Welcome to the Wyndham Hotels & Resorts First Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations.

Thank you, operator. Good morning, and thank you for joining us. With me today are Geoff Ballotti, our CEO; and Michele Allen, our CFO. Before we get started, I want to remind you that our remarks today will contain forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These risk factors are discussed in detail in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the SEC. We will also be referring to a number of non-GAAP measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided in our earnings release, which is available on our Investor Relations website at investor.wyndhamhotels.com. We are providing certain measures discussing future impact on a non-GAAP basis only because without unreasonable efforts, we are unable to provide the comparable GAAP metric. In addition, last evening we posted an investor presentation containing supplemental information on our Investor Relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC, and any public conference calls or webcasts. With that, I will turn the call over to Geoff.

Thanks, Matt, and thanks, everyone for joining us this morning. We are very pleased to report a strong start to the year with first quarter results once again demonstrating the value we bring to our owners, the strength of our brands, and the unconstrained demand from leisure travelers as our domestic economy hotels achieved record levels of Q1 occupancy, rate, and RevPAR. We delivered $159 million of adjusted EBITDA in the first quarter, 64% more than last year, and 41% more than what we delivered in 2019. We generated $125 million in free cash flow, more than double what we generated last year. We grew our development pipeline 5% sequentially and by 9% versus the prior year to a record 204,000 rooms. We awarded 114 new contracts domestically and 51 contracts internationally, which in total account for more than 22,000 new rooms. The number of domestic contracts was nearly 130% more than what we awarded last year and nearly 90% more than what we awarded in 2019. Importantly, we awarded contracts to develop the first 50 hotels for our new construction extended stay brand hotels that will begin to break ground later this year. Developer reaction has been overwhelmingly positive given its ultra-cost-efficient prototype and operating model. For the fifth consecutive quarter, we grew our overall system sequentially, closing Q1 with 200 basis points of year-over-year growth and 40 basis points of sequential net room growth. We opened more than 11,000 rooms globally, which was nearly 50% more than last year and in line with the first quarter of 2019. And we retained over 1,000 more rooms in Q1 than we did in Q1 of 2019, resulting in a 95% retention rate over the last 12 months. These results were in line with our expectations and position us solidly on track to achieve our full year net room growth outlook of 2% to 4%. Here in the United States, we grew our system size year-over-year by 120 basis points and by 30 basis points sequentially, opening nearly 7,000 rooms in the quarter, the most we've opened in the first quarter of any year since 2013. Our U.S. retention rate was consistent with Q1 2019 levels, running over 95% during the last 12 months. Internationally, net rooms grew by over 3% versus the prior year and by 60 basis points sequentially. Our China direct franchising business led the way with double-digit net room growth, followed by our Latin America and Southeast Asia and Pacific Rim regions, both growing at 5%. We continued to launch many of our brands in countries they've never operated in before, including our first La Quinta by Wyndham in China, our first Dolce by Wyndham in Brazil, and our first Howard Johnson by Wyndham in Ecuador. We made significant progress simplifying our business. We completed the previously communicated exit of our select service management business, resulting in no change to the underlying franchise agreement terms for the hotels transferred to CPLG's acquiring Highgate Holdings. In addition, we closed on the sale of our Wyndham Grand Bonnet Creek hotel in Orlando and executed a 20-year franchise agreement to keep this beautiful resort in our system at full franchise fees. We are also now under contract to sell our last remaining owned hotel, the Wyndham Grand Rio Mar in Puerto Rico, which we expect to also be subjected to a long-term franchise agreement at full fees. We expect that this transaction to sell our last remaining owned hotel will close in May of this year. Our global RevPAR increased 39% year-over-year in constant currency, which is 96% of 2019 levels. Here in the United States, we continued to see strong leisure demand. We grew RevPAR by 38%, which is 4% higher than 2019. Our brands once again outpaced overall industry growth by over 650 basis points. Weekend RevPAR exceeded 2019 levels by 10%, and we did not see any meaningful impact from rising gasoline costs as occupancy for our select service brands remained steady at about 96% of 2019 levels in the weeks before and after the gas price increase in March. With