Report Overview

Wyndham and Choice Hotels are two of the largest asset-light franchisors of hotel rooms in the U.S., with nearly 100% of their portfolios under franchise agreements. Both Wyndham and Choice skew to the midscale and economy chain scales, unlike their more upscale peers Hilton, Marriott and IHG. However, as the major brands look to address the whitespaces in their portfolio and expand into the opportunistic midscale and economy segments, Wyndham and Choice – though the current market leaders in these segments – are now facing more intense competition for share gains in their primary market. 

In this report, we provide a concise 20 chart factbook comparing the key financial metrics and performance indicators of the two largest hoteliers in the midscale market – Wyndham and Choice – such as segment mix by geography and chain scale, unit growth and pipeline, RevPAR, EBITDA margins and valuation. Though the companies are similar in many ways, there are differences in their mix and revenue streams which have defined their respective stock price performances through Covid and into 2023. 

What You'll Learn From This Report

  • A comparison of the key performance indicators of Wyndham and Choice, such as RevPAR, unit growth and EBITDA margin.
  • Wyndham and Choice's current segment mix versus future pipeline to show the long term growth strategies at each company.
  • Stock price performance and valuation of each company.

Wyndham vs Choice in 20 Key Charts

Chart 1: As of 2022, globally Wyndham has close to 850k hotel rooms, making it nearly 35% bigger than its closest competitor Choice Hotels.

Chart 2: Choice and Wyndham are predominantly asset-light franchise businesses, with nearly all their rooms under franchise agreements compared to 60-77% franchise mix at major U.S. peers Hilton, IHG and Marriott.  

Chart 3: Both Choice and Wyndham are predominantly based in the U.S. Internationally, they both rely on master franchising agreements, particularly in Asia. For example, at Choice, master franchising agreements account for 80% of its international rooms and at Wyndham, the master franchising agreement for the Super 8 brand in China accounts for 12% of total hotels. As a result of international master franchising agreements generally providing lower revenues to the company than direct franchises, the U.S. is a larger share of total revenues than it is of total rooms. 

Charts 4 and 5: Choice and Wyndham are both positioned in the midscale and economy chain scales, with nearly half of Wyndham’s U.S. rooms in the economy segment. Both companies are expanding their portfolios in higher chain scales, such as Choice recently acquiring Radisson Americas which skews to upper midscale and upscale.

Chart 6: Wyndham and Choice tend to skew to select-service hotels within the midscale and economy chain scales, whilst U.S. peers IHG, Hilton and Marriott are more skewed to full-service hotels within upscale and luxury brands.

Chart 7: Choice and Wyndham each have ~9% market share of the U.S. market. Whilst their peers are expected to gain share (mainly from independent hotels), Choice is expected to maintain share, whilst Wyndham will lose share.  

Chart 8: Opportunities for growth in the U.S. lie in the midscale and economy segments, where Wyndham and Choice are current market leaders but face competition from Hilton, Marriott and IHG as they look to expand into the space.

Charts 9 and 10: In 2022, Wyndham generated $810m of revenue, whilst Choice generated ~$700m. Whilst Wyndham has yet to recover to 2019 levels, unlike Choice, it has shown increased operating efficiencies, with its EBITDA margins at 80% in 2022 (vs 71% in 2019) – Choice on the other hand has margins of 68% in 2022 vs 70% in 2019.

Charts 11 and 12: Choice, being slightly less exposed to lower-class chain scales in the U.S., has higher RevPAR vs Wyndham. Both companies outperformed the industry during the pandemic, with both reporting RevPAR growth largely in line with each other. 

Charts 13 and 14: Choice has displayed a 4-year average unit growth of 2.6% (including its acquisition of Radisson Americas), whilst Wyndham has an average of 1%. Wyndham however has consistently grown its pipeline as a % of supply quicker than Choice with pipelines remaining relatively stable through the pandemic.

Chart 15: Both companies have material loyalty programs which allow customers to collect points from each stay, as well as from spending through co-branded credit cards. Both Choice and Wyndham have grown their loyalty program members at a CAGR of 10% since 2018, with loyalty members accounting for 37% of room nights booked at Wyndham and 40% at Choice.

Chart 16: Though both companies follow a similar share price pattern, Wyndham has consistently under-performed Choice since Wyndham’s IPO in June 2018. 

Chart 17: Wyndham and Choice, being more exposed to the U.S. – which has seen flattening growth rates in 2023 compared to other regions – have under-performed peers since the start of the year. 

Chart 18: Choice has traded at a premium to Wyndham since Wyndham’s IPO in June 2018. However, the valuation gap between the two companies has gotten smaller, with Choice trading at a 30% premium to Wyndham pre Covid and now trading at a 15% premium today.

Charts 19 and 20: Wyndham trades at a discount to Choice despite reporting higher EPS (Earnings per Share) growth through the pandemic and in 2023.

Bonus Chart: Sustainability is a topic of ever-growing importance and consideration for investors. Whilst Choice has lagged peers on disclosure, it recently published an Environmental, Social and Governance (ESG) report – the first time it has reported on such issues at scale. Most major companies report on Scope 1 (direct emissions from the activities of the organization including fuel combustion through gas boilers or vehicle emissions) and Scope 2 (indirect emissions from electricity purchased and used by the organization) emissions but are far less willing to report on Scope 3 emissions, which as we wrote in our report Progress in Sustainability: Hotel Company Analysis 2023 are “the upstream and downstream emissions from hotel activities which are not or only partially tracked by hotel companies. As emissions from hotel franchises are included in this scope, it is an important segment which needs more attention”. Whilst Choice has started reporting on Scope 1 and Scope 2 emissions, these are only for hotels under operational control (such as being owned, leased or managed). Many of the asset-light hotel brands are now run predominantly as franchised businesses, with ~99% of Choice and Wyndham’s rooms under franchised contracts. These franchised hotels do not fall under Scope 1 and Scope 2 emissions but are instead a part of Scope 3 emissions – where Choice doesn’t report any data.