Stephen Grambling: Hi. Thanks. I guess following up on shareholder feedback, I guess, one area we get questions on is just how the pipeline and net unit growth translates to fees. So looking at the pipeline, you did give some stats on the growth in midscale and above. Can you help quantify or provide color on how the royalty rates and RevPAR for the pipeline compares to the existing base, especially as we think about some of the new brand launches and how the pipeline has evolved over the past few years?
Michele Allen: Yeah. Sure. If you think about our development focus on the more revenue of creative deals, our domestic pipeline right now carries a RevPAR premium in excess of 15% compared to our existing system and an average royalty rate that is at least 5 basis points higher than our current system. And specifically double-clicking into the midscale and above segments, we see a 30% RevPAR premium for those hotels compared to our existing system. But it’s not just in the U.S. that we’re driving towards this objective of increasing royalty rate and bringing in higher RevPAR rooms. We see it internationally. And as we focus on growing our direct franchising business and there we’re seeing royalty rates that are 15% higher on average than our current international system.
Stephen Grambling: I think that nailed it. Thank you.
Geoff Ballotti: Thanks, Stephen.
Michele Allen: Thank you.
Geoff Ballotti: Little gambling in the background.
Operator: Thank you. We go next now to Steve Pizzella of Deutsche Bank.
Steve Pizzella: Thanks. Good morning, everyone.
Geoff Ballotti: Good morning, Steve.
Steve Pizzella: The February to March RevPAR improvement noted was pretty impressive, especially in the context of STR, limited service, RevPAR decelerating from February to March, implying some share gains for you. What do you think is driving that for you and how should we think about that moving forward?
Geoff Ballotti: Yeah. We really did, Steve and see that pick up into March. I think we saw well over 100 basis points of share gain in March as leisure ramped back up and so much of our business is leisure-focused. I think we’re also seeing travelers whose government and corporate per diems have been tapped out. They’re beginning to try us. Our brands have always outperformed the broader lodging market segments when there’s any pressure out there on the macro side and we think we could continue to do it. And certainly our brands, our large brands, continue to over-index from a share standpoint. Our most recent April ADD [ph], our largest brands, La Quinta, Hawthorn Suites, well over fair share, Microtel as well. Days Inn, again, very proud of the team and all the great work we’re doing.
With Days Inn and Super 8, Days Inn has jumped from 117% to 120% fair market share in our latest filing and it’s really being driven by all the great work our marketing teams are doing on the Wyndham Reward side. Our share of occupancy continues to grow. It’s up — I think it’s up over 700 basis points domestically versus where it was pre-COVID. And so we’re going to continue to promote into that and look to continue to grow share, becoming more competitive, certainly on ADR further out, and looking for that base business, that infrastructure business, to put on the books as often and as frequently as we can as our global sales teams could get that contracted business in. That allows franchisees to drive rate closer to arrival date on the weekends and that’s what we’re getting to see.
Steve Pizzella: Okay. Thank you. And then just pivoting to margins, the margins ex marketing spend were fairly strong in the quarter. How much of the year-over-year margin gains are from the higher margin ancillary revenue and how much is from some of the core operating expenses, and how should we think about moving forward?
Michele Allen: I think it’s about, off the top of my head, and Matt, you’ll have to go back to confirm, but I think it’s about two-thirds from the ancillary and maybe a third from the cost side.
Geoff Ballotti: Yeah. That sounds about right.
Michele Allen: We are — yeah. And we do — we are expecting margins to be pretty comparable year-over-year on a full year basis.
Steve Pizzella: Okay. Thanks. Appreciate it.
Operator: We’ll go next now to Ian Zaffino of Oppenheimer.
Isaac Sellhausen: Hey. Good morning. This is Isaac Sellhausen on for Ian. Thanks for taking all the questions. Just to follow up on the infrastructure impact, could you maybe help us understand how the 1% to 2% uplift is split between ADR and occupancy? I’m not sure if you can break out the statistics, but it sounds like there’s obviously a big opportunity more broadly to bridge the gap to 2019 occupancy levels.
Geoff Ballotti: Absolutely. We see tremendous occupancy, more so than rate. One of the biggest issues that we’ve got out there is our rate — our pricing pressure, as we said in our prepared remarks, with rate up 14%. We are educating and working with our franchisees to make sure that when one of our field sales, global sales teams bring them an infrastructure account, that they’re not only immediately responding to the RFP, but that they’re realizing that that base business that I just talked about is so important, albeit a much longer length of stay at a lower average daily rate.
Isaac Sellhausen: Okay. Understood. Thanks. And then a quick follow-up on Extended Stay, when should we expect the first ECHO Suites locations to open up? And maybe what’s the timeline for conversions at WaterWalk as well?
Geoff Ballotti: Sure. The — it’s a great question we ask our developers all the time. Slide 8 of our investor presentation, if you flip to that, shows a half a dozen of the nearly dozen that are nearing completion and should be opening soon across the country. We now have a dozen hotels under construction in 10 states from Taxes well from Florida all the way across the country and another 30 sites in active development. It’s going to be up to the local inspection offices who receives their first certificate of occupancy. But my guess is it should be sometime this summer, developers of Plano, Texas and Spartanburg, South Carolina would be my guess. They’re racing each other to have the grand opening that we’ll all certainly attend.
As to WaterWalk, I think, in terms of timing and we’ve just announced that deal, we’re just right now doing everything that they’re looking for in terms of bringing them onto our distribution platforms and shifting more mix to direct and getting them a more Wyndham business to drive operating margins. But as I said, this is a pipeline that our franchise sales team is very excited about beginning to build, and it’ll be a mix of conversion and new construction going forward.
