Wyndham Hotels & Resorts has shuttered roughly 1,000 hotels in China in the wake of the Covid-19 coronavirus outbreak, with Wyndham CFO Michele Allen telling investors during the group's full-year earnings call Thursday that the closures are projected to shave between $8 million to $12 million off Wyndham's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2020.
Around 900 of the impacted hotels are Super 8 master license franchisees, with Wyndham's overall China business currently accounting for an estimated 2% of the company's total adjusted EBITDA.
"What we know today is that approximately 70% of our hotels in China remain closed, with the balance experiencing occupancy declines of approximately 75%," said Allen. "We also know that our hotels in Southeast Asia, particularly in Korea, Singapore and Thailand, are seeing varying degrees of occupancy declines. We are assuming the market will remain soft for the vast majority of the year as occupancy recovers over a three- to six-month period."
Allen added that the market softness is predicted to contribute to a 2% to 4% decline in global RevPAR growth for Wyndham this year.
The evolving situation in Asia comes amid a backdrop of broader slowing RevPAR trends in the later part of last year. Wyndham reported that fourth-quarter RevPAR declined 2% on a global basis and 3% domestically, weighed down in part by a challenging front in the U.S. market.
"In the U.S., industrywide supply outpaced demand in both the economy and midscale segments, which negatively affected occupancy," said Allen. "Interstate, suburban and oil and gas markets, where we have an outsized portion of our portfolio, were particularly challenged in both rate and occupancy."
For 2019, Wyndham's global RevPAR was flat.
Wyndham's net income for the quarter was up roughly 48%, to $64 million. For the full year, net income fell 3%, to $157 million.