Wyndham Hotels & Resorts, Inc. (WH) Q4 2022 Earnings Call Transcript

Wyndham Hotels & Resorts, Inc. (NYSE:WH) Q4 2022 Earnings Conference Call February 16, 2023 8:00 AM ET

Company Participants

Matt Capuzzi - SVP, IR

Geoffrey Ballotti - President, CEO & Director

Michele Allen - CFO

Conference Call Participants

Joseph Greff - JPMorgan Chase & Co.

Stephen Grambling - Morgan Stanley

Dany Asad - Bank of America Merrill Lynch

Ian Zaffino - Oppenheimer

Charles Scholes - Truist Securities

Dan Wasiolek - Morningstar Inc.

Michael Bellisario - Robert W. Baird & Co.

David Katz - Jefferies

Brandt Montour - Barclays Bank

Operator

Good day, and invited to nan Wyndham Hotels & Resorts Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions]. I would now for illustration to move nan telephone complete to Matt Capuzzi, Senior Vice President of Investor Relations. Please spell ahead.

Matt Capuzzi

Thank you, operator. Good morning, and convey you for joining us. With maine coming are Geoff Ballotti, our CEO; and Michele Allen, our CFO. Before we get started, I want to punctual you that our remarks coming will incorporate forward-looking statements. These statements are taxable to consequence factors that whitethorn origin our existent results to disagree materially from those expressed aliases implied.

These consequence factors are discussed successful item successful our astir caller yearly study connected Form 10-K revenge pinch nan Series and Exchange Commission and immoderate consequent reports revenge pinch nan SEC. We will besides beryllium referring to a number of non-GAAP measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided successful our net release, which is disposable connected our Investor Relations website astatine investor.wyndhamhotels.com.

We are providing definite measures discussing early effect connected a non-GAAP SEC only because without unreasonable efforts, we are incapable to supply nan comparable GAAP metric. In addition, past evening, we posted an investor position containing supplemental information connected our Investor Relations website. We whitethorn proceed to supply supplemental accusation connected our website successful nan future.

Accordingly, we promote investors to show our website successful summation to our property releases, filings submitted pinch nan SEC and immoderate nationalist convention calls aliases webcast. With that, I will move the telephone complete to Geoff.

Geoffrey Ballotti

Thanks, Matt, and thanks, everyone, for joining america this morning. We're thrilled to study that our Q4 results vanished stronger than our expectations pinch afloat twelvemonth reported world RevPAR maturation of complete 16%; nett room maturation of 4%; and adjusted EBITDA of $650 million. We generated $360 cardinal of free rate travel successful 2022 and returned complete $560 cardinal to our shareholders, which represented 7% of our marketplace cap.

By each accounts, it was an outstanding twelvemonth for Wyndham Hotels and Resorts. We grew nett rooms by 4%, including 80 ground points of maturation from nan acquisition of our 23rd brand, Vienna House by Wyndham. Excluding Vienna House, we opened 64,000 rooms for nan year, much than 1 edifice each and each day. This represents 20% much rooms than we added past year.

Here successful nan United States, we added 27,000 rooms pinch immoderate awesome caller hotels, for illustration nan Stone Hill Lawrence, a AAA 3 gem edifice extracurricular of Kansas City, who converted to our Trademark Collection marque and nan opening of our first 2 construction, La Quinta Hawthorn Suite hotels successful Texas, a mixed extended enactment and select-service edifice successful a mid-scale abstraction designed to streamline improvement and operational costs by utilizing a stock lobby, fittingness center, gathering rooms, barroom and different amenities.

Internationally, we opened 37% much rooms organically successful 2022 than we did past twelvemonth and 2% much than we did backmost successful 2019. Latin America led nan measurement pinch 14 luxury edifice additions to our Registry Collection marque crossed nan Caribbean and Mexico. And successful nan 4th quarter, our Latin America squad welcomed our first Wyndham Grand successful Mexico pinch nan opening of nan Beach Front, Wyndham Grand Cancun Resort centrally located successful Cancun Hotel zone.

Our EMEA region besides had a tremendous year, opening 57% much rooms organically than they did past twelvemonth aliases 6% higher than 2019 pinch awesome 4th fourth additions for illustration nan Bulk and Jewel resort, a trademark postulation conversion successful nan edifice municipality of Razlock adjacent Sofia, Bulgaria, and nan Ramada Riyadh King Fahd, nan first caller Ramada summation since buying backmost our maestro licence statement successful Saudi Arabia. In Southeast Asia, we grew nett rooms by 5%, unfastened 40% much rooms successful 2022 than we did successful 2021.

And aft galore years of development, we welcomed nan beautiful caller 949 room Wyndham Benin Golden Bay Resort straight connected nan formation successful this erstwhile French Colonial port, marking nan 14th edifice opening for our Asia Pacific improvement squad successful Vietnam. And finally, our China nonstop improvement squad grew nett rooms by different awesome 10%. And contempt nan sporadic lockdowns and recreation restraints, galore of our squad members proceed to look passim nan 4th quarter, which person now thankfully dissipated. The squad added much nonstop franchise rooms than they did successful nan 4th fourth of 2019.

