Imagine finding that the stock of your favorite vacation spot sells for 67 cents. Welcome to Wyndham International
Wyndham reported mixed results today, with a net loss widening an unlucky 13% to $89 million. Revenue per available room (RevPAR), the industry standard measure, was up 1.2% and occupancy rose 3.6%. The average room rate dropped 3.9% to $97.89. In summary, increased occupancy could not counter lower room rates.
Results for other luxury hotel operators are mixed, but profitable. Four Seasons
Hotel investors have to be encouraged by recent trends in hotel occupancy and room rates. RevPAR has risen 5% or more during the last three weeks in October.
Yet, Wyndham's story, like many in the group, centers on debt, which at $2.7 billion, is like a pair of cement shoes. A financial snapshot shows negatives for everything from return-on-equity to profit margins. It is not a pretty picture.
It is said that, "You get what you pay for." In Wyndham's case, it could be spectacular gains if the economy rebounds and the industry flourishes. Without such rose-colored glasses, the future looks bleak. Heck, for the especially wishful, a strong competitor could always decide to use its cash flow for an acquisition.