9% increase in the average net price per rental.  Transaction volume benefited from capacity increases across the Company's European brands and the favorable impact from the timing of the Easter holiday.  

Exchange revenues were $159 million, an increase of 1% in constant currency compared with the prior year quarter.  Exchange revenue per member increased 2.4% and the average number of members declined 1.7%.

EBITDA was $89 million in the second quarter of 2017, a 5% increase compared with the second quarter of 2016.  On a currency-neutral basis and excluding the impact of acquisitions, EBITDA increased 6%, reflecting stronger performance in our vacation rental brands, which benefited from the favorable impact of the timing of the Easter holiday, as well as the reversal of a previously recorded value-added tax reserve.

Vacation Ownership
Revenues increased 6% to $750 million in the second quarter of 2017, compared with $705 million in the second quarter of 2016.  The increase reflects an increase in gross VOI sales of 9% as well as higher consumer financing revenues, partially offset by a higher provision for loan losses.

Tour flow increased 10.3% driven by increased tours to new owners.  Volume per guest (VPG) declined 1.1%, primarily reflecting a 14% increase in sales to new owners in North America, which produce a lower VPG. 

EBITDA was $47 million in the second quarter of 2017 compared with $187 million in the prior year quarter.  The EBITDA decline reflects the previously mentioned impairment charge on the write-down of undeveloped land as detailed in Table 8 of this press release.  Adjusted EBITDA was $183 million in the second quarter of 2017, a 2% decline compared with the second quarter of 2016.  Results reflect the increase in revenues, offset by higher legal expenses and the absence of a $4 million benefit from business interruption insurance claims received in the second quarter of 2016.

OTHER ITEMS

  • The Company repurchased 1.6 million shares of common stock for $150 million during the second quarter of 2017 at an average price of $95.82.  From July 1 through August 1, 2017, the Company repurchased an additional 0.5 million shares for $50 million
  • Net interest expense in the second quarter of 2017 was $37 million compared with $32 million in the second quarter of 2016, reflecting the issuance of a $300 million 4.15% 7-year unsecured note and $400 million 4.50% 10-year unsecured note in March.
  • Depreciation and amortization in the second quarter of 2017 was $66 million, compared with $63 million in the second quarter of 2016, as additional long-term projects came into service. 

Balance Sheet Information as of June 30, 2017:

  • Cash and cash equivalents of $415 million, compared with $185 million at December 31, 2016
  • Vacation ownership contract receivables, net of $2.8 billion, unchanged from December 31, 2016
  • Vacation ownership and other inventory of $1.3 billion, compared with $1.4 billion at December 31, 2016
  • Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2016
  • Long-term debt of $3.7 billion, compared with $3.4 billion at December 31, 2016. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of June 30, 2017, unchanged from December 31, 2016.

A schedule of debt is included in Table 12 of this press release.

OUTLOOK

Note to Editors: The guidance excludes possible future share repurchases, while analysts' estimates often include projected share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.

The Company provides the following guidance for the full year 2017:

  • Reiterates revenues of approximately $5.80 billion to $5.95 billion
  • Reiterates adjusted net income of approximately $631 million to $652 million
  • Reiterates adjusted EBITDA of approximately $1.41 billion to $1.44 billion
  • Updates adjusted diluted EPS to approximately $6.04 to $6.24 based on a diluted share count of 104.5 million from $5.98 to $6.18 based on a diluted share count of 105.5 million

In determining adjusted net income, adjusted EBITDA and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EBITDA and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted. See Table 10 for certain non-GAAP information concerning the outlook period.

The Company will post full guidance information on its website following the conference call.

CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance, as well as its plan to become two publicly traded companies, on Thursday, August 3, 2017 at 8:30 a.m. ET. Listeners can access the webcast live through the Company's website at http://www.wyndhamworldwide.com/investors/.  The conference call may also be accessed by dialing 800-862-9098 and providing the pass code "WYNDHAM."  Listeners are urged to call at least 10 minutes prior to the scheduled start time.  An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00 p.m. ET on August 3, 2017.  A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on August 3, 2017 at 800-695-2533.