And astir doubly arsenic galore rooms than they did successful nan 4th fourth of past year. With nan opening of hotels, for illustration nan Wyndham, nan Wyndham Grand and nan La Quinta Shanxi, 3 beautiful caller hotels located successful nan business territory successful nan bosom of Shanxi state featuring rather a nonstop entree to Shanxi's International Convention and Expo Center. And this caller La Quinta Shanxi represents our 2nd caller building La Quinta to unfastened successful China successful 2022.

On nan retention front, we improved for nan 2nd consecutive twelvemonth to a grounds precocious world complaint of 95.3%, including nan first clip that our world retention complaint has exceeded 95%, an denotation of our ever-improving owner-first worth proposition. We grew our improvement pipeline sequentially by 3% and by 12% versus anterior twelvemonth to a grounds 219,000 rooms and 1,700 hotels. This marks Wyndham's tenth consecutive 4th of sequential pipeline growth.

Our teams awarded 882 contracts globally for complete 113,000 room additions, which is complete 3 caller contracts awarded each and each business day. The number of home contracts signed successful nan 4th fourth was 40% higher than what we awarded past twelvemonth and astir 90% higher than what we awarded successful nan 4th fourth of 2019, reflecting grounds developer liking successful our brands for nan afloat year.

We signed 563 contracts successful nan U.S. for 62,000 room additions, which is astir double nan magnitude signed successful 2019 and 65% much than past year. Fourth 4th caller building home executions accrued 95%. Notably, we awarded different 50 Echo Suites by Wyndham contracts this 4th to found developers and knowledgeable extended enactment operators, bringing nan full number of contracts awarded to 170 hotels successful conscionable 9 short months since launching nan marque past March and making Echo nan edifice industry's fastest-growing caller marque motorboat of 2022.

We collapsed crushed connected our first 3 ECHO hotels successful nan past fewer months of 2022, and we expect to unfastened our first ECHO Suites by Wyndham Hotels later this twelvemonth arsenic we break crushed connected different 2 twelve ECHO hotels successful 2023. On a afloat twelvemonth basis, caller building home executions accrued 130% year-over-year. While home conversion execution accrued 30% compared to 2021. Developers are selecting by Wyndham caller building offerings now much than they ever have.

Our system caller building brand, Microtel, added 2,200 rooms to its home pipeline successful 2022, driven by developer liking successful its cost-efficient centrifugal prototype. While precocious mid-scale brands for illustration Wyndham Garden added 1,300 rooms to its home caller building pipeline. In nan upscale segment, we saw continued beardown caller building request for brands for illustration Wyndham, which grew its U.S. pipeline by 1,700 rooms this year.

Consumer request remains strong. Our middle-class customers proceed to walk much connected recreation than they ever have, and they are staying longer than they were backmost successful 2019, fixed hybrid activity environments. We saw booking windows summation 18% versus anterior twelvemonth to complete 14 days pinch guests readying further up fixed abstraction constraints and nan fearfulness of being blocked retired arsenic truthful galore were past outpouring and summer.

Thursday and Sunday nighttime occupancies and our impermanent mean magnitude of stays person some continued to climb successful nan 4th fourth versus wherever they were backmost successful 2019. All of these trends are giving our franchisees nan assurance to proceed to output up successful their pricing pinch nan caller gross guidance devices we're providing to them, mixed pinch nan changeless messaging that existent ADR for nan select-service abstraction remains fundamentally level to wherever it was 4 years ago.

We judge that leisure recreation stay nan #1 privilege for nan discretionary user walk among middle-income Americans successful 2023 arsenic truthful galore caller user surveys from our organizations specified arsenic MNG Wall astatine nan aforesaid time, we've seen beardown maturation successful our infrastructure-related revenues, which makes up astir 20% of our U.S. royalties. This area has ever been a spot for Wyndham.

And pinch nan size of nan pies that they turn substantially arsenic nan authorities originates to $1.5 trillion successful infrastructure and CHIPS Act spending, we've been making further investments present to turn our share. Those investments person already begun paying disconnected pinch home weekday occupancy successful our system hotels astatine their highest absolute levels connected record. Our wide infrastructure related revenues accrued double digits successful nan 4th fourth versus 2019, a inclination that began backmost successful nan 2nd 4th of 2021.

And we're assured that it will proceed to fortify passim 2023, arsenic projects for caller roads, bridges, rail, h2o systems, airports, broadband and nationalist transportation begin. Funneling nan hundreds of billions of dollars to nan states is simply a dense assistance that will return clip and require coordination from agencies connected some nan national and nan authorities levels arsenic these projects commence complete nan adjacent respective years successful nan markets wherever our system and mid-scale mini business owners will benefit.

We estimate that this caller level of walk represents an opportunity for america to make complete $3.3 cardinal of incremental gross for our franchisees and complete $150 cardinal of incremental royalties for Wyndham complete nan walk period. Our award-winning Wyndham Rewards loyalty programme recognized arsenic nan champion edifice loyalty programme for nan 5th consecutive twelvemonth by nan readers of USA Today, grew its enrollment by 8% complete nan past 12 months and now stands astatine 99 cardinal members.

Wyndham Rewards helped thrust a 23% summation successful nonstop bookings to our brand.com sites, outpacing nan complaint of maturation crossed each third-party channels and, erstwhile again, representing a grounds precocious level of publication for our brand.com sites. Our halfway values and our connie work civilization are astatine nan bosom of what drives our maturation and what makes Wyndham specified a awesome spot to work. There's nary amended measurement of why we are specified a awesome spot to activity that our astir caller squad personnel engagement survey, which generated grounds precocious results.

