Wyndham Issues Shouldn't Derail Expansion Plans

"We feel very good at where it's trading right now," chairman and CEO Fred J. Kleisner said in yesterday's conference call. At yesterday's close, stock dropped to $1.16 per share from $1.33 the day before. Smith said he is prepared to take the alternatives, for which he declined to be specific, to the board "at the proper time."

Meanwhile, Wyndham has another seven hotels under contract in a sell-off that started in 1999. To date, $903 million has been collected in 83 sales. No one's talking about the locations of the seven under contract, but they represent 2.5% of the portfolio's revenue and EBITDA. There are still 49 hotels up for grabs.

In the first quarter, Wyndham picked up $8.8 million from the sale of the Le Manior de Gressy in Gressy, France and its 25% stake in Shula's Steakhouse, which is one of the major retail tenants in Wyndham hotels.

Kleisner emphasized no more properties will be stripped from the portfolio for the time being. "We will not sell assets at depressed values," he stressed. "Wyndham is not having a fire sale."

Smith said the plan for now is to hold "until fundamentals return accretive to earnings and de-leveraging to our balance sheet." He says cash will be managed "very tightly," enabling the chain to "maintain liquidity without further asset sales."

Wyndham is banking on franchises and management pacts to be this year's star acts, both requiring little, if any, upfront capital while delivering plenty of opportunity for expansion. The goal is to sign one contract of either type per month through year's end, Wyndham leaders said. Summerfield Suites by Wyndham is predicted to be the most desired product in the chain's lineup.

Andrew Jordan, Wyndham's senior vice of marketing, tells GlobeSt.com that Wyndham will be looking at landing some properties in Hawaii, Mexico and San Francisco. "There are obvious voids that we would like to fill with the appropriate properties," he says.

Corporate also is looking to a Wyndham ByRequest perk for free long distance and local calls as well as copying services to boost business travel bookings. The program takes effect June 1.

In the numbers side of Wyndham's first quarter, the chain has about $3.4 billion in debt. Wyndham, as did FelCor Lodging Trust, is reporting increased bookings, a good sign for the beleaguered travel industry. Overall occupancy at owned and leased properties was 67% in comparison to 58.8% in fourth quarter 2001. March logged the highest at 72.5%.

Wyndham's numbers peg adjusted EBITDA at $114.3 million versus $172.3 million for Q1 2001. Still, it's up from the original guidance. RevPAR is down 16.9% to $77.33 from Q1 2001, of which 10.4% resulted from a drop in the average daily rate. The best performer was Wyndham Hotels & Resorts, logging a RevPAR drop of 13.9% to $90.13. The average daily room rate was $120.37 at the quarter's close, up from $109.69 just four months ago. The net loss amounted to $2.25 per share on a diluted basis while the recurring calculation tallied 32 cents per share.

Wyndham execs expressed "cautious optimism" for the remainder of the year. On the bright side, Kleisner said the chain already has achieved pre-9/11 levels. Dallas' third hotel giant, La Quinta, appears Wednesday before its shareholders.