WYNDHAM WORLDWIDE CORPORATION

k a $93 million decrease in net revenues in our lodging business primarily due to global RevPAR weakness
and a decline in reimbursable revenues and other franchise fees, partially offset by incremental revenues
contributed from the acquisition of U.S. Franchise Systems, Inc. (“USFS”);
k a $50 million decrease in net revenues from rental transactions at our vacation exchange and rentals
business due to a decrease in the average net price per rental, including a $60 million unfavorable impact
of foreign exchange movements;
k a $41 million decrease in ancillary revenues at our vacation exchange and rentals business from various
sources, including the impact from our termination of a low margin travel service contract and a $4 million
unfavorable impact of foreign exchange movements; and
k a $16 million decrease in annual dues and exchange revenues due to a decline in exchange revenue per
member, including a $17 million unfavorable impact of foreign exchange movements, partially offset by
growth in the average number of members.
Such decreases were partially offset by:
k a net increase of $262 million in the recognition of revenues previously deferred under the POC method of
accounting at our vacation ownership business;
k a $37 million increase in ancillary revenues at our vacation ownership business primarily associated with
the usage of bonus points/credits, which are provided as purchase incentives on VOI sales, partially offset
by a decline in fees generated from other non-core businesses;
k $30 million of incremental property management fees within our vacation ownership business primarily as
a result of rate increases and growth in the number of units under management; and
k a $9 million increase in consumer financing revenues earned on vacation ownership contract receivables
due primarily to higher weighted average interest rates earned on our contract receivable portfolio.
Total expenses decreased $1,955 million (38%) principally reflecting:
k the absence of a non-cash charge of $1,342 million for the impairment of goodwill at our vacation
ownership business to reflect reduced future cash flow estimates based on the expected reduced sales pace;
k a $272 million decrease in marketing and reservation expenses at our vacation ownership business
($217 million) resulting from the reduced sales pace and our lodging business ($55 million) resulting from
lower marketing and related spend across our brands as a result of a decline in related marketing fees
received;
k $207 million of lower employee related expenses at our vacation ownership business primarily due to
lower sales commission and administration costs;
k $150 million of decreased cost of VOI sales due to the expected decline in VOI sales;
k the absence of $84 million of non-cash impairment charges recorded across our three businesses during 2008;/
k the favorable impact of foreign currency translation on expenses at our vacation exchange and rentals
business of $58 million;
k $51 million in cost savings primarily from overhead reductions and benefits related to organizational
realignment initiatives at our vacation exchange and rentals business;
k a decrease of $32 million of costs due to organizational realignment initiatives primarily at our vacation
ownership business (see Restructuring Plan for more details);
k the absence of a $24 million charge due to currency conversion losses related to the transfer of cash from
our Venezuelan operations at our vacation exchange and rentals business recorded during 2008;
k $15 million of decreased payroll costs paid on behalf of hotel owners in our lodging business; and
k $9 million of lower volume-related expenses at our vacation exchange and rentals business.
These decreases were partially offset by:
k a net increase of $101 million of expenses related to the recognition of revenues previously deferred at our
vacation ownership business, as discussed above;
k $69 million of increased costs at our vacation ownership business associated with maintenance fees on
unsold inventory, our trial membership marketing program, sales incentives awarded to owners and
increased litigation settlement reserves;
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