Wyndham Hotels & Resorts, Inc.

Stand by, your program is about to begin. Welcome to the Wyndham Hotels and Resorts second quarter 2021 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations.

Thank you, operator. Good morning, and thank you for joining us. With me today are Jeff Pilotti, our CEO, and Michelle Allen, our CFO. Before we get started, I want to remind you that our remarks today will contain forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These risk factors are discussed in detail in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the SEC. We will also be referring to a number of non-GAAP measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided in our earnings release. which is available on our investor relations website at investor.windomhotels.com. We are providing certain measures discussing future impact on a non-GAAP basis only because without unreasonable efforts, we are unable to provide the comparable GAAP metric. In addition, last evening, we posted our investor presentation containing supplemental information on our investor relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC, and any public conference calls or webcasts. With that, I will turn the call over to Jeff.

Thanks, Matt, and thanks, everyone, for joining us this morning. We were very pleased with our second quarter performance, where global rev par increased 110% versus last year, and where our domestic economy rev par exceeded 2019 by nearly 4%. increasing every month versus both last year and the year prior for the month of june not only did domestic economy rep part increased 680 basis points compared to june of 2019 but overall domestic system including our many upscale and upper upscale brands exceeded june of 2019 by 70 basis points this was the first month that this has occurred since back in february of 2020. With improving leisure demand combined with the continued market share outperformance of our brands and the structural cost savings from our 2020 organizational restructuring, we generated $168 million of adjusted EBITDA, which was more than we generated in the second quarter of 2019. We delivered another clean quarter on both the P&L and cash flow fronts, with free cash flow this quarter of $104 million, increasing $264 million from the second quarter of 2019. we opened 9,800 rooms, which was nearly 30 percent more rooms than we opened in the first quarter and over 70 percent more rooms than we opened last year. With strategic removals of non-profitable licensees now behind us, terminations were 57 percent lower than last year. We awarded 154 new hotel agreements, which was over 30 percent more than last year and only 10 percent below the number of contracts we awarded in the second quarter of 2019. The continued pickup in our development team successes around the world resulted in 170 basis points of sequential pipeline growth and 580 basis points of year-over-year growth in our development pipeline, which climbed to over 190,000 rooms at the end of June. Leisure demand for our brands across the United States is robust, with nine out of 10 of our guests driving to our hotels this quarter. Booking windows continue to expand, and average rates of stay once again grew, fueled by several important factors that we believe will propel us not only through 2021, but also for the foreseeable future. First, household savings have hit a 10-year high, with most consumers improving their financial situation during the pandemic. They're also ranking travel as a top priority of discretionary spending. Second, we're also seeing consumers vacation more often. Survey tracking post-stay data reveal that approximately 60% of our customers have already stayed in a hotel in 2021, with nearly 70% planning a trip over the next 90 days. This intent to travel among our leisure customers is higher than it was a year ago. Weekend and short four-night breaks generated the largest percentage of our guest leisure stays, followed by travel to visit family and friends. We also saw sequential growth throughout the second quarter in our over five-night vacation stays, along with stays associated with sporting events and competitions. The 800 million vacation days that the U.S. Travel Association has long reported go unused every year may now actually be consumed. And with hybrid work-from-anywhere flexibility, we believe new consumer travel patterns could disrupt the traditional revenue management models that have historically seen Sunday and Monday as the lowest demand nights. In fact, this is exactly what we're experiencing right now, with Sunday and Monday occupancy having picked up 10 points of growth in Q2 versus Q1 as compared to 2019. The strong demand we saw during spring break and Memorial Day weekend did not fall off or slow down for our brands. Occupancy in the U.S. improved nearly 600 basis points in June compared to May, While June domestic REVPAR grew nearly 80% to 2020 and was up 1% to 2019. June was also the third consecutive month that our economy brands exceeded 2019 levels with a 7% REVPAR increase versus 2019. The week leading in to July 4th was our busiest independent holiday week on record. And for the past three weeks, domestic REVPAR is up 75% month to date versus last year and up a remarkable 7% versus 2019. Our franchisees are naturally feeling considerably more confident than they were at the end of last year. For the first time since 2019, we had no STR markets this quarter with occupancies lower than 30%. And with Sunday and Thursday nights now rivaling Friday and Saturday nights from an occupancy improvement standpoint and overall occupancy at or approaching 2019 levels, our franchisees have been driving average daily rate. In June, Domestic ADR exceeded 2019 by 9%, and this has only accelerated in July, with month-to-date ADR surpassing 2019's ADR by 10%. Our teams have provided more training than ever on the importance of driving average rate over occupancy, particularly in this challenging labor environment, and ensuring that our franchisees are taking advantage of the suite of a la carte revenue management and technology tools and services that we provide to them. All of this has helped lead to continued outsized rate gain index that have fueled the market share premiums our brands have continued to deliver. Market share for the quarter versus 2019 grew by nearly 300 basis points. We continue to see our hotels benefiting from a greater share of direct bookings from Wyndham Channels compared to 2019. Contribution from