Forward Looking Statements Certain statements in this presentation constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Such forwardlooking statements include projections. Such projections were not prepared in accordance with public guidelines of the American Institute of Certified Public Accountants regarding projections and forecasts, nor have such projections been audited, examined or otherwise reviewed by independent auditors of Wyndham Worldwide Corporation ( WYN ). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Wyndham Worldwide to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward looking statements are specified in Wyndham Worldwide s most recent Form 10-K under Risk Factors filed with the Securities and Exchange Commission. Except for ongoing obligations of Wyndham Worldwide to disclose material information under the federal securities laws, Wyndham Worldwide does not undertake any obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. The information in this presentation should be read in conjunction with the consolidated financial statements and accompanying notes, Management's Discussion and Analysis of Financial Condition and Results of Operations in Wyndham Worldwide's Form 10-K for the year ending December 31, 2013 filed with the Securities and Exchange Commission on February 14, 2014 and Form 10-Q for the quarter ending March 31, 2014 filed with the Securities and Exchange Commission on April 24, 2014. May 13, 2014 2
THE WYNDHAM WORLDWIDE STORY Powerful Cash Flow Drives Dependable Growth Business Execution Sustainable annual free cash flow EPS growth* Successful! Target $750M 17-21% CAGR * 2011-2015 3
Agenda Three solid platforms Strong execution Delivers dependable growth 4
WYNDHAM WORLDWIDE TODAY Leading Positions in Leisure Industry Business Segment Market Position Worldwide % of 2013 Adjusted EBITDA Major Brands Include Hotel Group #1 Hotel franchisor by hotels 23% Exchange & Rentals #1 Timeshare exchange and rental company 28% Vacation Ownership #1 Timeshare developer 49% 5
WYNDHAM WORLDWIDE TODAY Majority of Income from Fee-for-Service Businesses Revenues Advantages: ~ 40% ~ 60% Strong cash flow Low capital intensity Other Fee-for-Service Businesses Recurring revenues Stable earnings Hotel Franchising Fees Vacation Exchange Fees Vacation Rentals Fees Property Management Fees WAAM Fee-for-Service 6
WYNDHAM WORLDWIDE TODAY Uniquely Positioned in the Industry High (10%) WYN Other lodging companies High free cash flow Diversified revenue streams Cash Flow Yield Low (0%) Low Diversified Revenues product lines & demographics High 7
Three Strong Platforms for Growth Hotel Group Exchange & Rentals Vacation Ownership 8
HOTEL GROUP Building On Leading Global Position Adjusted EBITDA Strengths World s largest hotel franchisor over 645,000 rooms and approximately 7,500 hotels $271M $296M $320M-$330M 1 Leader of the economy & midscale segment $190M $214M Strategic Priorities Grow system size add new rooms retain every targeted property Strengthen value proposition upgrade and improve technology generate more bookings through our own channels Drive organizational excellence consolidate central reservation systems call center efficiency 2010 2011 2012 2013 2014E 1) Based on guidance as of April 24, 2014 9
EXCHANGE AND RENTALS Extending the Lead Rentals Strengths Exchange Strengths Adjusted EBITDA Largest professionally managed vacation rental business Access to over 107,000 rental properties Approx.1.5 million transactions completed during 2013 Leading timeshare exchange network 3.7 million members Nearly 4,500 vacation ownership resorts in over 100 countries $308M $348M $375M-$390M (2) $356M $340M (1) Strategic Priorities Expand into new geographic markets grow organically and through targeted M&A Leverage web technology investments enhance online experience & reduce costs Drive revenue and customer retention develop compelling products and services 2010 2011 2012 2013 2014E 1) Adjusted EBITDA decrease primarily due to currency ($17M) 2) Based on guidance as of April 24, 2014 10
VACATION OWNERSHIP A Transformed Business Strengths World s largest vacation ownership business 191 resorts and approximately 907,000 owners Leading innovator Adjusted EBITDA $640M - $660M (1) $621M $514M $552M Property management and consumer finance have fee-for-service components $440M Strategic Priorities Drive greater sales and marketing efficiencies Deliver better service to owners to enable greater owner satisfaction Drive further cash flow improvements develop Just-in-Time and Fee-for-Service inventory models (WAAM) 2010 2011 2012 2013 2014E 1) Based on guidance as of April 24, 2014 11