And it was nary astonishment to spot Wyndham Hotels & Resorts suffice arsenic a constituent of nan 2022 Dow Jones Sustainability Index, a world scale consisting of nan apical 10% of nan largest 2,500 companies successful nan S&P Global Broad Market Index based connected sustainability and biology practices. We sincerely convey our weighted squad members without whose support, nary of this would beryllium possible. And pinch that, I'll move nan telephone complete to our CFO, Michele Allen. Michele?

Michele Allen

Thanks, Geoff, and bully morning, everyone. I'll statesman my remarks coming pinch a elaborate reappraisal of our 4th fourth and afloat twelvemonth results. I'll past reappraisal our rate flows and equilibrium sheet, followed by our 2023 outlook. We generated $310 cardinal of fee-related and different revenues and $126 cardinal of adjusted EBITDA successful nan 4th quarter, bringing our afloat twelvemonth fee-related and different revenues to $1.35 cardinal and adjusted EBITDA to $650 million, some supra our expectations.

Our franchising conception grew 4th fourth gross by 12% year-over-year, chiefly reflecting world RevPAR maturation and higher licence fees. Adjusted EBITDA accrued 8% to $138 million, arsenic nan gross increases were partially offset arsenic expected by nan timing of higher trading walk successful nan quarter, which unfavorably impacted separator by 200 ground points. Excluding this timing impact, our adjusted EBITDA grew 13% successful nan 4th quarter, and our adjusted EBITDA separator remained accordant pinch anterior year.

In our Hotel Management segment, 4th fourth gross and adjusted EBITDA declined, reflected nan waste of our select-service guidance and owned edifice businesses, which collectively contributed astir $38 cardinal successful fee-related and different gross and $12 cardinal successful adjusted EBITDA successful 2021. Within our Corporate and Other segment, our 4th fourth expenses were successful statement pinch expectations aliases comparatively level compared to 2021.

Fourth 4th adjusted diluted EPS was $0.72, a 4% summation year-over-year aliases astir 16% connected a comparable basis. This summation reflects adjusted EBITDA maturation successful our Hotel Franchising segment,as good arsenic a use from our stock repurchase activity. Now turning to afloat twelvemonth results. Our franchising conception grew gross by 16% year-over-year, chiefly reflecting world RevPAR maturation and higher licence fees.

Adjusted EBITDA accrued 15% to $679 cardinal and our adjusted EBITDA separator was accordant pinch 2021 contempt ongoing inflationary pressures. In our Hotel Management segment, afloat twelvemonth gross and adjusted EBIT declines reflected nan first half of 2022 exit of our select-service guidance and owned edifice businesses, which contributed fee-related and different gross of $50 cardinal during 2022 and $125 cardinal successful 2021 and adjusted EBITDA of $18 cardinal during 2022 and $37 cardinal successful 2021.

Within our Corporate and Other segment, we saw $7 cardinal of higher expenses owed to inflationary costs pressures, successful statement pinch expectations. Full twelvemonth adjusted diluted EPS was $3.96, a 25% summation aliases astir 29% connected a comparable basis. This summation reflects adjusted EBITDA maturation successful our Hotel Franchising segment, little nett liking disbursal and a use from our stock repurchase activity.

Before moving connected to free rate flow, fto maine return a infinitesimal to talk existent location RevPAR performance. Global RevPAR successful changeless rate grew 15% year-over-year successful nan 4th quarter, up from 12% successful nan 3rd quarter. Domestically, RevPAR vanished 12% up of 2021 and 9% up of 2019. U.S. RevPAR maturation accelerated to 480 ground points successful nan 4th fourth from 250 ground points successful nan 3rd quarter. And for nan first 6 weeks of 2023, RevPAR for our marque has continued to accelerate pinch nan U.S. up astir 600 ground points year-over-year.

Internationally, 4th fourth changeless rate RevPAR ran 46% up of past twelvemonth and 23% supra 2019. All regions, pinch nan objection of Asia Pacific, generated RevPAR good successful excess of some 2019 and 2021 levels. Full twelvemonth world occupancy vanished down 21% to 2019 and will proceed to supply a meaningful tailwind for america successful nan coming quarters arsenic request continues to turn overseas, particularly successful our Asia Pacific and EMEA regions, which, for nan full of 2022, were only 68% and 88%, respectively, of 2019 levels.

Now turning to free rate flow. We generated $360 cardinal successful 2022 compared to $389 cardinal successful 2021, reflecting, arsenic expected, little rate collected from 2020 COVID-related interest deferrals arsenic good arsenic higher improvement advances. Importantly, we converted 55% of our adjusted EBITDA to free rate flow, correct successful statement pinch our target. We successfully executed connected our stated superior allocation strategy by investing complete $120 cardinal to turn nan business while returning a grounds precocious $561 cardinal to our shareholders, representing 7% of our marketplace headdress done $445 cardinal of stock repurchases and $116 cardinal of communal banal dividends.

As we move into 2023, our superior allocation strategy remains unchanged. We will stay disciplined connected nan halfway tenets of our M&A strategy and prosecute transactions that are accretive from an net and nett room maturation perspective, and complementary to our existing marque portfolio. We will besides proceed to incentivize franchisees to put successful caller marque prototype designs to amended wide marque equity.

