DOW JONES NEWSWIRES
Wyndham Worldwide Corp. (WYN) swung to a fourth-quarter loss on
a $1.3 billion write-down at its slumping timeshare business.
Wyndham, which again cut its 2009 revenue forecast but sees
first-quarter earnings above expectations, and other hotel chains
continue to be hammered by a pullback in consumer spending and
waning corporate travel. Analysts say the hotel industry might not
recover until 2011.
Weak results and outlooks from Wyndham rivals Marriott
International Inc. (MAR) and Starwood Hotels & Resorts
Worldwide Inc. (HOT) in particular underscore the growing
vulnerability of the timeshare business for U.S. hotels amid
continued consumer skittishness about buying real estate.
The three companies had consistently reaped big profits by
financing timeshare purchases amid strong consumer demand. But with
the lockdown in credit markets and concerns that consumers are
shunning big-ticket purchases, developers have scaled back
expansion plans in vacation ownership.
In mid-December, Wyndham said it would pare back its time-share
operations, eliminating 4,000 jobs, in an effort to reduce its
reliance on the troubled credit markets.
The hotel company - whose brands include Days Inn, Ramada and
Howard Johnson - reported a net loss of $1.36 billion, or $7.63 a
share, compared with year-earlier net income of $104 million, or 58
cents a share.
Excluding items including the write-down, earnings rose to 47
cents from 46 cents. The company in October projected 41 cents to
46 cents.
Revenue fell 12% to $911 million, reflecting the timeshare,
increased loan-loan provisions and the stronger dollar.
Analysts polled by Thomson Reuters were more recently expecting
earnings, excluding items, of 40 cents a share, on revenue of $989
million.
Revenue per available room, a key hotel-industry measure, fell
6.4%. The drop was 9.3% in the U.S. and 1.6% internationally.
Gross vacation-ownership interest sales dropped 11%. Wyndham
said in December it planned to reduce such sales to $1.2 billion in
2009 from about $2 billion in 2008. At the time, Chairman and Chief
Executive Stephen P. Holmes said the company was cutting back
timeshare operations because of its assumption that asset-backed
securities markets would be "unattractive for the foreseeable
future."
For 2009, Wyndham expects earnings, excluding items, of $1.61 to
$1.85 a share on revenue of $3.5 to $3.9 billion. In December it
cut its revenue view to $3.7 billion to $4.1 billion. Wall Street
was expecting earnings, excluding items, of $1.69 a share on
revenue of $3.68 billion.
For the first quarter, the company sees earnings, excluding
items, of 35 cents to 40 cents a share; analysts anticipated 31
cents.
Wyndham shares closed Thursday at $5.94 and there was no
premarket trading. The stock is down more than 70% the past five
months.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com