Lauren Taylor Wolfe Long Wyndham Hotels & Resorts: Sohn New York Conference ~ market folly

Tuesday, May 7, 2019

Lauren Taylor Wolfe Long Wyndham Hotels & Resorts: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Lauren Taylor Wolfe of Impactive Capital who presented long Wyndham Hotels & Resorts (WH).

Lauren Taylor Wolfe's Sohn New York Presentation

•    Activist. Not quick fix solutions like buybacks/firing people/sell yourself
•    Focus on ESG
•    Long: Wyndham Hotels & Resorts - Acquired LaQuinta.

o    Largest hotel franchiser.
o    Mid scale operator which tends to do well in downturns and upturns. Asset lite. 3 turn discount to hotel peers. Currently in a penalty box, time arbitrage
o    $110 a night average room. 60% of US hotel rooms in this value segment with Wyndham 40% market share.
o    Least supply growth of any segment in past 15 years. Expect to continue based on construction pipeline.
o    Least exposed to online disruptors. Lower price than AirBnB. Lots of same day bookings. Lowest price branded room you can get. Benefit from trade downs in tough times. 2% organic room growth during 2008 downturn.
o    Only 4% of EBITDA linked to franchisee profit. Lots of international growth coming online.
o    LaQuinta has a lot of growth. Cost synergies with LaQuinta of $~75 million.
o    Trades 3 turns cheaper than Choice, its closest competitor. Wyndham will generate $3 billion in FCF in next 3 years and can use it to buy other companies.
o    ESG suggestion is more efficient HVAC. Give reward points for reusing towels and not changing sheets.
o     Can triple growth. Base case 62% return 3 year return. Bull case 100% return

Be sure to check out the rest of the Sohn New York conference presentations.

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