And based connected nan occurrence of our caller ECHO Suites extended enactment marque to date, we expect to statesman to deploy a information of nan $100 cardinal of improvement superior we earmarked arsenic nan first ECHO Suite hotels adjacent opening successful precocious 2023. Finally, we expect to support our industry-leading dividend payout ratio taxable to Board support and stock repurchases will proceed to beryllium an integral constituent of our superior allocation strategy, albeit little than 2022, fixed nan absence of nan onetime proceeds from past year's transaction.

We ended nan 4th pinch astir $900 cardinal of full liquidity, and our nett leverage ratio was 2.9x, conscionable beneath nan debased extremity of our stated range. Moving connected to outlook. For afloat twelvemonth 2023, we expect world nett room maturation of 2% to 4% and world RevPAR maturation of 4% to 6%, which translates to 6% to 8% supra 2019 levels, a information constituent that we still see to beryllium applicable since nan select-service space, which represents complete 90% of our U.S. portfolio, recovered to pre-COVID levels overmuch faster than nan industry's afloat work base.

Fee related and different revenues are expected to beryllium $1.38 cardinal to $1.41 billion. We are projecting adjusted EBITDA of $650 cardinal to $660 million, which reflects comparable ground maturation of astir 5% erstwhile neutralizing for nan variability successful nan trading costs year-over-year, which will lend astir $10 cardinal little adjusted EBITDA successful 2023 arsenic we expect to wholly recapture our 2020 investment. Adjusted nett income is projected to beryllium $337 cardinal to $349 cardinal and adjusted diluted EPS is projected astatine $3.84 to $3.98 based connected a diluted stock count of $87.7 million, which excludes immoderate imaginable stock repurchases.

Finally, we are expecting free rate travel conversion from adjusted EBITDA of 50% to 55%, which reflects nan effect from our expected summation successful improvement advancement from $48 cardinal successful 2022 to astir $60 cardinal successful 2023 arsenic good arsenic higher liking expense. As a reminder, we person provided 2 slides successful our investor position to thief pinch your modeling. Slide 40 provides nan humanities financial effect of our prime work guidance business and owned hotels, which will request to beryllium adjusted from your base. And Slide 41 provides gross sensitivity.

In closing, we are very pleased pinch our 2022 performance. We successfully executed connected our cardinal business objectives, increasing our system, expanding our owners' profitability and simplifying our business model, while generating important adjusted EBITDA and free rate travel and returning a grounds magnitude of superior to our shareholders. We participate 2023 pinch a beardown equilibrium sheet, a grounds pipeline, tremendous momentum down our caller extended enactment brand, ECHO Suites by Wyndham and a awesome woody of optimism surrounding nan largest infrastructure measure successful our nation's history. With that, Geoff and I would beryllium happy to return your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions]. Our first mobility comes from Joe Greff pinch JPMorgan.

Joseph Greff

Geoff, tin you talk astir nan situation for, I guess, what we qualify arsenic tuck-in acquisitions. How overmuch is retired there? Is location thing lukewarm that you're moving on? How competitory is nan situation coming for tuck-in acquisitions versus a twelvemonth aliases 2 years ago? And I person a follow-up.

Geoffrey Ballotti

I deliberation nan situation will proceed and improve, joe. Vienna House is simply a bully illustration of that, our latest tuck-in acquisition. And I deliberation erstwhile you look astatine -- domestically and internationally, it will proceed to pickup and deals will proceed to coming themselves. And we'll beryllium strategic. We'll beryllium methodical and evaluating nan deals arsenic they travel along. We're going to beryllium looking for brands that are some EPS and NRG accretive arsenic Vienna House was nan brands that are of precocious value and brands pinch precocious ROI potential. Four of nan past 5 marque launches, though, for us, Trademark, Ultra, Registry and ECHO person each been launched organically. And there's nary logic we can't proceed to do that, but we now person awesome brands successful each conception of nan industry. But amended than anyone that M&A is ever successful our DNA, having covered america for arsenic agelong arsenic you person pinch 19 of nan 24 brands we have, person been acquired, and we do judge that size matters, standard matters. And we'll proceed to look for deals. But we're not going to do a woody conscionable to do a deal. We stay disciplined and guarantee that immoderate woody that we do successful nan adjacent twelvemonth aliases 2 to person compelling returns for our shareholders arsenic Vienna House had.

Joseph Greff

And past switching complete to ECHO and bully to spot nan sequential maturation to proceed here. And I heard some Geoff, your comments and Michele, your comments, it doesn't sound to america that your 2% to 4% 2023 systemwide rooms maturation incorporates overmuch from ECHO, is that much of a 2024 contributor? And past is location immoderate pivot, Geoff, connected multi-development ECHO deals arsenic yet to single?

Geoffrey Ballotti

Questions you've asked earlier offline. Yes, location is simply a pivot. We person not yet offered ECHO to nan thousands of individual franchisees, which we expect to do later this year. And to your nonstop question, location is nary effect really overmuch impacted to 2023 nett room growth. We will person our first ECHO openings later this year. We person surgery crushed and conscionable immoderate phenomenal RevPAR markets: Plano, Texas; Sterling, Virginia; Richmond, Virginia. And nan squad is unbelievably excited. I mean we said connected nan Q2 telephone that we person 100 successful nan pipeline. We're astatine 170. And those are, arsenic you say, each pinch multiunit improvement agreements pinch immoderate of nan nation's astir successful extended enactment developers because we want to really unfastened these -- create these, builds these and unfastened these to person arsenic large an effect arsenic we can.

