Wyndham Hotel Group
Steven A. Rudnitsky President & CEO
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2 Strategic Overview
Wyndham Hotel Group has evolved from a U.S. economy-centric franchise business to an integrated, multi-segment, international franchise and management company. 2002 2003 2004 2005 2006
Project Restore Revamped QA/ Rate and Inventory Processes Introduced Field Support Organization Strategic Evolution
Leading Economy segment player
Maximize core brand operating performance
International expansion
Upscale management company capabilities
For every kind of traveler. For every kind of trip. 3 Global Brand Portfolio
North America North America Brands International International Segments Segments Brands Upper Upscale Wyndham Grand Luxury Wyndham Grand Collection Collection Wyndham Hotels and Resorts Upscale Wyndham Garden Inn First Class Wyndham Hotels and Resorts
Mid-scale Wingate Inn Mid-Market Ramada Ramada Howard Johnson Baymont/AmeriHost Inn Howard Johnson Economy Days Inn Budget/Economy Days Inn Super 8 Super 8 Travelodge Knights Inn
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4 Customer Value Proposition
Brand strength Three of 10 brands have consumer awareness over 90% Consumer database with over 70 million names Breadth of brands provides range of franchising options Worldwide distribution in all key regions Brand growth, domestically and internationally Super 8 and Days Inn: 35% of Economy segment; 100+ RevPAR index Ramada International: opened more than 7,000 rooms since December 2004 acquisition Ability to drive revenue TripRewards members generate 26% of all consumed nights Reservation contribution at approximately 30% Field staff providing operational and revenue management support Brand Web sites: projected 50 million visitors, 17% revenue growth year-over-year through web reservations Leverage scale and efficiencies Central reservations system Information Technology, franchise support infrastructure Marketing and worldwide sales RCI worldwide footprint
For every kind of traveler. For every kind of trip. 5 Franchise Hotel Model
Weighted Average 365 Royalty Average XXOccupancy XRoyalty Rate X = Rooms Daily Rate Days Revenues
“RevPAR”
Weighted Marketing & Marketing & Average 365 Average Occupancy Reservation Reservation XXDaily Rate XX Days = Rooms Rate Revenues
Marketing & Royalty Reservation Operating Revenues + X 0% + Other Revenue – = EBITDA Revenues Expenses
•TripRewards •Management Fees •Reimbursable Costs •Initial Fees
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6 Performance
+8.4% RevPAR CAGR over the past four years • +6.3% CAGR for the industry 2002 2006E Baymont Improvement Franchise sales Project Restore Ongoing Operational International development Wyndham Hotels and Resorts
QA RevPAR $25.33 $35.00 Royalty/Mktg. and Res. Revenue ($M) $366 $465 - $475 EBITDA ($M) $162 $200 - $210
For every kind of traveler. For every kind of trip. 7 Performance
Wyndham Hotel Group has exceeded Economy segment RevPAR performance since 2003
Economy Mid-scale w/F&B Mid-scale w/o F&B Wyndham Hotel Group 12% 10% 8% 6% 11.7%
% 9.6% 4% 6
. 8.6% 2.3%
7 % 7.2%
7 6.1% 0.7% 5.9% 2% . % RevPAR 4.7% 4 0.6% 4.1%
0
. Growth 0% 3
%
%
3
.
.7
-2% 3
3 - %
- -4.0%
.4 -5.5% -0.4%
1 -1.6% -4% -6.7% -6.8% - -0.6% -6% -8% 2000 2001 2002 2003 2004 2005(1)
Sources: PricewaterhouseCoopers Hospitality Directions journals, September 2006 (December 2005 for 2000 data) (1) Excludes Ramada International
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8 Global Distribution
Strong progress toward global diversification
2002 2006E
1.2% 10.0% 0.5% 3.4% 98.8% 0.2% 90.0% 0.8% 0.5% 5.8%
North America EMEA APAC LAM
Note: As measured by number of rooms
For every kind of traveler. For every kind of trip. 9 North America Segment Distribution
Expanding into the faster-growing Mid-scale w/o F&B and Upscale segments.
2002 2006E
3.3% 11.6% 4.8% 6.8%
30.5% 22.9%
66.2% 65.5%
Economy/Mid-scale w/F&B Mid-scale w/F&B Mid-scale w/o F&B Upscale
Note: As measured by number of rooms
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10 Competitive Comparison
Wyndham Hotel Group is the largest hotel group in the world, measured by number of hotels. Top Ten Hotel Companies (2005) (Ranked by Total Global Hotels)
Number of Hotels Number of Rooms
Wyndham Worldwide 6,344 532,284 Choice Hotels International 5,897 481,131
Best Western International 4,195 315,875
Accor 4,065 475,433
InterContinental Hotels Group 3,606 537,533 Hilton Hotels Corp. 2,817 485,356
Marriott International 2,741 499,165
Carlson Hospitality Worldwide 922 147,129
Starwood Hotels and Resorts Worldwide 849 257,889 Global Hyatt Corp. 731 134,296
Sources: Hotels Magazine, July 2006 for competition
For every kind of traveler. For every kind of trip. 11 Industry Overview: United States
Industry RevPAR forecasted to grow +5.9% in 2007 RevPAR Growth by Segment in 2007 Economy 5.9% Mid-scale w/ Food & Beverage 5.9% Mid-scale w/o Food & Beverage 7.9% Upscale 7.2% Upper Upscale 6.3% Industry supply growing 1.6% in 2007 ADR increases driving growth across all segments Macroeconomic factors that may affect industry drivers Corporate profit growth is slowing RevPAR growth moderating
Sources: PricewaterhouseCoopers September 2006, Merrill Lynch Lodging Supply Watch
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12 Industry Overview: International
Internationally, the industry is also expected to grow.