the U.S. Travel Association reporting that nearly 9 out of every 10 Americans expect to travel this summer, we expect to see continued strong demand for leisure travel throughout the summer season. Demand from our everyday business travel segments also continued to increase in the quarter. Infrastructure accounts, which represent the majority of our domestic business segment, contributed 16% more revenue to our hotels than in the first quarter of 2021, driven by the uptick in government spending. With the recent passage of the $1.2 trillion infrastructure bill by Congress, which includes approximately $550 billion in new spending that will be invested in core infrastructure projects over the next five years, our teams have been more focused than ever on organizations that are contracting for the construction of U.S. roads, bridges, levees, dams, ports, and waterways. Encouragingly, our franchisees are already seeing steady and consistent pickup in these types of infrastructure accounts, which made up more than half of the newly negotiated business contracts that our sales teams signed this quarter. With Wyndham Rewards enrollments growing by 8% in the quarter, our award-winning loyalty program now stands at approximately 94 million members. The program's overall domestic share of occupancy continues to grow and contributes nearly one out of every two check-ins for our franchisees. In light of the staffing shortages that our franchisees continue to experience, we're partnering with them to identify best practices and training tools that focus on recruiting, hiring, and retention strategies. Combining our move to digital check-in and check-out with franchisee opt-in services, such as our highly requested auto call routing technology, we are moving fixed labor costs out of their hotels and helping them improve their operating margins. Over the past two months during our cross-country Executive Summit Meetings, we've highlighted new operating guides and new strategic sourcing programs designed to further reduce on-property operating costs. Perhaps no initiative holds greater promise for our small business owners than Wyndham's digital room key. With the launch of our highly rated Wyndham booking app, now surpassing 4 million consumer downloads, we became the first hotel franchisor to introduce at scale digital room keys embedded into our app in the economy segment, allowing franchisees to expedite check-ins and reduce staffing levels. Importantly, Wyndham's mobile key solution allows our franchisees to upgrade their existing door locks versus having to replace those locks altogether. While we are in the early months from an adoption standpoint, hundreds of our franchisees have expressed interest in this labor-saving technology over the past several weeks of our meetings with them. We aim to lead in the economy and mid-scale select service segments with the number one mobile app that checks guests in and out of their rooms, opens their guest room doors, and provides industry-leading texting solutions to communicate with our guests without detracting from the check-in or the front desk experience. One major message delivered to franchisees we met with this quarter was requiring all owners globally to attain a minimum Level 1 Core Certification in our Wyndham Green Certification Program by April of 2023 as part of our brand standard compliance. We believe this will help them further reduce operating costs while building sustainable practices and consumer awareness recognition to help drive incremental revenue from environmentally conscious travelers. We continue to advance our ESG efforts, and just this week, we published our 2022 ESG report, which is now posted to our Corporate and Investor websites. Our report has been prepared in accordance with the Global Reporting Initiative standards and integrates the recommendations of the Sustainability Accounting Standards Board and the Task Force on climate-related financial disclosures. The report highlights our commitment to operate our business in a socially, ethically, and environmentally responsible manner and includes enhanced disclosures around risk management. Finally, we are furthering our commitment to advance women hotel ownership by providing enhanced training, operational support, and capital support. We were very proud to celebrate Women's History Month by hosting several women-led events throughout March as we awarded new hotel development contracts to women developers for projects in Colorado, Delaware, Texas, Virginia, Oklahoma, and Florida. Our economy culture, built on integrity, accountability, inclusiveness, caring, and fun, would not be possible without the ongoing support of our valuable team members who pride themselves on making a meaningful impact on our industry, on the lives of our franchisees, and on all of those around them. To that end, we were extremely pleased to be recognized this month by Forbes Magazine on its 2022 list of best employers for diversity, which highlights companies identified as being the most dedicated to diversity, equity, and inclusion. With that, I'll now turn the call over to Michele.