Operator

Our adjacent mobility comes from Stephen Grambling pinch Morgan Stanley.

Stephen Grambling

This first one, possibly a follow-up to those comments connected ECHO and conscionable improvement much broadly. We conscionable hoping to excavation into nan components of your indebtedness maturation guidance successful nan discourse of gross additions and attrition particularly successful nan statement pipeline, I guess, it's now up 13% year-over-year successful attrition complaint that they proceed to improve. So immoderate colour you tin supply benignant of splitting retired arsenic we deliberation astir nan guidance successful gross adds, attrition and immoderate nuances by geography?

Michele Allen

Yes, sure. So I would opportunity from a nett room maturation perspective, we don't spot important effect successful 2023 from nan maturation successful nan pipeline. 80% of nan pipeline coming is caller construction. And successful nan U.S., building starts wrong astir a twelvemonth aliases 2 of nan woody being signed. So connected average, location is simply a 18- to 24-month build from there. So it's typically successful nan pipeline 4 years. And internationally, it's a small longer. So overall, we would expect nan pipeline to beryllium realized complete a 4- to 5-year period. So -- and a large portion of our pipeline maturation is nan ECHO brand, and that's not going to person a worldly effect to 2023, arsenic Geoff conscionable mentioned.

Moving our nett room growth, that will besides past require -- arsenic we've ever talked astir betterment and nan retention rate. And I deliberation if you look backmost to pre-2019, we were successful 93%, 94% range, and we've been steadily improving astatine 20 to 30 ground points each twelvemonth since then, and we're marching toward that 96% target. But erstwhile you spot america get there, that's erstwhile you should expect to spot our wide nett room maturation expectations left.

Stephen Grambling

Sounds bully for '24 and '25 then. Maybe changing gears. You had immoderate bully specifications connected China and nan nonstop constituent there. Can you supply a spot much colour connected really nan reopening location whitethorn not only effect home RevPAR successful nan country, but besides nan broader region arsenic outbound perchance resumes?

Geoffrey Ballotti

Yes, we spot nan -- arsenic outbound resumes a large beneficiary, surely for our hotels were nan Chinese are going to beryllium looking to travel. I mean, we're already seeing and proceeding from our teams successful South Korea, wherever we person complete 10,000 rooms that they're seeing much Chinese arrivals, Thailand, Indonesia, Australia, Singapore. Those are each large beneficiaries. China represented complete 150 cardinal world travelers successful '19, Stephen. And that number, arsenic we know, dropped to nether 20 for nan past 2 years. So we're excited to spot that. On nan ground, we're conscionable encourages each get retired to spot nan beardown rebound during nan Chinese New Year. Our past 3 weeks of RevPAR were up 60% successful China to past twelvemonth and 8% to 2019, fixed that pent-up family vacation recreation demand. And our resorts successful nan picnic destinations, we sewage large resorts successful Hainan and Sanya came backmost really, really strong. I mean done nan past 14 days, aft Chinese New Year, our Wyndham Sanya was up 30% to past year. Our edifice successful Hainan, our large triumph gross was up 60% to past year, but importantly, they are up complete 10% and 30%, respectively, to 2019. And while that was Chinese New Year driven, it was awesome to spot nan results that came retired past nighttime from Smith Travel, wherever wide China past week RevPAR was up 1% successful what was almost a cleanable comp week versus '19, pinch occupancy moving astir 90% successful '19 levels. So we're really, really excited astir what we're proceeding from our teams complete location and conscionable thrilled pinch everything our squad accomplished contempt nan challenges pinch that 10% Q4 nett room maturation successful our nonstop franchising business and really galore much hotels they were capable to unfastened successful a reliable 4th than they were past year.

Operator

Our adjacent mobility comes from Dany Asad pinch Bank of America.

Dany Asad

When we look astatine your 2023 guidance, truthful if we conscionable look astatine your portion maturation expectations, your RevPAR maturation expectations benignant of if you harvester them, you're looking astatine for illustration a 6% to 10% interest maturation arsenic a whole. But your EBITDA guidance, if we portion retired trading preservation is much for illustration 5% to 6%. So tin you possibly conscionable thief america understand what's causing a resistance connected nan algorithm for 2023? And really should we deliberation astir that move longer term?

Michele Allen

Yes, Danny. Your mathematics location is correct. And I deliberation there's 2 contributing factors: The first 1 is higher expenses, mostly owed to inflation. Some of that we saw rotation connected successful 2022, but we didn't person a afloat 12 months of it, and we will person a afloat 12 months successful 2023. And past nan 2nd effect really is nan operation effect of higher RevPAR maturation internationally versus RevPAR maturation successful nan U.S., and that really is because nan world regions are still successful betterment mode successful 2023, while nan U.S. business had been afloat recovered arsenic of nan 2nd half of 2021. And really that plays into nan semipermanent maturation algorithm? I would say, typically, if each regions are increasing astatine akin complaint growth, nan algorithm works, but we knew complete nan past 2 to 3 years pinch nan COVID effect playing out, we knew that location was going to beryllium immoderate differences successful nan algorithm, which is why erstwhile we supply nan sensitivities, we supply sensitivity per constituent of RevPAR for nan U.S. business abstracted and isolated from nan world business?

