Wyndham Worldwide profit falls, holds forecast
NEW YORK (Reuters) - Wyndham Worldwide Corp <WYN.N>, the world's No. 2 hotel group by rooms, said on Thursday first-quarter profit fell as growth in its economy hotel business was offset by a one-time charge related to the rebranding of its timeshare operations.
The U.S. No. 1 timeshare seller, which also operates hotel brands such as Ramada, Days Inn and Super 8, said it was confident it could weather a downturn in travel spending hurting upscale rivals Starwood and Marriott, and held its full-year profit forecast unchanged.
Wyndham, spun off from Cendant Corp in July 2006, reported quarterly net profit of $42 million, or 24 cents per share, compared with $86 million, or 45 cents per share, in the year-ago quarter.
Excluding a trademark writedown of $17 million and costs associated with the Cendant spin off, earnings were 35 cents per share. Wall Street was expecting 33 cents, on average, according to Reuters Estimates.
Revenue was flat at $1 billion, in line with analysts' estimates, as growth in its hotel and vacation rental business was offset by lower timeshare sales.
Its hotel revenue rose 12 percent to $170 million, helped by growth in its international business, and its vacation rental and exchange revenue rose 9 percent to $341 million.
The company's overall revenue per available room, the most common measure of growth in the industry, rose 2.7 percent in the quarter, compared with a 2.2 gain a year ago.
But its timeshare business, which it has now rebranded under the Wyndham name, saw revenue fall 8 percent to $504 million, which the company said was due to more revenue being deferred due to accounting for incomplete timeshare buildings.
The softening U.S. economy has threatened to accelerate a slowdown in the once-booming hotel industry, which has been cooling as supply creeps up.
But Wyndham, which serves primarily leisure travelers through its large timeshare businesses and economy hotel chains, remains confident.
"Wyndham Worldwide's portfolio of resilient businesses and brands produced strong first-quarter results despite the challenging economic environment," Stephen Holmes, Wyndham's chief executive, said in a statement.
Earlier this month, leading U.S. hotel operators Marriott International Inc <MAR.N> and Starwood Hotels & Resorts Worldwide Inc <HOT.N> reported lower quarterly profit as the slowing U.S. economy took a toll on travel spending.
Looking ahead, Wyndham held its full-year earnings forecast steady in a range of $2.23 to $2.38 per share, in line with analysts' average forecast of $2.28.
For the second quarter, it forecast profit of 46 cents to 48 cents per share, below the 50 cents expected by analysts. Wyndham said profit in the quarter would be cut by deferring revenue at its timeshare unit, but that revenue would be recognized in future quarters.
(Reporting by Bill Rigby, editing by Mark Porter and John Wallace)