Morningstar

Check Into Wyndham Hotels Shares

Check Into Wyndham Hotels Shares
Securities In This Article
Wyndham Hotels & Resorts Inc Ordinary Shares
(WH)

Dan Wasiolek: Most are likely familiar with the hotel brands Super 8 and Days Inn, but probably fewer are aware that Wyndham Hotels is the operator of these and 18 other brands and possesses powerful intangible-asset and switching-cost advantages.

We expect Wyndham to gradually expand roomshare in the hotel industry and sustain a brand-intangible asset. This view is supported by the company's roughly 40% share of all U.S. economy and midscale branded hotels, and the industry’s fourth largest loyalty program by membership with 77 million, all of which encourage third-party hotel owners to franchisee with the company.

In addition to Wyndham's brand-intangible advantages, the company also has a switching cost moat. With all but two of its 9,000-plus hotels managed or franchised, Wyndham has an attractive recurring-fee business model with healthy returns on invested capital. Moreover, this asset-light model creates switching costs, given the 10- to 20-year contracts associated with these relationships.

With shares trading at a meaningful discount to our $76 fair value estimate, we view Wyndham shares as a place investors should travel to.

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About the Author

Dan Wasiolek

Senior Equity Analyst
More from Author

Dan Wasiolek is a senior equity analyst, AM Consumer, for Morningstar*. He covers gaming, lodging, and online travel. Names covered within the gaming industry are Wynn Resorts, Las Vegas Sands, MGM Resorts, Caesars Entertainment, Penn Entertainment, and DraftKings. In the hotel industry Dan covers Marriott, Hilton, InterContinental, Hyatt, Wyndham, Choice, and Accor. Other travel related names under his coverage are Booking Holdings, Expedia, Airbnb, Tripadvisor, Sabre, and Amadeus.

Before joining Morningstar in 2014, Wasiolek spent 16 years as an analyst and portfolio manager covering US mid- and large-cap strategies for Driehaus Capital Management. During the first half of his time at Driehaus, Dan’s responsibilities as an analyst included analyzing and recommending stocks across all sectors and industries for inclusive in the portfolios. Then in the second half of his tenure at Driehaus, Dan was responsible for stock selection and portfolio management of the US mid- and large-cap strategies, as well as co-managing in-house smaller-cap portfolios.

Wasiolek holds a bachelor’s degree in business administration from Illinois Wesleyan University and a master’s degree in business administration, with a concentration in finance, from the DePaul University Kellstadt School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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