Good day, and welcome to the Wyndham Hotels & Resorts fourth quarter and full year 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Matt Capuzzi, Senior Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, and thank you for joining us. With me today are Geoff Ballotti, our CEO, and Michele Allen, our CFO. Before we get started, I wanna remind you that our remarks today will contain forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These risk factors are discussed in detail in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the SEC. We'll also be referring to a number of non-GAAP measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP metrics are provided in our earnings release, which is available on our investor relations website at investor.wyndhamhotels.com.
We are providing certain measures discussing future impact on a non-GAAP basis only because, without unreasonable efforts, we are unable to provide the comparable GAAP metric. In addition, last evening, we posted an investor presentation containing supplemental information on our investor relations website. We may continue to provide supplemental information on our website in the future. Accordingly, we encourage investors to monitor our website in addition to our press releases, filings submitted with the SEC, and any public conference calls or webcasts. With that, I will turn the call over to Geoff.
Thanks, Matt. Thanks, everyone, for joining us this morning. We're thrilled to report that our Q4 results finished stronger than our expectations with full year reported global RevPAR growth of over 16%, net room growth of 4%, and adjusted EBITDA of $650 million. We generated $360 million of free cash flow in 2022 and returned over $560 million to our shareholders, which represented 7% of our market cap. By all accounts, it was an outstanding year for Wyndham Hotels & Resorts. We grew net rooms by 4%, including 80 basis points of growth from the acquisition of our 23rd brand, Vienna House by Wyndham. Excluding Vienna House, we opened 64,000 rooms for the year, more than one hotel each and every day.
This represents 20% more rooms than we added last year. Here in the United States, we added 27,000 rooms with some great new hotels like the StoneHill Lawrence, a AAA 3- Diamond hotel outside of Kansas City, who converted to our Trademark Collection brand, and the opening of our first two dual brand new construction La Quinta Hawthorn Suite Hotels in Texas, a combined extended stay and select service hotel in a midscale space designed to streamline development and operational costs by utilizing a shared lobby, fitness center, meeting rooms, bar, and other amenities. Internationally, we opened 37% more rooms organically in 2022 than we did last year, and 2% more than we did back in 2019. Latin America led the way with 14 luxury resort additions to our Registry Collection brand across the Caribbean and Mexico.
In the fourth quarter, our Latin America team welcomed our first Wyndham Grand to Mexico with the opening of the beachfront Wyndham Grand Cancun Resort, centrally located in Cancun's Hotel Zone. Our EMEA region also had a tremendous year, opening 57% more rooms organically than they did last year or 6% higher than 2019, with impressive fourth quarter additions like The Balkan Jewel Resort, a Trademark Collection conversion in the resort town of Razlog near Sofia, Bulgaria, and the Ramada Riyadh King Fahd, the first new Ramada addition since buying back our master license agreement in Saudi Arabia. In Southeast Asia, we grew net rooms by 5%, opening 40% more rooms in 2022 than we did in 2021.
After many years of development, we welcome the beautiful new 949 room Wyndham Danang Golden Bay Resort directly on the beach in this former French colonial port, marking the 14th hotel opening for our Asia Pacific development team in Vietnam. Finally, our China direct development team grew net rooms by another impressive 10%. Despite the sporadic lockdowns and travel restraints many of our team members continued to face throughout the fourth quarter, which have now thankfully dissipated, the team added more direct franchise rooms than they did in the fourth quarter of 2019, and nearly twice as many rooms than they did in the fourth quarter of last year.
With the opening of hotels like the Wyndham, the Wyndham Grand, and the La Quinta Shanxi, three beautiful new hotels located in the business district in the heart of Shanxi Province, featuring quarter direct access to Shanxi's International Convention and Expo Center. This new La Quinta Shanxi represents our second new construction La Quinta to open in China in 2022. On the retention front, we improved for the second consecutive year to a record high global rate of 95.3%, including the first time that our international retention rate has exceeded 95%, an indication of our ever improving owner first value proposition. We grew our development pipeline sequentially by 3% and by 12% versus prior year to a record 219,000 rooms and 1,700 hotels. This marks Wyndham's tenth consecutive quarter of sequential pipeline growth.
Our teams awarded 882 contracts globally for over 113,000 room additions, which is over three new contracts awarded each and every business day. The number of domestic contracts signed in the fourth quarter was 40% higher than what we awarded last year, nearly 90% higher than what we awarded in the fourth quarter of 2019, reflecting record developer interest in our brands. For the full year, we signed 563 contracts in The U.S. for 62,000 room additions, which is nearly double the amount signed in 2019 and 65% more than last year. Fourth quarter new construction domestic executions increased 95%.
