WYNDHAM WORLDWIDE CORPORATION

as annual budget preparation, financial analysis and extensive food and beverage services. Revenues earned from
our management business include management and service fees. Management fees are comprised of base fees,
which typically are calculated based on a specified percentage of gross revenues from hotel operations, and incentive
fees, which typically are calculated based on a specified percentage of a hotel’s gross operating profit. Service fees
include fees derived from accounting, design, construction and purchasing services and technical assistance provided
to managed hotels. In general, all operating and other expenses are paid by the hotel owner and we are reimbursed
for our out-of-pocket expenses. We are also required to recognize as revenue fees relating to payroll costs for
operational employees who work at certain of our managed hotels. Although these costs are funded by hotel owners,
we are required to report these fees on a gross basis as both revenues and expenses; there is no effect on our
operating income.
We also earn revenues from the Wyndham Rewards loyalty program when a member stays at a participating
hotel. These revenues are derived from a fee we charge based upon a percentage of room revenues generated from
such stay. These loyalty fees are intended to reimburse us for expenses associated with administering and marketing
the program.
Reservation Booking Channels
In 2010, hotels within our system sold 7.7% or approximately 77.7 million, of the one billion hotel room nights
sold in the U.S. and another 26.3 million hotel room nights across other parts of the world. Over 95% of the hotels
in our system are in the economy and midscale segments of the global lodging industry. Economy and midscale
hotels are typically located on highway roadsides for convenience to business and leisure travelers. Therefore, the
majority of hotel room nights sold at these hotels is to guests who seek accommodations on a walk-in basis, which
we believe is attributable to the brand reputation and recognition of the brand name.
For guests who book their hotel stay in advance, we booked on behalf of hotels within our system a total of
32.0 million room nights in 2010, which represents 41% of total bookings at these hotels and includes 15.1 million
room nights booked through our Wyndham Rewards loyalty program.
Our most significant and fastest growing reservation channel is the Internet, which includes proprietary
websites for each of our brands and for the Wyndham Rewards loyalty program, as well as OTAs and other thirdparty
Internet booking sources. In 2010, we booked 17.4 million room nights through the Internet on behalf of U.S.
hotels within our system, representing 22.5% of the total bookings at these hotels. Since 2005, bookings made
directly by customers on our brand websites have increased at a five year CAGR of approximately 13.0%, and
increased to over 7.8 million room nights in 2010, and bookings made through OTAs and other third-party Internet
booking sources increased at a five year CAGR of approximately 19.0% to almost 9.6 million room nights in 2010.
Therefore, a key strategy for reservation delivery is the continual investment in and optimization of our
eCommerce capabilities (websites, mobile and other online channels) as well as the deployment of advertising spend
to drive online traffic to our proprietary eCommerce channels, including through marketing agreements we have
with travel related search websites and affiliate networks. In addition, to ensure our franchisees receive bookings
from OTAs and other third-party Internet sources, we provide direct connections between our central reservations
system and strategic third-party Internet booking sources. These direct connections allow us to deliver more accurate
and consistent rates and inventory, send bookings directly to our central systems without interference or delay and
reduce our franchise distribution costs.
Apart from the Internet, our call centers contributed almost 2.6 million room nights in 2010 which represents
3.4% of the total bookings at the U.S. hotels within our system. We maintain call centers in Saint John, Canada;
Aberdeen, South Dakota; and Manila, Philippines that handle bookings generated through toll-free numbers for our
brands.
Our global distribution partners, such as Sabre and Amadeus, and global sales team also contributed a total of
2.5 million room nights in 2010, which represents 3.2% of the total bookings at the U.S. hotels within our system.
Our global distribution partners process reservations made by offline travel agents and by any OTAs that do not have
the ability to directly connect with our reservation system. Our global sales team generates sales from global and
meeting planners, tour operators, travel agents, government and military clients, and corporate and small business
accounts, to supplement the on-property sales efforts.
Loyalty Program
The Wyndham Rewards program, which was introduced in 2003, has grown steadily to become one of the
lodging industry’s largest loyalty programs (based upon number of participating properties). The diversity of our
brands uniquely enables us to meet our members’ leisure as well as business travel needs across the greatest number
of locations and a wide range of price points. The Wyndham Rewards program is offered in the U.S., Canada,
Mexico, throughout Europe and in China. As of December 31, 2010, there were 23.4 million members enrolled in
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