PRESENTATION OF FINANCIAL INFORMATION
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company's ongoing operating performance.  Exclusion of items in the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring.  Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of the press release.

ABOUT WYNDHAM WORLDWIDE
Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates welcomes people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company's re-imagined guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. For more information, please visit www.wyndhamworldwide.com.

FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham Worldwide makes the statements and may be identified by terminology such as "will," "expect," believe," "plan," "anticipate," "goal," "future," "outlook," guidance," "target," "estimate" and similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Worldwide or the post-spin companies to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company's revenues, earnings, cash flow, related financial and operating measures and expectations with respect to the spin off and related transactions, as well as the post-spin companies' future operating, financial and business performance.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.  Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, uncertainties that may delay or negatively impact the spin off or cause the spin off to not occur at all, uncertainties related to the post-spin companies' ability to realize the anticipated benefits of the spin off, uncertainties related to Wyndham Worldwide's ability to successfully complete the spin off on a tax-free basis within the expected time frame or at all, unanticipated developments that delay or otherwise negatively affect the spin off, uncertainties related to Wyndham Worldwide's ability to obtain financing for the two companies or the terms of such financing,  unanticipated developments related to the impact of the spin off on our relationships with our customers, suppliers, employees and others with whom we have relationships, unanticipated developments resulting from possible  disruption to our operations resulting from the proposed spin-off, the potential impact of the spin-off and related transactions on Wyndham Worldwide's credit rating, uncertainties relating to Wyndham Worldwide's exploration of strategic alternatives for its European rentals brands and the outcome and timing of that process, as well as those factors described in Wyndham Worldwide's Annual Report on Form 10-K, filed with the SEC on February 17, 2017, and in Wyndham Worldwide's subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except for Wyndham Worldwide's ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

 

Wyndham Worldwide Corporation
Earnings Release Schedules

Quarter Two - June 30, 2017

Table of Contents




Table No.



Consolidated Statements of Income (Unaudited)

1



Operating Results of Reportable Segments

2



Operating Statistics

3



Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flows (Unaudited)

4



Revenue Detail by Reportable Segment

5



Brand System Details

6



Non-GAAP Reconciliation of Adjusted Net Income and EPS

7



Non-GAAP Reconciliation of Adjusted EBITDA by Reportable Segment

8



Non-GAAP Reconciliation of Gross VOI Sales

9



Non-GAAP Reconciliation of 2017 Outlook

10



Non-GAAP Reconciliation - Constant Currency, Currency Neutral and Acquisitions

11



Schedule of Debt

12



 















Table 1

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)



































 Three Months Ended 


 Six Months Ended 





 June 30, 


 June 30, 





2017


2016


2017


2016

Net revenues














Service and membership fees


$

653


$

632


$

1,289


$

1,266


Vacation ownership interest sales



448



409



798



750


Franchise fees



177



172



318



310


Consumer financing



114



108



224



215


Other




87



82



169



165

Net revenues



1,479



1,403



2,798



2,706
















Expenses















Operating



654



622



1,254



1,236


Cost of vacation ownership interests 



38



32



75



68


Consumer financing interest



19



19



37



36


Marketing and reservation



231



211



426



403


General and administrative



191



185



383



372


Asset impairments 



135



-



140



-


Restructuring



-



-



7



-


Depreciation and amortization



66



63



128



125

Total expenses



1,334



1,132



2,450



2,240
















Operating income



145



271



348



466

Other (income)/expense, net



(3)



(6)



(4)



(16)

Interest expense



39



34



73



68

Early extinguishment of debt



-



-



-



11

Interest income



(2)



(2)



(4)



(4)
