Notably, we awarded another 50 ECHO Suites by Wyndham contracts this quarter to establish developers and experienced extended stay operators, bringing the total number of contracts awarded to 170 hotels in just 9 short months since launching the brand last March, making Echo the hotel industry's fastest growing new brand launch of 2022. We broke ground on our first 3 Echo hotels in the last few months of 2022, we expect to open our first ECHO Suites by Wyndham hotels later this year as we break ground on another 24 Echo hotels in 2023. On a full year basis, new construction domestic executions increased 130% year-over-year, while domestic conversion executions increased 30% compared to 2021. Developers are selecting by Wyndham new construction offerings now more than they ever have.
Our economy new construction brand, Microtel, added 2,200 rooms to its domestic pipeline in 2022, driven by developer interest in its cost efficient Moda prototype. Upper midscale brands like Wyndham Garden added 1,300 rooms to its domestic new construction pipeline. In the upscale segment, we saw continued strong new construction demand for brands like Wyndham, which grew its US pipeline by 1,700 rooms this year. Consumer demand remains strong. Our middle-class customers continue to spend more on travel than they ever have, and they're staying longer than they were back in 2019, given hybrid work environments. We saw booking windows increase 18% versus prior year to over 14 days, with guests planning further ahead given space constraints and the fear of being blocked out as so many were last spring and summer.
Thursday and Sunday night occupancies and our guests average length of stays have both continued to climb in the fourth quarter versus where they were back in 2019. All of these trends are giving our franchisees the confidence to continue to yield up in their pricing with the new revenue management tools we're providing to them. Combined with the constant messaging that real ADR for the select service space remains essentially flat to where it was four years ago. We believe that leisure travel remains the number one priority for discretionary consumer spend among middle income Americans in 2023, as so many recent consumer surveys from organizations such as MMGY and the American Society of Travel Advisors have indicated. At the same time, we've seen strong growth in our infrastructure related revenues, which makes up about 20% of our US royalties.
This area has always been a strength for Wyndham, and with the size of the pies set to grow substantially as the government begins to deploy the $1.5 trillion in infrastructure and CHIPS Act spending, we've been making further investments here to grow our share. Those investments have already begun paying off with domestic weekday occupancy in our economy hotels at their highest absolute levels on record. Our general infrastructure related revenues increased double digits in the fourth quarter versus 2019, a trend that began back in the second quarter of 2021. We're confident that it will continue to strengthen throughout 2023 as projects for new roads, bridges, rail, water systems, airports, broadband, and public transit begin.
Funneling the hundreds of billions of dollars to the States is a heavy lift that will take time and require coordination from agencies on both the federal and the state levels as these projects commence over the next several years in the markets where our economy and mid-scale small business owners will benefit. We estimate that this new level of spend represents an opportunity for us to generate over $3.3 billion of incremental revenue for our franchisees and over $150 million of incremental royalties for Wyndham over the spend period. Our award-winning Wyndham Rewards loyalty program, recognized as the best hotel loyalty program for the fifth consecutive year by the readers of USA Today, grew its enrollments by 8% over the past 12 months and now stands at 99 million members.
Wyndham Rewards helped drive a 23% increase in direct bookings to our Brand.com sites, outpacing the rate of growth across all third-party channels and once again representing a record high level of contribution for our Brand.com sites. Our core values and our economy service culture are at the heart of what drives our growth and what makes Wyndham such a great place to work. There's no better measure of why we are such a great place to work than our most recent team member engagement survey, which generated record high results. It was no surprise to see Wyndham Hotels & Resorts qualify as a constituent of the 2022 Dow Jones Sustainability Index, a global index consisting of the top 10% of the largest 2,500 companies in the S&P Global Broad Market Index based on sustainability and environmental practices.
We sincerely thank our valued team members without whose support none of this would be possible. With that, I'll turn the call over to our CFO, Michele Allen. Michele?
Thanks, Geoff. Good morning, everyone. I'll begin my remarks today with a detailed review of our fourth quarter and full year results. I'll then review our cash flows and balance sheet, followed by our 2023 outlook. We generated $310 million of fee-related and other revenues, and $126 million of adjusted EBITDA in the fourth quarter, bringing our full year fee-related and other revenues to $1.35 billion and adjusted EBITDA to $650 million, both above our expectations. Our franchising segment grew fourth quarter revenue by 12% year-over-year, primarily reflecting global RevPAR growth and higher license fees.
