Wyndham Worldwide Split Companies

Michael Brown, CEO of Wyndham Destinations, sat down with CNBC’s Jim Cramer, the network’s resident markets expert, to discuss the split up of Wyndham Worldwide to create Wyndham Destinations and Wyndham Hotels and Resorts, how this split will influence the timeshare market and, how it will benefit Wyndham shareholders.

Wyndham Destinations is now purely focused on their Timeshare Vacation Ownership product and investing in its future, by creating a strong brand and a greater market share for its investors. Michael Brown CEO explains: “We have had growth every single year, but what’s really interesting in terms of growth is the growth is really changing in favour of branded hospitality. Over the last few years market growth of branded hospitality has doubled.” 

Cramer: “What is the value proposition of being with Wyndham versus another timeshare company and also versus a hotel”?

“The industry is very strong. What we are seeing from consumers today is they like space and amenities and the confidence and consistency that comes from branded hospitality players.”

“Wyndham Destinations serves the everyday traveller, that’s the largest demographic in the United States today, that’s the segment we fit in, we are the largest destination vacation company in the industry and we proudly serve the customer that not only values their vacation, but they also value great value. We ask potential customers, would you like to pay for your hotel at the rate it was in 2010? Everyone says yes. So it’s a great way to lock in your future vacations at today’s price.”

On the contentious subject of Timeshare exit procedures, Brown seemed positive about Wyndham’s exit strategy, “As far as exiting their ownership, Wyndham was the first trailblazer in the industry to create a way to exit your ownership when the time is right. We call that the Ovation Programme and we exit owners on occasion when they call us and say the times right for them.” This statement is widely disputed amongst timeshare owners, as with most timeshare companies, the requirements an individual needs to meet to procure an exit from their contact is often difficult to meet, time consuming and subject to provisions.

In relation to the timeshare secondary market, it seems Brown and Wyndham are thinking of developing a strategy in this area, which may add some value to the resale of its timeshares.

Brown: “There is a secondary market but the key to that market is to have a robust sales and marketing operation that can distribute that inventory. I think thats an opportunity for us as we move forward to be more active in the secondary market.”

When asked about the finances and future of the company in todays competing market, Brown was optimistic about the company’s future, strong dividend and, the company as a whole is committed to making it stronger.

“Our balance sheet is really solid, we do have plans for very modest debt repayment plans to get us to our target leverage. But the key to our size and scale as the largest vacation ownership company in the world is that we are generating $500 million dollars of free cash flow on an annual basis. That cash flow gives us a great opportunity to return capital to the shareholders and focus on what this split-up is all about , which is growth and shareholder value.”