Thanks, Geoff, and good morning, everyone. I'll begin my remarks today with a detailed review of our first quarter results. I'll then review our cash flows and balance sheet, followed by an update to our 2022 outlook. We generated fee-related and other revenues of $316 million, a year-over-year increase of 36%, reflecting global RevPAR growth of 39% on a constant currency basis. In the U.S., RevPAR grew 38% year-over-year to 104% of 2019 levels, led again by our economy brands and materially driven by ADR, though occupancy also exceeded 2019 levels for four consecutive quarters. This quarter, we saw particular strength in Snowbird states such as Arizona, Florida, and Louisiana, as well as ski destinations such as Colorado, Utah, and Montana. As we move through the spring break season, April month-to-date results are ahead of March with RevPAR up 8% versus 2019, including continued strength in our economy brands with economy RevPAR up 13%. Internationally, RevPAR improved to 83% of 2019 levels, up from 81% in the fourth quarter. Canada improved to 94% of 2019 levels, up from 91%, and Latin America was at its strongest level since the onset of the pandemic, exceeding 2019 levels by 33%. In China, government lockdowns caused results to soften a bit from Q4, with Q1 RevPAR recovering to 71% of 2019 levels, slightly down from the 77% we saw in Q4. However, the zero-tolerance policy in Shanghai has had more meaningful repercussions in early April, where preliminary results during the lockdown period indicate RevPAR is now at about 30% of 2019 levels. We view this situation as temporary and are optimistic that demand will normalize once the government restrictions are once again lifted, as has been the case on numerous occasions throughout the past few years. In EMEA, RevPAR improvement also moderated, with Q1 recovering to 82% of 2019 levels, slightly down from the 84% experienced in the fourth quarter. While our exposure to the Ukrainian region and Russia is not material, we did see lower demand throughout the continent in February due to Omicron concerns. March, however, recovered to 86%, which was slightly above pre-Omicron levels back in October and November, but we are seeing a slight reversal of that trend with April month-to-date results tracking at less than 70% now. Clearly, there's a good bit of divergence in the region, and something we're monitoring closely. As a reminder, over 95% of our EBITDA is generated from our U.S. operations. For every point of RevPAR change in the U.S., we expect to see about a $3 million impact on EBITDA. While China would only contribute about $150,000 and EMEA about $100,000. Adjusted EBITDA was $159 million in the first quarter, up 64% versus a year ago, which includes a $14 million timing benefit from the marketing fund. Marketing revenues exceeded expenses by $7 million in the first quarter of 2022, while expenses exceeded marketing revenues by $7 million last year. Excluding this impact, adjusted EBITDA would have increased 46%, primarily reflecting the constant currency RevPAR growth of 39% and 300 basis points of margin expansion. Our adjusted EBITDA and franchising margins both improved versus last year. Our adjusted EBITDA margin increased by 900 basis points, which included 500 basis points from the marketing funds, while our franchising margin, calculated on the same basis as our peers, which excludes the effects of the marketing funds, increased 300 basis points to 84%. Adjusted diluted EPS improved 164% to $0.95, reflecting the increase in adjusted EBITDA as well as lower net interest expenses and the impact of share repurchases. Free cash flow for the quarter was $125 million, more than twice the $59 million we generated last year. As Geoff mentioned, we exited our select service management business with CPLG, receiving $84 million in proceeds. We've also mentioned that we sold the Wyndham Grand Bonnet Creek Resort in Orlando for approximately $121 million. Based on the Resort's 2019 adjusted EBITDA, the sale price represents a 15.4x multiple inclusive of planned capital expenditures. Earlier this month, we renewed our $750 million revolving credit facility, extending the maturity from May 2023 to April 2027 on similar terms as the prior facility. We also closed on a new $400 million 5-year senior secured Term Loan A facility. Proceeds from this new issuance were used to repay a portion of our existing Term Loan B facility maturing in 2025. Pro forma for these transactions, we effectively extended the maturity of a quarter of the Term Loan B facility by two additional years and the revolver by four additional years without any increase in interest rates on either facility. We returned $68 million to our shareholders during the first quarter of 2022 through $38 million of share repurchases and $30 million of common stock dividends. We ended the quarter with approximately $1.2 billion in total liquidity, and our net leverage ratio was 2.6x, well below our 3x to 4x stated target range. This is unusually low, as our ending cash balance is inflated due to the proceeds we received in March from the CPLG and Bonnet Creek transactions. Excluding these cash items, which will essentially be deployed, our net leverage ratio was 2.9x. Together with the free cash flow we will generate this year, we expect to have just over $600 million of cash to deploy. We plan to do so in a manner that is consistent with our stated capital allocation strategy. Our first priority, as always, is to invest in the business. We are actively exploring both external and organic growth opportunities. The core tenets of our M&A strategy are for deals to be accretive from an earnings and net room growth standpoint and complementary to our existing brand portfolio. While we've been tracking some actionable opportunities this year, nothing so far has met our investment criteria. However, M&A is in our DNA, and we will continue to aggressively pursue deals that fit our investment criteria. We also expect to maintain a dividend subject to Board approval with a net income payout ratio in the mid-30s. Share repurchases will, as usual, be an integral element of our capital allocation strategy. The way we're thinking about the split right now is that about 20% of the $600 million will fund dividend payments, while the remainder will be allocated toward investing in the business and share repurchases. This means we will see heavier share repurchase volumes throughout the rest of the year as compared to the $38 million we spent in Q1, and it also gives us the opportunity to redeploy the proceeds from CPLG and the hotel sales back into the business to replace the EBITDA. Absent attractive opportunities to do that, we would see additional allocation to share repurchase. Turning to outlook, we are updating our full year 2022 outlook to adjust for the sale of our two owned hotels. As a reminder, the post-exit results for the CPLG management business were already excluded from our February outlook, so there are no adjustments needed for that transaction. We now expect fee-related and other revenues of $1.28 billion to $1.31 billion, down $60 million from February's outlook, reflecting the removal of the two owned hotels post-sale date. Adjusted net income actually increases by $9 million to $317 million to $329 million due to the removal of related depreciation expenses. Adjusted diluted EPS is then projected to increase by $0.11 per share at $3.39 to $3.51 based on a diluted share count of 93.6 million, which usually excludes any potential share repurchases. We expect capital expenditures of $40 million, a reduction of $5 million as we no longer need to maintain these two hotels. There are no changes to our prior outlook for adjusted EBITDA, global net room growth, global RevPAR, or free cash flow conversion rate. Finally, we do not expect any changes from the renewal of the revolving credit facility, the issuance of the new Term Loan A, or the repayment of the Term Loan B. However, we are all aware of the Fed's intention to raise interest rates multiple times throughout the year. Approximately 20% of our gross debt is variable with the remainder effectively fixed. Accordingly, every 50 basis point increase in interest rates versus where they are today would result in a $2 million increase in our annualized gross interest expense. In closing, our first quarter results once again demonstrated the resiliency of our brands and the strength of our business model. We've significantly simplified our business structure, allowing for a greater focus on our highly profitable direct franchising business, and we strengthened our balance sheet considerably in the process. We remain steadfast in our disciplined capital allocation framework and are confident in both our long-term growth potential and in delivering another strong year ahead.