Operator

Our adjacent mobility comes from David Katz pinch Jefferies.

David Katz

Following done connected immoderate of that, 1 of nan themes we've started to attraction connected mostly 1 of your peers is gross intensity. And arsenic you build retired internationally, I wonderment if you tin shed immoderate ray connected nan deals that you're making aliases nan signings that you're making successful China, wherever I deliberation nan strength has historically been a spot lower, but successful nan different areas of nan world, really those comparison pinch nan U.S.?

Geoffrey Ballotti

And it's bully to perceive your moms doing better, God bless her. In China, certainly, yes. I mean, wherever we're increasing our rooms. The maturation is coming successful our nonstop franchising business, which, arsenic you know, is 3x much revenue-intensive than our maestro licence agreements, which person obscurity adjacent nan maturation that we're seeing pinch our nonstop franchising correct now astatine double digit. And you're correct. And connected Slide 9 successful nan IP that Matt put retired past night, you spot that complete 70% -- 73% of our pipeline are successful that higher revenue-generating segments successful nan midscale and supra brands that are driving that. Over 60% of our home pipeline are successful nan midscale and above, and complete 85% -- aliases astir 85% of our world pipeline. So what that intends for america is that our mean woody values per room successful nan pipeline are expanding there. They're up 800 ground points domestically, which is important and up 240 ground points internationally. And that represents complete $100 cardinal of royalty fees for america complete nan adjacent 4 years. Domestically, arsenic they're much weighted to higher RevPAR, higher segments, upscale brands. And internationally, arsenic they're weighted successful higher RevPAR markets, particularly notably successful Latin America and successful Europe pinch immoderate of our much precocious mid-scale brands. Our upscale brands, our Wyndham Hotels and Resorts, full-service marque are Registry Collection, luxury brands. So we're very excited astir that.

David Katz

Understood. And if you could conscionable talk a spot more. I deliberation 1 of nan issues we're altering to process is really group are what group people being -- you are factoring into your guidance pinch respect to nan macro situation arsenic nan twelvemonth progresses?

Michele Allen

Sure. I would opportunity what we really are factoring into our guidance is -- well, first, our U.S. business has been afloat recovered to pre-COVID levels since nan 2nd half of 2021, I mentioned. And vanished 2022, 9% supra 2019. So we're looking to adhd different 4% to 6% connected apical of that maturation this year. And I would opportunity from a macro perspective, successful nan U.S., we began to thigh much normalized comps successful nan 2nd half of 2022. We were seeing astir 3% year-over-year growth. So we're expecting a continuation of that inclination into 2023. And internationally, wherever not each markets are yet recovered to nan pre-pandemic levels, there's a bigger year-over-year maturation opportunity. So we're expecting each of our world regions pinch nan objection of Asia Pac to get beautiful adjacent backmost to 2019 occupancy levels. So overall, we're looking for astir half of our maturation to travel from occupancy betterment and nan different half to travel from immoderate humble ADR growth.

Operator

Our adjacent mobility comes from Michael Bellisario pinch Baird.

Michael Bellisario

Michele, conscionable 1 follow-up there. Just nan 4 to 6 benignant of system-wide globally. Can you springiness immoderate much specifics connected conscionable what nan U.S. anticipation is versus international, conscionable nan dispersed successful nan components of nan 4 to 6. I cognize you benignant of touched connected it a small bit, but immoderate much specifics would beryllium helpful.

Michele Allen

U.S. is surely going to beryllium little maturation wide compared to world since location still beryllium successful betterment mode for sure. So for illustration I said, there's astir apt successful nan U.S., there's going to beryllium a fewer points of occupancy maturation and a fewer points of ADR growth. Whereas internationally, we're expecting to spot again immoderate humble ADR growth, but a overmuch bigger assistance coming retired of occupancy.

Michael Bellisario

Okay. And then, Geoff, for you, you person a large competitor now getting into nan system space, possibly large picture. What are nan risks to you connected nan conversion front? And what are you proceeding truthful acold from your franchisees?

Geoffrey Ballotti

Congrats to you and Mary connected nan commencement of Lucy, past Tuesday. Andy request to play made a begetter of 4 girls, I wish you 2 more. We talked astir that offline. Yes, we're not seeing immoderate effect to your mobility connected our system brands. We person nan astir recognized system brands successful nan space, and we've been successful this abstraction for complete 30 years. We cognize these customers. We cognize these owners, and we cognize it's important to both. The 1 point that COVID has demonstrated to our system proprietor guidelines is that they wish they ain much Wyndham merchandise fixed conscionable really good our brands performed passim COVID and really good they performed aft 9/11 and nan awesome financial crisis. These mundane basal building and infrastructure workers ne'er stopped walking and they were staying successful our system brands successful grounds numbers, which was what allowed our franchisees to ne'er person to adjacent down. So we'll proceed to supply nan astir elastic and nan astir competitively priced system brands pinch a attraction connected what we cognize is important to our guests and what we besides cognize is important to our owners. And our renewal and our PIP costs tally 3 to 5x little than galore of our larger marque peers and our exertion stack installation. And our exertion stack operating costs stay nan lowest astatine 4 to 6x little pinch conscionable a continued attraction connected generating nan champion cash-on-cash returns successful nan Economy segment.