Income before income taxes



111



245



283



407

Provision for income taxes



33



89



64



156

Net income



$

78


$

156


$

219


$

251
















Earnings per share














Basic



$

0.75


$

1.40


$

2.10


$

2.25


Diluted



0.75



1.39



2.09



2.23
















Weighted average shares outstanding














Basic




104



111



104



112


Diluted



104



112



105



113

 

 














Table 2















(1 of 2)


Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)































In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and "EBITDA", which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Company's Consolidated Statements of Income.  The Company also uses adjusted EBITDA as a financial measure of its operating performance.  The Company believes that EBITDA and adjusted EBITDA are useful measures of assessing performance of the Company and for the Company's segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to assess our operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  The Company's presentation of EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.






















The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile Net Income to EBITDA for the three months ended June 30, 2017 and 2016:




















Three Months Ended June 30, 





2017


2016





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

345


$

106


$

334


$

101


Destination Network


405



89



384



85


Vacation Ownership


750



47



705



187


     Total Reportable Segments


1,500



242



1,423



373


Corporate and Other (a)


(21)



(28)



(20)



(33)


     Total Company

$

1,479


$

214


$

1,403


$

340

















Reconciliation of Net Income to EBITDA


































 Three Months Ended June 30,  








2017





2016


Net income





$

78





$

156


Provision for income taxes





33






89


Depreciation and amortization





66






63


Interest expense





39






34


Interest income





(2)






(2)


EBITDA





$

214





$

340
































Note: Amounts may not add due to rounding. 


(a)  Includes the elimination of transactions between segments.  
















The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the three months ended June 30, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):





















Three Months Ended June 30, 





2017


2016







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

345


$

106


$

334


$

101


Destination Network


405



89



384



85


Vacation Ownership


750



183



705



187


     Total Reportable Segments


1,500



378



1,423



373


Corporate and Other (a)


(21)



(28)



(20)



(33)


     Total Company

$

1,479


$

350


$

1,403


$

340

















 














Table 2














(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)





























The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham shareholders for the six months ended June 30, 2017 and 2016:



















Six Months Ended June 30, 





2017


2016





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

643


$

191


$

629


$

185


Destination Network


797



191



768



166


Vacation Ownership


1,399



166



1,345



323


     Total Reportable Segments


2,839



548



2,742



674


Corporate and Other (a)


(41)



(68)



(36)



(67)


     Total Company

$

2,798


$

480


$

2,706


$

607

















Reconciliation of Net income


































Six Months Ended June 30, 








2017





2016


Net income





$

219





$

251


Provision for income taxes





64






156


Depreciation and amortization





128






125


Interest expense





73






68


Early extinguishment of debt





-






11


Interest income





(4)






(4)


EBITDA





$

480





$

607
































Note: Amounts may not add due to rounding. 


(a)   Includes the elimination of transactions between segments.  





The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the six months ended June 30, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):





















Six Months Ended June 30, 





2017


2016







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

643


$

192


$

629


$

185


Destination Network


797



191



768



190


Vacation Ownership


1,399



306



1,345



323


     Total Reportable Segments


2,839



689



2,742



698


Corporate and Other (a)


(41)



(62)



(36)



(66)


     Total Company

$

2,798


$

627


$

2,706


$

632

















 

















Table 3

















(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS


















The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:
























Year


Q1


Q2


Q3


Q4


Full Year

Hotel Group(a)













Number of Rooms 

2017


699,800


705,700


 N/A 


 N/A 


 N/A 



2016


679,100


683,300


689,800


697,600


 N/A 



2015


667,400


668,500


671,900


678,000


 N/A 



2014


646,900


650,200


655,300


660,800


 N/A 















RevPAR

2017

$

31.73

$

39.43

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

31.59

$

39.10

$

43.04

$

32.92

$

36.67



2015

$

32.84

$

39.82

$

43.34

$

32.98

$

37.26



2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57














Destination Network













Average Number of Members (in 000s)

