Hospitality Company Annual Report Analysis - Essay Example

Wyndham worldwide is the world’s largest and most diversified hospitality service company in the world with over 7,200 establishments in six continents. The company owns some of Wyndham worldwide has become highly diversified in their business with offerings on the economy, mid-scale and luxury sectors of the hospitality industry. The company’s well diversified business portfolio has allowed Wyndham as a whole to maximize market share, business efficiency and profit potential while minimizing overall business risks for the company as a whole.

For example; Wyndham owns and operates over 15 of the biggest hospitality brands and hotel chains in the world such Howard Johnson, Days Inn, Travelodge, Ramada International and Wyndham Hotels and Resorts among others. As a whole the company has divided its business operations in three distinct segments:a) Lodging-by franchising hotels in the economy, mid-scale and upscale as well as extended stay categories of the lodging industry. The company also provides hotel management services for full-service hotels worldwide.

Through their franchising agreements the company provides nightly bookings for their franchisee hotel owners through promotion of brand awareness, global sales promotions, ensuring customer service and satisfaction as well as upholding brand image. A large percentage of the revenue from this most profitable segment comes from franchise fees based on a percentage of gross revenues, royalties, as well as service and marketing fees.Another important source of income in the lodging segment is management fees that are collected under management contracts which offer their customers all the benefits of their global branding as well as all management, marketing, financial as well as booking and reservation services.

The company also earns revenues from the Wyndham rewards program, when a participating customer stays at one of our hotels.b) Vacation Exchange and Rentals-The company affiliates themselves with developers and owners of vacation properties to allow owners of intervals to exchange their ownership stake for other intervals or leisure services within our network of vacation exchange business participants. This segment derives its revenues mostly from annual membership dues and exchange fees for members trading their intervals.c) Vacation Ownership- develop, market and sale and financing of VOI (vacation ownership interest) for prospective customers.

This business segment provided some of the highest revenues for the company in 2010.Wyndham international has done an excellent job of aligning its business model, brand portfolio and corporate culture to fit their global mission statement of becoming “the global leader in travel accommodations, welcoming our guests to iconic brands and vacation destinations through our signature Count On Me! Service.” In 2010 the company generated revenues of $3851 million (Annual Report: Windham Worldwide, 2010).

In comparison with the previous year the company generated 2.69% higher revenues. The net income of the company in 2010 was $379 million. The net margin of the firm was a very healthy 9.8%. If we look at each of the individual business segments, the lodging division increased operating revenues increased $28 million (4%) and EBIT increased $14 million (8%) in 2010 compared to 2009, demonstrating a significant increase of not only revenues but also operating efficiency. The vacation exchange and rental segment also enjoyed a healthy 4% increase in revenues and a 2% increase in EBIT equivalent to $6 million.

The VOI segment enjoys some of the highest operating revenues percentage wise for the firm of all its business divisions. As a whole financially the company has generated significant increases in operating revenues, while at the same time strengthening its balance sheet by increasing its total asset base and decreasing is overall liabilities. Overall the company is poised for future economic growth, as well as being able to withstand the swings related to the uncertainty and instability of the current global economic climate as well as minimizing its business exposure by continuing to increase its operating efficiency and lower operating costs.

ReferencesAnnual Report: Windham Worldwide Corporation. Retrieved August 22, 2011 from http://www.wyndhamworldwide.com/Portals/0/pdf/10-k/wyndham-worldwide-2010-10k.pdf