Operator

Our adjacent mobility comes from Patrick Scholes of Truist Securities.

Charles Scholes

One question. You talked successful your property merchandise astir achieving your extremity of retention complaint of 95%. Going forward, do you spot that arsenic benignant of nan equilibrium level astatine this point? Or do you spot there's continued opportunity to amended that?

Geoffrey Ballotti

Absolute opportunity to proceed to amended it, Patrick. We -- arsenic Michele said, we were successful nan 94s successful '19. We moved that to 95% successful 2021, and we've moved it to 95.3% successful '22. Our teams are incredibly focused connected that. You blend that successful pinch what we're doing connected nan gross unitization side, which we've besides been moving up. We achieved 7% gross additions successful '21. We moved that organically, return retired Vienna House to an 8% integrated maturation summation successful 2022. An all-time grounds of integrated maturation room additions for our system, and you blend those 2 and it's to Michele's point, really we're assured that we could move complete clip that 2% to 4% to 3$% to 5%.

Operator

Our adjacent mobility comes from Brandt Montour of Barclays.

Brandt Montour

So possibly connected that aforesaid theme, Geoff aliases Michele, nan retention extremity of conscionable complete 95.3% this twelvemonth versus 95.3% past year. I'm conscionable funny because it seems to maine that a batch of folks successful nan manufacture deliberation that this is nan twelvemonth wherever nan brands will commencement pushing backmost connected owners that possibly person immoderate deferred CapEx during COVID that they held off, and this is nan twelvemonth that nan marque benignant of-- nan rubber meets nan roadworthy connected a batch of hotels having to woody pinch that, and we saw Marriott guideline to higher deletion complaint this twelvemonth versus what they had past year. So conscionable funny what you guys deliberation astir your system, astir your brands and your owners that you deliberation you'll beryllium capable to benignant of move successful nan other guidance of that?

Geoffrey Ballotti

Well, I deliberation nan advancement that we've been making, Brandt, from nan 93% to 94% to 95% to 95.3% to your point, gives america confidence. I deliberation there's still an opportunity retired location pinch nan champion marque worth proposition successful nan system and mid-scale abstraction to prime up connected nan conversion front. And we deliberation transaction volumes are going to proceed to accelerate. The accent income are expected to summation by nan 2nd half of this year. So we saw bully activity connected nan adds, arsenic we've said, and we've been really focused complete nan past fewer years. We had important substandard deletions that were very targeted and very focused successful 2018 and 2019 erstwhile our retention rates were little than wherever they are today. And our marque value and each of nan efforts that we're doing connected nan value beforehand proceed to springiness america awesome assurance that we tin move that number higher.

Brandt Montour

Okay. Okay. Great. And past if we move to nan different broadside of nan equation to gross ads because if you opportunity retention mightiness get a small amended aliases enactment nan same. But if you look astatine your benignant of nan midpoint of your nett portion maturation guidance, would -- possibly we're splitting hairs here, but it would connote not a flimsy decel versus what you really did do successful '22. So is that conscionable conservatism? Or is location a portion regionally? Or portion of nan concatenation scales that you would attraction connected successful position of your gross ads that isn't arsenic beardown arsenic past year?

Michele Allen

Yes, Brandt, I don't deliberation it's really a flimsy decel. I deliberation erstwhile you look astatine nan nett room maturation successful 2022, you person to remember, there's 88 ground points of maturation successful location from nan tuck-in acquisition of nan Vienna House. So I deliberation we delivered astatine 3% connected an integrated basis. And nan midpoint of our guideline this twelvemonth would connote 3%. I would opportunity we're looking for 20 to 30 ground points of betterment each twelvemonth successful nan retention rate. And past -- and that 3% is simply a rounded number. So it could beryllium nan 3.2%, it could beryllium 3.3%. It could beryllium 2.8%, but we're expecting it to beryllium 3% aliases amended astatine nan midpoint. And truthful I deliberation if you target a retention complaint of, let's say, 95.5% and you're looking astatine 3% nett room maturation past that would connote that you're driving location betwixt 8% and 9% successful gross opens.

Operator

Our adjacent mobility comes from Ian Zaffino pinch Oppenheimer.

Ian Zaffino

You had different mobility connected guidance here. When do we expect nan effect of nan authorities spending connected nan infrastructure build, different bills to benignant of travel done successful 2023? I don't cognize if you really tin do this, but immoderate benignant of magnitude you mightiness beryllium capable to springiness america aliases astatine slightest directionally what we should expect?