2017


3,817


3,791


 N/A 


 N/A 


 N/A 



2016


3,841


3,857


3,868


3,843


3,852



2015


3,822


3,831


3,835


3,836


3,831



2014


3,727


3,748


3,777


3,808


3,765















Exchange Revenue Per Member

2017

$

192.01

$

168.27

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

189.78

$

164.61

$

164.39

$

151.19

$

167.48



2015

$

194.06

$

167.81

$

163.38

$

152.00

$

169.29



2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12















Vacation Rental Transactions (in 000s) (a) (b)

2017


538


461


 N/A 


 N/A 


 N/A 



2016


500


409


508


350


1,767



2015


459


390


462


319


1,630



2014


429


376


455


293


1,552















Average Net Price Per Vacation Rental(a) (b)

2017

$

343.07

$

476.72

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

366.08

$

492.83

$

599.59

$

430.14

$

475.24



2015

$

361.20

$

513.14

$

642.00

$

452.19

$

494.92



2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95














Vacation Ownership (a)













Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)

2017

$

439,000

$

563,000

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

428,000

$

518,000

$

564,000

$

502,000

$

2,012,000



2015

$

390,000

$

502,000

$

565,000

$

507,000

$

1,965,000



2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000















Tours (in 000s)

2017


176


235


 N/A 


 N/A 


 N/A 



2016


179


213


230


197


819



2015


168


206


227


200


801



2014


170


208


225


191


794















Volume Per Guest (VPG)

2017

$

2,354

$

2,302

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

2,244

$

2,328

$

2,320

$

2,399

$

2,324



2015

$

2,177

$

2,353

$

2,354

$

2,390

$

2,326



2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257


















Note: Full year amounts may not add across due to rounding.

(a)

Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:
























Year


Q1


Q2


Q3


Q4


Full Year


Vacation Rental Transactions (in 000s)

2014


429


367


431


292


1,518


Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93



































(c)

Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).








































ADDITIONAL DATA
































Year


Q1


Q2


Q3


Q4


Full Year

Hotel Group













Number of Properties

2017


8,080


8,140


 N/A 


 N/A 


 N/A 



2016


7,830


7,880


7,930


8,040


 N/A 



2015


7,670


7,700


7,760


7,810


 N/A 



2014


7,500


7,540


7,590


7,650


 N/A 














Vacation Ownership













Provision for Loan Losses (in 000s) (*) 

2017

$

85,000

$

110,000

$

 N/A 

$

 N/A 

$

 N/A 



2016

$

63,000

$

90,000

$

104,000

$

86,000

$

342,000



2015

$

46,000

$

60,000

$

78,000

$

64,000

$

248,000



2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000


















Note: Full year amounts may not add across due to rounding.

(*)

Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

 

















Table 3


















(2 of 2)




















Wyndham Worldwide Corporation


OPERATING STATISTICS




GLOSSARY OF TERMS




















Hotel Group




















Number of Rooms: Represents the number of rooms at hotel group properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided. 





















Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.




















Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day. 




















RevPAR:  Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods.





















Destination Network




















Average Number of Members:  Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.






















Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period. 





















Vacation Rental Transactions:  Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through one of our vacation brands. One rental transaction is recorded for each standard one-week rental.





















Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions.





















Vacation Ownership




















Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. We believe gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.





















Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.




















Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours.  The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel.  See Table 9 for a detail of tele-sales upgrades for 2014-2017. 






















General




















Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation).




















Currency-Neutral: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).



 








Table 4

Wyndham Worldwide Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS

(In millions)

(Unaudited)

















Condensed Consolidated Statements of Cash Flows:










Six Months Ended June 30, 




2017


2016

Net cash provided by operating activities


$

663


$

706









Net cash used in investing activities



(133)



(140)









Net cash used in financing activities



(309)



(251)









Effect of changes in exchange rates on cash and cash equivalents



9



(8)









Net increase in cash and cash equivalents


$

230


$

307

















Free Cash Flow:
















We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.