Total Hotel Revenue by Region 2005 Gross Revenue % Forecast Growth Rate $U.S. Billion 2006-08 U.S. 124.0 +8.2
Total Europe 133.2 +2.3 W. Europe 121.9 +1.2 E. Europe 11.3 +14.1
Asia Pacific 110.2 +4.3 China 15.6 +15.0 India 1.3 +35.7 Japan 80.0 -0.4
Latin America 23.8 +16.3 Mexico 6.9 +5.9
Sources: Euromonitor Integrated Market Database – Dec. 2005 for International data; PricewaterhouseCoopers – Sept. 2006 for U.S. data
For every kind of traveler. For every kind of trip. 13 Industry Overview: International
Large percentage of small chains/independent hotels offers significant conversion opportunities.
U.S.
33%
67%
Independent Branded
Total Europe Asia Pacific Latin America
39% 45% 48% 52% 55% 61%
Small Chain/Independent Large Chain
Sources: Euromonitor Integrated Market Database – Dec. 2005 for International data; STR for U.S. data
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14 Industry Overview: International
Fastest growing international segments are Mid-market and Budget/Economy.
% % change U.S. RevPAR Revenue 2001-2005 Luxury 7.5% $174.60 +4.0% Upper Upscale 30.8% $100.06 +3.0% Upscale 16.3% $72.16 +3.2% Mid-scale 33.3% $47.91 +3.7% Economy 12.0% $28.45 +1.7%
% % change % % change Europe RevPAR Asia RevPAR Revenue 2000-2005 Revenue 2000-2005 Luxury 10.2% $244.12 -4.2% Luxury 20.8% $102.69 +6.1% First Class 61.3% $101.28 -1.5% First Class 68.5% $81.99 -3.7% Mid-Market 24.4% $72.10 +3.7% Mid-Market 10.3% $62.96 +16.0% Budget/Economy 4.1% $58.75 +13.6% Budget/Economy 0.4% $59.99 +14.1%
Sources: International data: Deloitte & Touche same store analysis 2005 U.S. data: PricewaterhouseCoopers, September 2006
For every kind of traveler. For every kind of trip. 15 Growth Strategies
Operating Growth System Growth
Revenue management program Identify target markets to fill in distribution Optimize performance New property management system Enhance customer service culture of North American Increase sales/marketing efficiency Capitalize on Baymont brand value Economy/Mid-scale Restructure worldwide sales proposition portfolio Pursue portfolio conversions and tuck-in acquisitions
Implement brand standards Invest in high RevPAR strategic assets Position Wyndham Integrate loyalty program Execute timeshare/mixed-use opportunities flagship and Wingate Invest in sales/marketing Align Wingate brands as value-added Revenue management program alternatives to competitive brands
Grow International core Refine global brand positioning Pursue tuck-in acquisitions and multi-unit development deals brands: Wyndham, Invest in sales/marketing to drive reservation contribution Drive mixed-use opportunities Ramada, Days Inn, Implement essential operational Leverage RCI developer network Super 8, Howard and system efficiencies Johnson Utilize RCI global infrastructure
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16 Wyndham Master Brand Strategy
Wyndham Collection Wyndham Vacation Wingate Historic Wyndham Hotels and Wyndham Garden Ownership Boutique by Wyndham Grand Bay Resorts International
AAA 4+ diamond AAA 3, 4 diamond AAA 3 diamond AAA, 2, 3 diamond Major markets Major urban & Major/Secondary Secondary markets Original resort destinations markets 80+ rooms architecture Restaurant/bar- Casual/select- F&B 24/7 F&B mart Distinctive dining/ casual dining service Fitness center bar Meeting/event Limited meeting Strong local facilities space identification Full fitness Fitness center facilities
For every kind of traveler. For every kind of trip. 17 Wyndham Master Brand Strategy
Position Wyndham flagship and Wingate brands as value-added alternatives to competitive brands.