Geoffrey Ballotti

Sure. We would expect successful nan backmost half of nan year, if you travel everything that's being put retired by nan legislature fund agency that adjacent information of nan $1 trillion will group nan money successful precocious '23. There surely are galore preexisting and time-sensitive projects that person moved forward. The $350 cardinal road reauthorization Act is simply a bully illustration of that pinch $40 cardinal already being spent connected bridges. In position of nan size, I deliberation we said successful our prepared remarks that it's complete a $3 cardinal gross opportunity for our franchisees complete nan adjacent 5 to 8 years, which would mean different $150 million-ish of incremental royalties complete that period. We're ace excited astir it. And we person been making investments successful group for a while successful processes and technologies. We're adding much sellers to triumph a greater stock of these national and authorities allocations, and we're creating a dedicated business-to-business income squad to place nan biggest opportunity targets retired there. There are 1.8 cardinal infrastructure institution businesses successful nan United States today, and we're leveraging our relationships pinch our third-party partners. Our recreation guidance companies, for illustration CLC, who person complete 1,400 buying centers crossed nan country. And we're sending our teams to events and conventions and conferences that person ne'er been to earlier for illustration nan American Society of Concrete Contractors and calling connected companies we haven't called pinch before. So look, this has been a competitory spot of ours forever. We're continuing to put heavy successful it. The champion is yet to come. And for nan seventh consecutive quarter, we've seen a pickup successful position of what our franchisees are experiencing. We were up 16% successful this business successful nan 3rd quarter, and that accelerated to 21% successful nan fourth. So we're really excited astir what's to come.

Michele Allen

Add to that really quick. We're generating astir $17 cardinal a twelvemonth from this portion of our business. So if it conscionable continued to summation successful nan double-digit class would beryllium astir $3 cardinal of incremental EBITDA. And of course, we're not looking conscionable for continued stock capture, we're looking for an description successful nan size of nan pastry erstwhile nan walk really hits nan market.

Ian Zaffino

That's really bully color. And past conscionable arsenic a speedy follow-up. On nan room maturation projections, tin you springiness america immoderate of nan puts and takes connected for illustration what you're assuming pinch rates going higher, possibly a softening successful nan economy. How does that algorithm alteration pinch those 2 factors?

Michele Allen

Yes. So fto maine commencement by saying half nan rooms successful nan existent pipeline of either conversions aliases caller building projects that are already successful nan ground. So that's going to importantly reduced our vulnerability to nan existent marketplace dynamics and past we're conscionable seeing pinch nan different half of nan pipeline. And that, I'd say, nan accelerated emergence successful liking rates person impacted each plus levels successful Canadian hotels, but hotels are unsocial and that they are -- they person worth rates and tin offset costs broadside of that equation, whether it beryllium ostentation aliases liking connected higher pricing, and they person nan expertise to do that daily, which is what we saw each during 2022. And developers -- our underwriting sustained increases successful ADR, which is either partially, aliases successful immoderate cases, afloat offsetting nan higher liking expense. So we and nan well-capitalized developers that we're moving with, we each judge this is nan champion clip to build. Even though liking rates are higher than nan historical lows that we've seen complete nan past decade, we're each expecting that they will alteration a spot erstwhile ostentation is nether power and nan economical uncertainty that we're facing to walk this complete and these select-service hotels person minimal staffing requirements. They're delivering really precocious ROI for our owners and offering very charismatic rates moreover successful this environment.

Operator

Our adjacent mobility comes from Dan Wasiolek pinch Morningstar.

Dan Wasiolek

So possibly wondering if you springiness update connected your loyalty rank wherever that's at? How that's grown and nan engagement of it pertaining to nan number of room nights aliases percent of room nighttime is being booked by nan loyalty base? And past 2nd question, conscionable I deliberation you mentioned that nan nonstop bookings were up 23%. Was that for 2022? And wondering if you could besides springiness a akin fig for nan OTA channel?

Geoffrey Ballotti

Sure. Our enrollments, to nan first portion of that question, grew 8%, Dan, year-over-year. We're astatine 99 cardinal members globally. And it is what's driving that double-digit year-on-year percent quote. Our brand.com maturation is astatine nan highest level it's ever been. And to nan OTA piece, it is outpacing nan OTA growth. Our stock of occupancy has accrued 500 ground points domestically to wherever it was pre-pandemic, which is beautiful remarkable, astir 1 retired of each 2 check-ins to our system mid-scale, precocious mid-scale, upscale brands are coming done nan program. But we've sewage astir that aforesaid percent now successful nan system space. And we person definite brands, for illustration La Quinta and American that are pushing 60% stock of occupancy blended. It's astir a 50% stock of occupancy domestically.

Operator

At this time, I show nary further questions successful queue. I'll move nan telephone backmost to Geoff Ballotti for closing remarks.

Geoffrey Ballotti

Thanks, Todd, and thanks, everyone, for your questions and your liking successful Wyndham Hotels & Resorts. We'd for illustration to, erstwhile again, convey our weighted squad members for their important accomplishments astir nan world and for helping america present our eighth sequential 4th of integrated nett room maturation on pinch a 12% maturation and astatine a improvement pipeline that's ne'er been stronger than it is today.

Domestic and world RevPAR maturation accelerated to some anterior twelvemonth and 2019 levels and occupancy continues its recovery, providing a meaningful tailwind for america successful nan twelvemonth ahead. With user recreation request holding patient successful our iconic and trusted brands delivering grounds levels of nonstop publication done our brand.com channels, we are very enthusiastic astir nan opportunities that dishonesty up successful our expertise to present outstanding worth to our shareholders, our guests, our franchisees and our squad members. Michele, Matt and I look guardant to talking to and seeing galore of you successful nan weeks and months up astatine galore of nan upcoming investor conferences will beryllium attending. We wish everyone a happy President's Day play and look guardant to seeing you soon.

Operator

Thank you. This does reason today's Wyndham Hotels & Resorts Fourth Quarter and Full Year 2022 Earnings Conference Call. Please disconnect your statement astatine this clip and person a awesome day.