VACATION OWNERSHIP A Closer Look Recurring upgrade sales ~ 70% of sales are to existing owners Flexible points based product Enables remote market sales Recurring income Property management fees = $75M EBITDA (1) Recurring interest income Financing receivables (1) For full year 2013 12
Agenda Three solid platforms Strong execution Delivers dependable growth 13
Strong Record of Execution Key Initiatives 1 Vacation Ownership transformed 2 3 4 5 Leverage web to improve margins of Vacation Exchange Grow Vacation Rentals business Strengthen Hotel Group value proposition Strong balance sheet and financial position Delivered strong cash flow and 2013 Adjusted EPS growth of 19% 14
Vacation Ownership Transformed Major Actions (1) Major Benefits Right-sized the business Margin increased from 16% to 24% Tightened consumer lending practices Average FICO scores (2) increased to 725 Developed WAAM concept Inventory spend reduced from nearly $700M to approx. $175M target for 2014 1) Since Spin 2) Weighted Average FICO of Portfolio (at origination) 15
VACATION OWNERSHIP A CLOSER LOOK Vacation Ownership Inventory Model Highly Successful Wyndham Asset Affiliation Model (WAAM) Traditional Vacation Ownership Model Affiliate with developers Invest in development of resort properties Advantages Reduces capital intensity Increases recurring management fees Improves returns 16
Leverage Web to Improve Margins of Vacation Exchange Key Actions Web Penetration Enhanced search Improved Exchange value transparency Improved resort photography and videos Better websites for club affiliates 13% 48% 2008 2013 ~300 bps of segment margin improvement 17
Grow Vacation Rentals Business U.S. Market large $23B of annual revenue in the U.S. Close to 50/50 split between rent-byowner and professionally managed markets highly fragmented 49% of professional managers control 20 or fewer properties Just 12% of US adults have stayed in Market is under-penetrated under-penetrated a vacation rental over the past 2 years Source: PhoCus Wright Annual Report 2013 18
Strengthen Hotel Group Value Proposition Build value proposition Revamp Websites Drive direct channel bookings Improve conversion - increases of 10% to 60% Enhance Content Overhaul information and images of 7,000 properties Improve search engine results Improve Rate Integrity Better manage rates and inventory Enhance property management system synergies 19
Strong Balance Sheet and Financial Position Annual sustainable free cash flow target $750 million Well stacked capital deck no near-term maturities Investment grade ratings from three major rating agencies Cost-efficient commercial paper program 20
Agenda Three solid platforms Strong execution Delivers dependable growth 21
Segment Long-term Growth Dynamics Hotel Group Continued RevPAR recovery Technology upgrades International expansion Exchange & Rentals Migration to web for Exchange business U.S. penetration in Rentals Vacation Ownership Drive sales and marketing Improve portfolio performance WAAM inventory sourcing High-single digit growth Mid-single digit growth Mid-single digit growth Organic EBITDA growth of 6-8% 22
Our Cash Flow will Enhance Strong, Sustainable Growth 17-21%* 6-8% Share Repurchase and M&A EBITDA of Base Business Company EPS CAGR * 2011-2015 23
Disciplined Capital Deployment Drive Shareholder Value Disciplined Capital Deployment of ~$1B Annually 2014 Free Cash Flow Target: $750M Maintain existing leverage: $100M EBITDA = $300M of debt Dividends Share Repurchase Targeted M&A Investment $156M in 2013 ~30% of adj. net income $590M in 2013 Focus on fee-for-service businesses 24
Clear Evidence Our Business Model is Working Adjusted EBITDA Adjusted EPS $1,215M - $1,240M $4.23-$4.33 (2) $1,152M $3.83 +12% $1,054M $3.23 +7% +19% $976M +9% $2.49 $860M +10% +30% +13% $2.00 +25% 2010 2011 2012 2013 2014E (1) 2010 2011 2012 2013 2014E (1) 1) Based on guidance as of April 24, 2014 2) Excludes share repurchases 25
WYN Valuation Framework Price/Earnings Peer Average 23.4 WYN 16.5 Peer Average 2013 Enterprise Value / EBITDA 13.0x WYN 9.6x Peer Average Free Cash Flow Yield 5.2% WYN 8.2% As of April 24, 2014 26
IN SUMMARY Powerful Cash Flow Drives Dependable Growth Execution Solid Platforms Growth Strong record of execution Building on three solid platforms Delivering dependable growth Transformed Vacation Ownership business model ~$750M annual sustainable free cash flow target Extending lead of all platforms Continuing to optimize operations Using free cash flow for targeted growth Targeting 17-21% EPS CAGR* * 2011-2015 27
Investor contact: Margo C. Happer Senior Vice President, Investor Relations Wyndham Worldwide Corporation (973) 753-6472 margo.happer@wyn.com