Our first question comes from David Katz of Jefferies.

Hi, everyone. Good morning. Thanks for all of the information. Michele, you went through some parameters on capital allocation. I just want to make sure we have that straight. It sounds as though you are actively looking at some potential acquisitions, but it also sounds like those should not, at least on an annual basis, interfere with buying back stock and continuing to pay dividends. That gives us just a little bit of sense for the order of magnitude. Is that a fair interpretation?

Good morning, David. Thank you. Yes, I think that is a fair interpretation. I would say we are focused on growing our business. So, our first preference is always going to be to invest for future growth, yet we are going to be disciplined. We are not going to do a deal just to do a deal; it has to be the right one and for the right reasons. We've laid out our investment criteria in our February deck and then in last night's deck on Slide 17. Aside from being asset-light franchises with a manageable impact on net leverage, we are really looking for deals that are both accretive to earnings and to net room growth, and then complementary to our existing portfolio. If a deal on the market today doesn't hit those criteria, then it's not the right one for us, and we are going to continue to remain disciplined in that approach. But if it does and we are a green light, then we would aggressively pursue it. We expect to have over $600 million to deploy this year, plus some potential leverage opportunity on top of that. We want to give our teams ample time to find prospects, so we are not making a specific commitment today on buybacks. What I can say is that we haven't seen anything yet that hits our criteria, and in the event we weren't able to find attractive opportunities throughout the remainder of the year, then all this capital would naturally be allocated to share repurchase, representing a significant shareholder return moment, probably 8% or even higher based on today's market cap.