Initiatives Progress To Date
Implement brand standards Commissioned Michael Graves for Integrate loyalty program new design Invest in sales/marketing Invested over $12 Million to fund Operating Growth Revenue management marketing and product program development efforts
Invest in high RevPAR strategic 100+ deals in progress assets Executed 15 hotel contracts YTD Execute time share/mixed-use Opened five hotels YTD System Growth opportunities Re-branded 16 WVO properties Align Wingate Corinthia JV for 11 international properties
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18 Wyndham Master Brand Strategy Wyndham Hotel Wingate Wyndham Vacation Ownership Pipeline
HI
For every kind of traveler. For every kind of trip. 19 Wyndham Master Brand Strategy
Wyndham brand has delivered strong performance in key markets RevPAR Index* Houston 119.6
Denver 113.9 Atlanta 112.4 Palm Springs 112.1 Miami 104.5
Chicago 101.3 San Diego 101.1
* RevPAR Index from STR, WYN hotels vs. market, market = 100
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20 Wyndham Collection
Historic Hotels: Galveston, Texas
For every kind of traveler. For every kind of trip. 21 Wyndham Collection
Historic Hotels: The St. Anthony, San Antonio, Texas
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22 Wyndham Resorts
Grand Bay Isla Navidad, Mexico
For every kind of traveler. For every kind of trip. 23 Wyndham Hotels
Chicago
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24 Wyndham Hotels
Cleveland Playhouse Square, left, Miami Airport & Executive Meeting Center
For every kind of traveler. For every kind of trip. 25 Wyndham Resorts
Sugar Bay, St. Thomas, Virgin Islands
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26 Wyndham Garden
Overland Park, Kansas
For every kind of traveler. For every kind of trip. 27 Wyndham development activity
Jacksonville, Fla.: conversion
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28 International Strategy
Grow International core brands: Wyndham, Ramada, Days Inn, Super 8, Howard Johnson
Initiatives Progress To Date
Refine global brand positioning Developed regional marketing Invest in sales/marketing to co-ops Operating growth drive reservation contribution Launching multi-lingual Web sites Implement essential operational Expanded in-country marketing and system efficiencies structure Utilize RCI global infrastructure Established and expanded General Sales Agent network
Pursue tuck-in acquisitions and Approximately 25% of pipeline is multi-unit development deals international Drive mixed-use opportunities Signed multi-unit development System Growth Leverage RCI developer deals in EMEA, APAC and LAM network Completed JVs to develop and manage hotels in Europe and China
For every kind of traveler. For every kind of trip. 29 International Performance
Successfully expanded into EMEA, Asia Pacific and Latin America over past three years
EMEA Asia Pacific Latin America
Total Asia Pacific Total Latin 40,000 T o t al EM EA 5,000 25,000 China America 4,000 - 32,000 - 4,500 35,000 32,550 18,250 - 4,228 20,000 18,750 4,000 30,000 25,083 13,000 - 3,087 25,000 22,849 15,000 13,500 3,000
20,000 11,344
10,000 2,000 15,000 8,322 7,836
10,000 5,244 5,000 1,000 5,000
0 0 0 2004 2005 2006E 2004 2005 2006E 2004 2005 2006E
Source: Internal
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30 International Development
Development Activity
Malta U.K. Peru India Ireland Argentina Hungary China Saudi Arabia Australia Romania Mexico U.A.E. France Italy Czech Republic Tunisia Belgium
Korea Honduras Germany Egypt Netherlands
For every kind of traveler. For every kind of trip. 31 International: Corinthia
St. Petersburg, left, and Prague
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32 International: Corinthia
Budapest
For every kind of traveler. For every kind of trip. 33 China joint venture
First project: 140-room Ramada Encore in Wuxi, China
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34 Days openings
Days Inn Shenzhen
Days Hotel Dublin Airport
Days Hotel Kilkenny
Days Inn Joiest Beijing Days Inn Ferrybridge
For every kind of traveler. For every kind of trip. 35 Super 8 openings
Super 8 Beijing Dong Super 8 Shanghai Feng Ye Nanzhan
Super 8 Shanghai He Jing Super 8 Tianjin Jian Gong Super 8 Shenzhen Peng Yue Mei Lin
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36 Ramada openings
Ramada Plaza Cheongju
Ramada Plaza Guangzhou
Ramada Hotel Dresden Ramada Osaka
For every kind of traveler. For every kind of trip. 37 Rooms, Rooms, Rooms
Base Business Wyndham/Wingate Business 495 75 490 CAGR CAGR 2% 70 11% 485 1.5% 65 8% 480 60 1.0% 6% 475 55 470 50 465 45 460 40 455 35
450 30 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Base-Medium Base-High Base-Low Wyndham/Wingate-Medium Wyndham/Wingate-Low Wyndham/Wingate-High
International Business Combined Business
785.0 CAGR 230 CAGR 7% 39% 735.0 180 33% 6% 685.0
130 26% 4% 635.0
80 585.0
30 535.0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
International-Medium International-High International-Low Combined-High Combined-Medium Combined-Low
Note: Rooms in thousands
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38 Summary
Strategic transformation Diversification of portfolio International Upscale Management Company Strengthened base business value proposition Performance Consistent revenue and earnings growth Going forward Optimize performance of North American Economy/Mid-scale portfolio Position Wyndham flagship and Wingate brands as value-added alternatives to competitive brands Grow International core brands: Wyndham, Ramada, Days Inn, Super 8, Howard Johnson
For every kind of traveler. For every kind of trip.