direct bookings increased from 500 basis points of growth in Q1 to 600 basis points in Q2, once again outpacing the growth of OTA and third-party channels. Our award-winning Wyndham Hotels and Resorts mobile app continues to be our fastest-growing direct booking channel, with second-quarter reservations up approximately 60% versus 2019. Wyndham Rewards is also contributing to the significant growth in direct bookings. Last month, Forbes magazine called it, quote, one of the simplest rewards programs worth studying given its simplicity and sheer number of redemption opportunities. Wyndham Rewards' share of occupancy grew 500 basis points domestically and over 550 basis points globally from where it was at the end of the second quarter, 2019, proving the increasing preference for both the program and for our brands, with nearly one out of every two domestic guests asking for their Wyndham Rewards points at check-in. We will continue to build on this affinity throughout the remainder of the busy summer season, targeting longer weekend getaways and midweek leisure vacations with incentives to non-members to book direct, to stay longer, and to enroll and win the rewards. We have seen measurable success and tremendous opportunity ahead in attracting more non-members with our nation's 150 million Gen Z, millennial, and Gen X travelers who collectively have $350 billion of disposable income to spend. These next-generation consumers are the most eager to vacation, with nearly 40% identifying budget-friendly as a key consideration. This younger demographic now represents our number one segment from a demand standpoint and has grown from 62% of arrivals in 2019 to 65% of arrivals year-to-date. We believe that continuing to expand our marketing funnels to cast a wider net to target these younger consumers with data-led engagement strategies and closed user group loyalty incentives will allow us to continue to grow member enrollments as we aim to drive more than 50% of the nightly check-ins through non-OTA commissionable channels. Consistent with the boom of leisure travel, demand from our infrastructure, construction, and logistics accounts continue to outperform the broader white-collar business transient and group segments. We're seeing increasing demand from our general infrastructure segment, which increased 23% from 2019, our logistics and trucking segment up 11% from 2019, And we continue to believe that business provided to our hotels from small and medium-sized companies in these industries will grow at a faster rate in the coming years than business from corporate, group, and convention travel, which our small business owners largely do not rely on, and which have historically accounted for less than 5% of our room nights domestically. Net room growth continued to be strong, especially in China, where our direct franchising business has now grown 7% on a year-to-date basis. This growth included two new additions to our Wyndham Garden brand, an outstanding conversion from a competitor of the newly constructed Wyndham Garden Chang Bai Shan Hot Spring Resort, and this stunning new construction, Wyndham Garden Nanjing Airport, close to the Ming Tomb and Confucius Temple. Southeast Asian, the Pacific Rim, and Latin America have each now grown their respective rim counts by 2% year-to-date, including the launch of our first Ramada Encore in Malaysia, the opening of two new Ramadas in New Zealand, including our first in its capital city of Wellington, and the introduction of our first registry collection hotel, the Grand Residences in Puerto Morelos, Mexico, which converted from a luxury competitor. And despite the persistent travel restrictions for our developers across many European countries, our team there has still achieved a positive 1% net room growth in this region year to date, including the opening of our first La Quinta in the heart of the United Emirates in Dubai and our first Days Inn in Istanbul. Here in the United States, our franchise operations and support teams continue to build on the first quarter momentum, adding over 30% more rooms in the second quarter than in the first, and nearly 85% more rooms than last year, including the Bay Hotel San Francisco, another conversion for the trademark collection, located in the heart of the city by the financial district in Union Square, and the new construction La Quinta Nashville downtown, directly across the street from Nissan Stadium, home to the Tennessee Titans. Year-to-date additions, as expected, are now trending at 63% of 2019 levels and 46% higher than last year, while year-to-date terminations are trending 49% better than last year and 27% better than 2019. With continued momentum on both the room openings and retention fronts, we are seasonally on pace with our full-year net rooms growth guidance. Our domestic pipeline increased 70 basis points sequentially and 590 basis points year-over-year, Internationally, our pipeline grew 230 basis points sequentially and 580 basis points versus the same time last year with double-digit year-over-year growth in our China, in our Latin America, and in our Europe, Middle East, Eurasia, and Africa pipelines. As expected, conversion activity continued to accelerate. We awarded approximately 25% more conversion contracts than we awarded both in the second quarter of 2020 and in the first quarter of this year. Despite a more muted new construction environment, our team successfully executed over 90 new construction contracts in the quarter, 20% more than we awarded in 2019, bringing the total of new construction contracts signed to over 390 since the onset of the global pandemic. Before handing the call over to Michelle, I'd like to acknowledge our team members for what they've been able to achieve on the ESG front. ISS has recognized our team's best-in-class level of disclosure and mitigated risk on both our social and environmental standings, with their highest 1 out of 10 quality score rating. And for the second year in a row, Diversity, Inc. has again recognized Wyndham Hotels and Resorts as a 2021 noteworthy company. All of us would also like to thank our franchisees of over 850 hotels who, despite the pandemic, have increased enrollments by over 75% since last quarter in our proprietary online environmental management system, the Wyndham Green Toolbox, to track, to measure, and to report the progress they've been making on their energy, emissions, water, and waste diversion efforts. And with that, I'll now turn the call over to Michelle. Michelle?