Understood. As my follow-up, I think you may have said accretive, right, to earnings. Now just if you could elaborate a bit, are we talking about immediately accretive, reasonably immediately accretive, or accretive in something like year 2 or 3?

We want it to be accretive within the first 12 months.

Our next question comes from Joe Greff of JPMorgan.

Good morning, guys.

Good morning, Joe.

Geoff, it was nice to see the pipeline grow 5% sequentially. I'm guessing it's better than most expectations from people on this call. Can you talk about in the first quarter, the pace of new contract signings? How much of it may have been front-loaded when the macro was less uncertain? Did it slow down as we got through March? Can you talk about that both in the U.S. and China? What are you seeing thus far in Q2 regarding pipeline signings?

Sure. It was a very strong quarter, Joe, as you pointed out. We signed 16,000 rooms, which was ahead of expectations. It was 25% over last year and 10% over 2019. Echo domestically was a big piece of that. Our pipeline grew 9% year-over-year overall, but in the U.S. it was a little bit stronger. But without Echo, it was still strong growth in the low – mid low single digits in the U.S. Internationally, we signed 8,000 rooms, which was 2% over last year and 7% over 2019 signings. You asked about China. China surprisingly, in the first quarter, signed more direct franchise deals than they did in the quarter for Q1 of 2019. So, we were pleased with that. Our new construction signings improved significantly, both on the new construction side and on the conversion side. Our new construction signings, with Echo, increased quite a bit here in the U.S., but also did internationally.

Great. And then going back to capital return and M&A, can you guys talk about the size of the M&A, the things that you're looking at? I mean, you have $300 million of excess cash on the balance sheet at the end of Q1. You have $750 million available under the revolver. You have a turn of leverage to get another $600 million of capacity. Is that sort of the size of M&A that you guys are looking at? Also, Michele, you made some sort of comment about buyback activity resuming, and maybe I'm putting words in your mouth, at some greater pace in the back part of this year relative to Q1. Can you just elaborate on that comment you made in your prepared remarks? That's all for me. Thank you.

Sure. What I can say on M&A is that nothing is really off the table. We look for opportunities globally, in high-growth markets, or in regions where we have gaps in our portfolio. They could easily be bolt-ons of smaller brands, or they could be large brands if it's a strategic fit and hits our investment criteria. With respect to share repurchases, I think the window will open tomorrow, and then you should expect to see us step up our volume on repurchases immediately.

Okay, great. Can you give us the magnitude of the net proceeds from the Rio Mar sale?

We are expecting Rio Mar to trade close to its net book value.

Okay. And you have that number handy, the net book value?

I believe it's close to about $60 million.

Great. Thank you, guys.

Thanks, Joe.

Our next question comes from Dany Asad of Bank of America.

Hi. Good morning, everybody. My question is kind of in the same vein, but does a successful project Echo rollout make the buy versus build a brand proposition any different than it would have been in the past?

Great question, Danny. I think this is our fourth brand launch ourselves versus buying a brand, and it has become even more popular with developers. We already have 6,000 rooms in the pipeline for our new Microtel Moda brand, which was a brand we purchased many years ago and became our #1 new construction economy brand last year from a new construction development standpoint. I think it does. We have seen significant interest in this brand. We had one of the largest teams we've ever had at the Hunter Investor Conference in Atlanta in March. We also had our busiest trade show booth ever at the Asian American Hotel Owners Association in Baltimore, where the demand was prevalent in wanting to talk to Wyndham about territories and the ability to develop an Echo. We are tasking our teams to sign another 50 of these hotels. We are looking to have 100 in our pipeline by year-end. We know that four will already break ground this year, and our architecture and construction teams believe they could get those four open next year. We will see; generally, there's a 12 to 18-month construction time. We hope to have another two dozen break ground next year and expect to open at least 300 hotels over the next 10 years.

