Wyndham Worldwide is feeling the financial impact of the three major hurricanes that swept through Texas, Florida, and the Caribbean as it pursues its planned spinoff in 2018.

The hurricanes that swept through the Caribbean and Florida in particular — Hurricanes Irma and Maria — forced the temporary closures of Wyndham’s vacation ownership sales centers, a partial closure of the company’s Wyndham Grand Rio Mar resort in Puerto Rico, and led to reduced timeshare exchanges because of travel disruptions. Two of Wyndham’s vacation ownership sales centers in the Caribbean are still closed.

Hurricanes reduced third quarter revenue by $13 million, net income by $6 million, earnings before interest, taxes, depreciation, and amortization (EBITDA) by $9 million, and adjusted earnings per share by six cents.

Despite the impact of the hurricanes, Wyndham Worldwide saw 4 percent growth in its third quarter revenues compared to 2016 for a total of $1.6 billion.

Wyndham Worldwide chief financial officer David B. Wyshner said the financial impact of the storms will continue to be felt in the fourth quarter, with an estimated reduction in fourth quarter revenues ranging anywhere from $20 to $30 million, and a reduction in net income anywhere from $9 to $15 million.

The company has reduced its projections for the 2017 fiscal year following the hurricanes.

On the Road to a Spin Off

Shareholders and investors will watch Wyndham Worldwide’s financial health carefully over the next few months as the company pursues a planned spinoff, which CEO Stephen P. Holmes expects to be completed by the second quarter of 2018.

Wyndham is one of the last major U.S. hotel companies to pursue this business model structure, following in the footsteps of Marriott International and Hilton Worldwide.

Holmes reiterated that the company intends to sell off its valuable European vacation rental business, which “generates $750 million in revenues at attractive margins” and is “under appreciated by the U.S. investor base.” He’s optimistic that this business will be sold prior to the completion of the spinoff next year.

Hotel Group Plans

Wyndham Hotel Group president and CEO Geoff Ballotti and his colleague, Wyndham Vacation Ownership president and CEO Mike Brown, introduced themselves to investors as the new CEOs of the soon-to-be spun-off companies.

Ballotti noted that in the last three years, Wyndham has removed more than 80,000 “substandard domestic rooms” from its system and given its brands new brand positioning, and that Wyndham’s domestic pipeline is up 35 percent in the last three years.

The company is continuing to transition its brands onto a new cloud-based guest reservations system powered by Sabre and that nine of its 20 brands have already migrated onto the new technology platform.

Echoing comments he made at last month’s Skift Global Forum, Ballotti said this is “a time when loyalty has never mattered more,” touting statistics related to the Wyndham Rewards loyalty program. He said that since the program was launched in 2015, Wyndham has seen 55 percent more enrollments at hotel front desks and member redemptions have increased from 64 percent to more than 80 percent. Balotti expects those redemption opportunities will expand to 20,000 of Wyndham’s vacation ownership and vacation rental properties after the spinoff as well.

In the third quarter, the hotel group saw domestic revenue per available room (RevPAR) rise 2.3 percent in comparison to the same period last year, and global RevPAR rose 3.3 percent.

Vacation Ownership Is Focused on New ‘Lifeblood’

Brown, who joined Wyndham in April and previously worked at Hilton Grand Vacations and Marriott Vacations Worldwide, said he wants to “fully leverage Wyndham Rewards” and appeal to “everyday travelers” by bringing on more new owners, whom he referred to as the “lifeblood of our business.”

Although Wyndham Rewards only generates less than 5 percent of new sales for Wyndham Vacation Ownership, he said there’s “significant untapped potential to grow” and hotel-related leads are up 48 percent from last year.

Brown will be CEO of the new business unit combining Wyndham Vacation Ownership and Wyndham Destination Network, its vacation rental and exchange business which has been led by current president and CEO Gail Mandel. This business includes RCI, which purchased LoveHomeSwap in August for an estimated $44.6 million.

Photo Credit: The Wyndham Grand Rio Mar Resort in Puerto Rico suffered significant damage during the two recent hurricanes. Wyndham Worldwide has lowered its 2017 projections as a result of recent hurricanes. Wyndham Worldwide