We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measures of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.


The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:

 




Six Months Ended June 30, 




2017


2016

Net cash provided by operating activities


$

663


$

706

Less: Property and equipment additions



(82)



(90)

Free cash flow



$

581


$

616

 

























Table 5


























Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)























































2017


2016






 Q1 


 Q2 


 Q3 


 Q4 


 Year 



 Q1 


 Q2 


 Q3 


 Q4 


 Year 

Hotel Group
























Royalties and Franchise Fees


$

79

$

98


 N/A 


 N/A 


 N/A 


$

74

$

94

$

105

$

94

$

367


Marketing, Reservation and Wyndham Rewards Revenues (a)


83


106


 N/A 


 N/A 


 N/A 



83


103


125


92


405


Hotel Management Reimbursable Revenues (b)


66


69


 N/A 


 N/A 


 N/A 



67


71


67


65


271


Intersegment Trademark Fees



13


15


 N/A 


 N/A 


 N/A 



13


15


16


14


56


Owned Hotel Revenues



23


21


 N/A 


 N/A 


 N/A 



27


19


17


17


81


Ancillary Revenues (c)



34


36


 N/A 


 N/A 


 N/A 



31


32


34


34


129


Total Hotel Group



298


345


 N/A 


 N/A 


 N/A 



295


334


364


316


1,309


























Destination Network
























Exchange Revenues



183


159


 N/A 


 N/A 


 N/A 



182


159


159


145


645


Rental Revenues



184


220


 N/A 


 N/A 


 N/A 



183


202


304


151


840


Ancillary Revenues (d)



24


26


 N/A 


 N/A 


 N/A 



20


23


23


21


86


Total Destination Network



391


405


 N/A 


 N/A 


 N/A 



385


384


486


317


1,571


























Vacation Ownership
























Vacation Ownership Interest Sales



351


448


 N/A 


 N/A 


 N/A 



342


409


441


415


1,606


Consumer Financing



111


114


 N/A 


 N/A 


 N/A 



107


108


112


113


440


Property Management Fees and Reimbursable Revenues


175


175


 N/A 


 N/A 


 N/A 



164


161


168


168


660


WAAM Fee-for-Service Commissions


2


4


 N/A 


 N/A 


 N/A 



17


16


13


-


46


Ancillary Revenues (e)



9


9


 N/A 


 N/A 


 N/A 



11


11


10


9


42


Total Vacation Ownership



648


750


 N/A 


 N/A 


 N/A 



641


705


744


705


2,794

Total Reportable Segments


$

1,337

$

1,500


 N/A 


 N/A 


 N/A 


$

1,321

$

1,423

$

1,594

$

1,338

$

5,674























































2015


2014






 Q1 


 Q2 


 Q3 


 Q4 


 Year 



 Q1 


 Q2 


 Q3 


 Q4 


 Year 

Hotel Group
























Royalties and Franchise Fees


$

74

$

96

$

103

$

87

$

361


$

68

$

88

$

100

$

83

$

339


Marketing, Reservation and Wyndham Rewards Revenues (a)


96


108


112


92


407



76


101


117


91


385


Hotel Management Reimbursable Revenues (b)


61


71


73


68


273



37


39


39


39


154


Intersegment Trademark Fees



12


15


16


15


57



9


11


11


10


41


Owned Hotel Revenues



25


20


16


19


79



24


20


18


20


81


Ancillary Revenues (c)



24


24


37


33


120



23


24


30


24


101


Total Hotel Group



292


334


357


314


1,297



237


283


315


267


1,101


























Destination Network
























Exchange Revenues



185


161


157


146


649



187


168


162


150


667


Rental Revenues



166


200


296


144


807



176


217


331


144


868


Ancillary Revenues (d)



18


22


23


20


82



16


17


19


17


69


Total Destination Network



369


383


476


310


1,538



379


402


512


311