I would just add to that, Dany. Generally, the rule for buy versus build is to buy hotels when they're trading below replacement cost and to build when they're trading above replacement costs. Today, hotels are trading at or above 2019 levels in many markets, particularly in the chain scales that we have the most exposure to, which would bias owners toward building. Of course, we're seeing construction costs rise at the same time. So, net-net, we would say the buy versus build hasn't really changed. If an owner is sitting on significant dry powder, they're going to look to deploy it immediately and lean toward buying. If they're opportunistic and willing to wait, they're going to build. I'd also add that ROIs in the hotel space are still really attractive versus other real estate asset classes.

Got it. Thank you.

Thanks, Dany.

Our next question comes from Stephen Grambling of Goldman Sachs.

Hey, thanks for taking the questions. Maybe another follow-up just on investment. You did reference internal investment opportunities. We generally don’t think of the model as being particularly capital intensive, so I would love any additional color on what those internal investment opportunities might look like.

Stephen, I'm not sure if I mentioned internal investment opportunities. When we discuss organic growth opportunities, it mainly refers to the potential to acquire a significant number of hotels under a specific brand, and we might invest some capital to facilitate that, possibly through development advances or similar means.

Got it. So that will be more like key money effectively?

Yes, that's right.

Okay, that's helpful. And then maybe an unrelated follow-up. And I think Joe is alluding to this a little bit. But as we look at China, you referenced the sharp slowdown from lockdowns in early April. Has that impacted your development or construction in the region?

Our operations and development teams, who can travel where permitted, are out there. We opened 2,400 rooms in the first quarter. It was down a bit from last year in terms of our room opening activity. While we awarded the same number of contracts as we did in the first quarter of 2019. We did see some slowdown on both the opening and signing side. China has a proven ability to recover quickly, as Michele referenced in her remarks. This is the fourth time we've seen a setback. Our team delivered double-digit net room growth, and we have 60,000 direct franchise rooms in our pipeline right now — that’s as many direct franchise rooms as we currently have open in the country. Our teams are bullish about the long-term prospects in the coming years.

That's helpful. I will jump back in the queue. Thank you.

Thanks, Stephen.

Our next question comes from Michael Bellisario of Baird.

Thanks. Good morning, everyone. Just one more on the M&A front, maybe asked differently. If you didn’t have this excess capital on hand, would you be as aggressive in your pursuit of acquisition opportunities?

Yes, Michael. I do think we would be as aggressive. Our preference is to deploy our free cash flow to grow the business, and we generate a substantial amount of free cash flow every year. You should always expect us to first look at growth opportunities.

Got it. Thanks. Just wanted to clarify that. And then just ….

I would also just add that we place a high value on shareholder return; for an asset-light business, there's no reason we couldn't do both.

Got it. Understood. And then just a follow-up question on fundamentals since we haven't really touched on it too much. Can you maybe talk about U.S. trends and then the slight slowdown or narrowing in RevPAR recovery that occurred in the quarter versus Q4, and then what you're seeing or hearing from customers regarding the impact from higher gas prices on demand?

Sure. As we mentioned in our remarks, we haven’t seen any measurable impact on gas results. What we're hearing from our franchisees is nothing but optimism. In terms of trends, Michele touched upon how strong April has been so far. What's impressed us, giving our franchisees great confidence, is how strong the ADR gains are out there. We talked about ADR gains of 8% in the first quarter over 2019; that's grown to 13% so far in April. Weekend ADRs are really impressive. So far this month, they're running 18% compared to 2019. We've had weekends this past Friday and Saturday where certain brands like La Quinta have been running upwards of 25% in average daily rates compared to 2019. Our franchisees feel that the summer of 2022 could potentially replace the summer of 2021 as the best ever. Three-quarters of them had a higher occupancy than they did back in 2021, and so we believe the trend of domestic drive travel will continue to outperform and give our franchisees the opportunity to keep on driving rates.

Let me add to Geoff's remarks. If you look at Q4 levels at 104% of 2019 in the U.S. compared to Q4 last year, which was at 109%, it was up 15% in December. October and November were up 7%. We’re viewing Q1 activity seasonally in line with the performance from October and November, the higher demand period.

