Wyndham Destinations, Inc. announced it is withdrawing its full-year 2020 guidance and providing business updates relating to the evolving impact of novel coronavirus/COVID-19 on travel demand and the global economy.
Michael D. Brown, president and CEO of Wyndham Destinations noted, “At Wyndham Destinations, our priority remains the safety and well-being of our owners, guests and associates. As the travel industry is currently being impacted by COVID-19 in unprecedented ways, we are working around the clock to ensure the safety of all of our constituents and the continuity of our business. The travel industry will endure, vacation time will remain as important as ever, and we will get through this difficult time. Our organization is squarely focused on taking the right steps to ensure that we are in the best position to welcome back our owners, members and guests as soon as possible.”
“Even if leisure travel is suspended for an extended period, we have the cash and liquidity necessary to sustain the business,” said Brown. As a result of these issues, the Company is providing its stakeholders with updates to financial performance and liquidity, as well as actions being taken to ensure for the care of owners and associates.
Owners & Guests
As part of its efforts to keep guests and associates safe, on March 18, 2020, Wyndham Vacation Clubs implemented a reservation freeze on new bookings through April 30, and proactively cancelled all existing reservations for the same time period. Customers are able to rebook via its websites, and the Company has ramped up at-home call center and social media teams around the globe to help customers rebook for future dates. For real-time updates on the impact of COVID-19 at the Company’s resorts, please visit https://clubwyndham.wyndhamdestinations.com/us/en/covid-19-information.
Resorts
Most Wyndham Vacation Clubs resorts have already temporarily closed, or are in the process of closing, to slow the spread of COVID-19 and comply with local government orders. The common areas and amenities at all company-managed resorts have been closed since March 15, 2020.
Update on 2020 Outlook
On February 26, 2020, the Company provided first quarter and full-year 2020 guidance excluding the impact of COVID-19. Given the unprecedented and fluid nature of the current environment, the Company is withdrawing its guidance until there is a better understanding of the duration and depth of significantly reduced leisure travel on the Company’s business.
Business Performance
The cancellations of reservations at the Company’s resorts and significant declines in tourist travel near the Company’s sales centers have led to significant declines in its vacation ownership interest (VOI) sales. In the first two months of 2020, tours were 9% higher year-over-year. Steep declines in leisure travel in March have resulted in an estimated year-over-year tour decline of approximately 55% for the month and an estimated decline of 17% for the first quarter. At this time the Company does not anticipate any VOI sales in April.
Balance Sheet
At the end of February, the Company’s leverage ratio was 2.7x. As a precautionary measure, and to ensure adequate liquidity for a sustained period, the Company recently fully drew its $1 billion Revolving Credit Facility to further increase its cash position and preserve financial flexibility. As of March 25, 2020, the Company had cash and cash equivalents of just over $1 billion. The Company’s next long-term debt maturity is the $250 million secured note due March 2021.
In addition, the Company is pursuing actions to further improve liquidity by reducing capital expenditures, inventory spending and operating expenses, as well as other actions including suspending share repurchases.
As previously announced, the Company will be paying its first quarter dividend of $0.50 per share on March 31, 2020 to shareholders of record as of March 16, 2020.
“We know that in times of uncertainty, people want to spend time with family and friends,” Brown said. “As restrictions on global travel are eased, we are well positioned to deliver great vacations to the nearly 880,000 owner families and 4 million exchange members who have entrusted us for a lifetime of travel. We’re eager to welcome them back to their resorts as soon as circumstances allow.”