Intro

Today, we will break down Wyndham Hotels, the world’s largest and most diverse hotel franchisor with more than 9,000 hotels across 20 brands in over 80 countries.

Wyndham is a brilliant example of a ubiquitous business that often goes unnoticed. In this breakdown, we’ll start by looking at just how vast Wyndham’s portfolio of hotels and brands is, how the Highway Act of 1956 played an important role in developing that scale, and explore the economics of hotel ownership, both from the franchisee and franchisor’s perspective.

Then we’ll dive into Wyndham’s growth algorithm, the factors that make the business resilient to external shocks, and the ways in which green programs are helping to drive higher cash-on-cash returns for franchisees.

To help break down Wyndham Hotels, host Patrick O’Shaughnessy is joined by Lauren Taylor Wolfe, co-founder and Managing Partner of Impactive Capital and a Wyndham shareholder.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:48] - [First question] - What Wyndham is and the scope of their hotel franchise

[00:04:17] - Defining what select-service hotels are compared to traditional ones 

[00:04:49] - An overview of what the hotel business is and their important levers 

[00:06:44] - Why Wyndham’s business model is so advantageous

[00:09:22] - Franchisee expectations and the pros of franchising the brand 

[00:12:22] - Whether or not Wyndham participates in loan and debt generation

[00:13:36] - Overview of their award-winning loyalty program

[00:17:36] - Customer acquisition for their loyalty program and how it drives spending

[00:19:16] - Wyndham’s corporate history and how it affects them today

[00:22:17] - Driving growth beyond their current real-estate footprint

[00:24:30] - Possible positive or negative nonlinear events that could affect them

[00:26:09] - Overview of the sales functions inside of their business

[00:28:05] - Changes in hotel use trends as of late

[00:30:05] - What hotel management means as a business

[00:33:05] - Capital allocation and abundant free cash flow without much need for it

[00:35:48] - Considering the ESG implications when evaluating the hotel industry

[00:38:17] - Aspects of the business that make it both resilient and competitive

[00:42:14] - Big variables that could cause Wyndham to fail

[00:44:10] - What it is about Wyndham’s economic opportunity that is favorable for franchisees

[00:46:19] - Unit economics and expenses at the individual hotel level

[00:47:40] - Lessons learned about brand, investing in a brand, and identifying new brands to acquire

[00:50:22] - What she’s learned most as an investor working with Wyndham

[00:52:19] - Attractive opportunities Hilton could offer that Wyndham couldn’t

[00:53:46] - What she’s learned about being a strong operator while working at Wyndham