Equity Research: Wyndham Hotels & Resorts Inc.

Considering myself a travel passionate, I was fortunate to have the opportunity to travel throughout the world over the years, provided by my parents. Alongside with the Air Travel segment, the Hotel Industry, integrated into the Food and Beverage Industry was always present. Therefore, when presented with the industry options, the Hospitality Industry was my first choice. Wyndham Hotels & Resorts was the selected company to perform my Master Final Work (MFW) under the research report format recommended by the CFA (Chartered Financial Analyst) Institute. Under the ticket WH, Wyndham Hotels & Resorts operates in the Hotel Industry and is present in 95 countries with nearly 790,000 rooms in 2020YE. It is considered the biggest hotel franchiser company by number of branded hotels and the fourth largest hotel group by the number of rooms in the world. The recommendation for 2022YE is BUY, with a target price of $93.89/share, using the WACC Method and implying a 29.15% upside potential from August 31st, 2021, closing price of $72.70/share. Due to the industry volatility and its high dependence on macroeconomic indicators, a High-Risk classification approach was chosen for the valuation. To complement the valuation, other methods were calculated as the Flow to Equity, the Adjusted Present Value (APV), and a market-based valuation based on a selection of comparable companies. The uncertainty in the industry primarily cause by COVID-19 explains the existing mispricing present in the company share price. The evolution of COVID-19 and the future governmental policies concerning travel restrictions, lockdowns can influence and change the recommendation. This project is structured to enhance the investor’s understanding of the entity, the industry where it is integrated, the recommendations and valuation methods used, and the investment risks associated. It starts with the company business description, followed by their type of governance and how ESG is approached. Then, an Industry and competitive position analysis is performed, following a top-down approach. Moreover, the recommendation is set alongside with the methods used, the main forecast assumptions and ratio analysis. Finally, the investment risks were assessed, along with the recommendation price sensitivity through the Monte Carlo Simulation and the sensitivity analysis. All the public information used to perform this Equity Research was disclosed and available as of 2021, August 31st.