Got it. Thank you.

Thanks, Mike.

Our next question is from Daniel Adam of Loop Capital.

Hey. Good morning, everyone. Thanks for taking the question. Michele, I think you mentioned in the prepared remarks that domestic RevPAR is tracking 8% above 2019 levels in April. Can you talk about where RevPAR is tracking on a global system-wide basis so far quarter-to-date? When might we expect to see international RevPAR get back to 2019 levels?

I'll start, Dan, and then maybe Michele can fill in. We saw international RevPAR improvement from 81% in Q4 to 83% in Q1. We picked up a couple of hundred basis points. Where we garnered improvement was in Canada, which is almost back to 2019 levels. Latin America improved, and aside from China, the only other region that slipped back a bit was Europe, dropping from 84% of 2019 levels to 82%. There is tremendous optimism in Europe right now with travel restrictions being lifted. We're seeing summer booking demand and forward business on the books growing.

Awesome. That's helpful. And then as an unrelated question, given the rise in interest rates, to what extent, if at all, have you seen the rising rates impact the development pipeline? Do you have any insight into how many of your franchisees have variable interest rate debt used to finance their deals?

What our franchisees are telling us is that it's never been easier to get financing from the pandemic to now. Our pipeline activity has been strong, and franchisees believe there's never been a better time to build a select service hotel than today due to financing availability. Franchisees feel they're beginning a cycle that could run another 10 years, as they're coming off the strongest cycle they’ve ever had. Their leverage is down, and their balance sheets are much stronger, pointing to why our new construction activity has really ticked up.

Great. Thanks so much.

Thanks, Dan.

Our final question is from Ian Zaffino of Oppenheimer.

Hi, great. Thank you for the color on the infrastructure bill. Could you help us out with the P&L impact of the infrastructure bill?

Our teams have been doing a lot of work on it. I will turn it over to Michele to discuss the P&L impact. Our franchisees and sales teams are very excited about what's coming. We kept our best franchise and global sales teams during the pandemic, and we are adding more to our GSO and field sales teams today to get accounts that will be contracting for this important work. We are gaining more midweek share and have been able to grow our RevPAR index significantly in that sector during the first quarter from everyday business travelers, especially around infrastructure.

Sure. The bill is calling for an incremental $550 billion over the next 5 years. If you annualize that, it represents a doubling of annual federal infrastructure spending. Currently, we are generating about $15 million of royalties from U.S. federal infrastructure spending, so we think there's an opportunity to double that contribution, assuming the new spend doesn’t displace any existing spend at local, state, or federal levels. However, labor is limited, so we expect some displacement. It wouldn't be unreasonable to assume that the total spend goal could extend beyond the targeted five years, implying less annualized incremental spend. I wouldn't take the $15 million to the bank until we have clarity on how and when the government intends to deploy those funds.

Okay, great. Can you also talk about the rate environment? I know you’ve discussed ADR. Are you hitting any elasticity? Have you looked at that regarding customer feedback? How much higher can we continue to push pricing, and how much availability is there?

We look at every available survey, and Americans are ready to travel at unprecedented levels. The most recent survey shows that 91% of Americans plan to travel in the next six months. Domestic drive destinations continue to outperform, allowing our franchisees to drive rates. We have gaps between our segments and available alternatives for consumers to vacation this summer. That gap has grown to $48, with the upper midscale to upscale segments widening to $84. This enables our Wyndham economy and mid-scale select service brand owners to continue to raise rates while providing a more upscale experience.

All right. Thank you very much for the color, guys.

Thanks, Ian.

This does conclude the question-and-answer portion of our conference. I'd be happy to return the call to Geoff Ballotti for any closing remarks.

Thanks, Leo, and thanks again, everyone, for your time this morning. Michele, Matt, and I very much appreciate everyone's continued interest in Wyndham. We look forward to talking with you and hopefully seeing many of you in person someday soon. Have a great day, everyone.

Thank you. This does conclude today's Wyndham Hotels & Resorts first quarter 2022 earnings conference call. Please disconnect your line at this time, and have a wonderful day.