WYNDHAM WORLDWIDE CORPORATION

Lodging
Net revenues and EBITDA decreased $93 million (12%) and $43 million (20%), respectively, during 2009
compared to 2008. The decrease in revenues primarily reflects a decline in worldwide RevPAR and other franchise
fees. EBITDA further reflects lower marketing expenses, the absence of a non-cash impairment charge recorded
during 2008 and the impact of the USFS acquisition, partially offset by higher bad debt expense.
The acquisition of USFS contributed incremental net revenues and EBITDA of $11 million and $6 million,
respectively. Excluding the impact of this acquisition, net revenues declined $104 million reflecting:
k a $60 million decrease in domestic royalty, marketing and reservation revenues primarily due to a RevPAR
decline of 15%;
k $15 million of lower reimbursable revenues earned by our hotel management business;
k a $14 million decrease in other franchise fees principally related to lower termination and transfer volume;
k a $12 million decrease in international royalty, marketing and reservation revenues resulting from a
RevPAR decrease of 19%, or 14% excluding the impact of foreign exchange movements, partially offset
by an 8% increase in international rooms; and
k a $3 million decrease in other revenues.
The RevPAR decline was driven by industry-wide occupancy and rate declines. The $15 million of lower
reimbursable revenues earned by our property management business primarily relates to payroll costs that we incur
and pay on behalf of hotel owners, for which we are entitled to be fully reimbursed by the hotel owner. As the
reimbursements are made based upon cost with no added margin, the recorded revenues are offset by the associated
expense and there is no resultant impact on EBITDA. Such amount decreased as a result of a reduction in costs at
our managed properties due to lower occupancy, as well as a reduction in the number of hotels under management.
In addition, EBITDA was positively impacted by:
k a decrease of $55 million in marketing and related expenses primarily due to lower spend across our
brands as a result of a decline in related marketing fees received;
k the absence of a $16 million non-cash impairment charge recorded during 2008 (see Note 21 —
Restructuring and Impairments for more details); and
k $1 million of lower costs relating to organizational realignment initiatives (see Restructuring Plan for more
details).
Such decreases were partially offset by:
k $16 million of higher bad debt expense principally resulting from operating cash shortfalls at managed
hotels that have experienced occupancy declines;
k a non-cash charge of $6 million to impair the value of an underperforming joint venture in our hotel
management business;
k $5 million of incremental costs due to remediation efforts on technology compliance initiatives;
k the absence of $2 million of income recorded during the second quarter of 2008 relating to the assumption
of a credit card marketing program obligation by a third party; and
k the absence of $2 million of income associated with the sale of a non-strategic asset during the third
quarter of 2008.
As of December 31, 2009, we had approximately 7,110 properties and 597,700 rooms in our system.
Additionally, our hotel development pipeline included approximately 950 hotels and approximately 108,100 rooms,
of which 43% were international and 51% were new construction as of December 31, 2009.
Vacation Exchange and Rentals
Net revenues decreased $107 million (8%) while EBITDA increased $39 million (16%), respectively, during
2009 compared to 2008. A stronger U.S. dollar compared to other foreign currencies unfavorably impacted net
revenues and EBITDA by $81 million and $23 million, respectively. The decrease in net revenues reflects a
$50 million decrease in net revenues from rental transactions and related services, a $41 million decrease in
ancillary revenues and a $16 million decrease in annual dues and exchange revenues. EBITDA further reflects
favorability resulting from the absence of $60 million of charges recorded during the fourth quarter of 2008,
$51 million in cost savings from overhead reductions and benefits related to organizational realignment initiatives
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