Adjusted EBITDA increased 8% to $138 million as the revenue increases were partially offset, as expected, by the timing of higher marketing spend in the quarter, which unfavorably impacted margin by 200 basis points. Excluding this timing impact, our Adjusted EBITDA grew 13% in the fourth quarter and our Adjusted EBITDA margin remained consistent with prior year. In our hotel management segment, fourth quarter revenue and Adjusted EBITDA declines reflected the sale of our select service management and owned hotel businesses, which collectively contributed approximately $38 million in fee-related and other revenue, and $12 million in Adjusted EBITDA in 2021. Within our corporate and other segment, our fourth quarter expenses were in line with expectations or relatively flat compared to 2021.
Fourth quarter adjusted diluted EPS was $0.72, a 4% increase year-over-year or approximately 16% on a comparable basis. This increase reflects adjusted EBITDA growth in our hotel franchising segment, as well as a benefit from our share repurchase activity. Turning to full year results. Our franchising segment grew revenue by 16% year-over-year, primarily reflecting global RevPAR growth and higher license fees. Adjusted EBITDA increased 15% to $679 million, and our adjusted EBITDA margin was consistent with 2021, despite ongoing inflationary pressures.
In our hotel management segment, full year revenue and adjusted EBITDA declines reflected the first half of 2022 exit of our select service management and owned hotel businesses, which contributed fee-related and other revenue of $50 million during 2022, and $125 million in 2021, and adjusted EBITDA of $18 million during 2022, and $37 million in 2021. Within our corporate and other segment, we saw $7 million of higher expenses due to inflationary cost pressures in line with expectations. Full year adjusted diluted EPS was $3.96, a 25% increase or approximately 29% on a comparable basis. This increase reflects adjusted EBITDA growth in our hotel franchising segment, lower net interest expense, and a benefit from our share repurchase activity.
Before moving on to free cash flow, let me take a moment to discuss current regional RevPAR performance. Global RevPAR in constant currency grew 15% year-over-year in the fourth quarter, up from 12% in the third quarter. Domestically, RevPAR finished 12% ahead of 2021 and 9% ahead of 2019. US RevPAR growth accelerated to 480 basis points in the fourth quarter from 250 basis points in the third quarter. For the first six weeks of 2023, RevPAR for our brands has continued to accelerate, with The U.S. up approximately 600 basis points year-over-year. Internationally, fourth quarter constant currency RevPAR ran 46% ahead of last year and 23% above 2019.
All regions, with the exception of Asia-Pacific, generated RevPAR well in excess of both 2019 and 2021 levels. Full year international occupancy finished down 21% to 2019 and will continue to provide a meaningful tailwind for us in the coming quarters as demand continues to grow overseas, especially in our Asia-Pacific and EMEA regions, which for the whole of 2022 were only 68% and 88%, respectively, of 2019 levels. Turning to free cash flow. We generated $360 million in 2022 compared to $389 million in 2021, reflecting, as expected, lower cash collected from 2020 COVID related fee deferrals as well as higher development advances. Importantly, we converted 55% of our adjusted EBITDA to free cash flow right in line with our target.
We successfully executed on our stated capital allocation strategy by investing over $120 million to grow the business while returning a record high $561 million to our shareholders, representing 7% of our market cap through $445 million of share repurchases and $116 million of common stock dividends. As we move into 2023, our capital allocation strategy remains unchanged. We will remain disciplined on the core tenets of our M&A strategy and pursue transactions that are accretive from an earnings and net room growth perspective. Complementary to our existing brand portfolio. We will also continue to incentivize franchisees to invest in new brand prototype designs to improve overall brand equity.
Based on the success of our new ECHO Suites extended stay brand to date, we expect to begin to deploy a portion of the $100 million of development capital we earmarked as the first ECHO Suites hotels near opening in late 2023. Finally, we expect to maintain our industry-leading dividend payout ratio subject to board approval, and share repurchases will continue to be an integral element of our capital allocation strategy, albeit lower than 2022, given the absence of the one-time proceeds from last year's transactions. We ended the quarter with approximately $900 million of total liquidity, and our net leverage ratio was 2.9 times, just below the low end of our stated range. Moving on to outlook.
For full year 2023, we expect global net room growth of 2%-4% and global RevPAR growth of 4%-6%, which translates to 6%-8% above 2019 levels. A data point that we still consider to be relevant since the select service space, which represents over 90% of our U.S. portfolio, recovered to pre-COVID levels much faster than the industry's full service space. Fee-related and other revenues are expected to be $1.38 billion-$1.41 billion.
We are projecting adjusted EBITDA of $650 million-$660 million, which reflects comparable basis growth of approximately 5% when neutralizing for the variability in the marketing funds year-over-year, which will contribute approximately $10 million less to adjusted EBITDA in 2023, as we expect to completely recapture our 2020 investment. Adjusted net income is projected to be $337 million-$349 million, and adjusted diluted EPS is projected at $3.84-$3.98, based on a diluted share count of 87.7 million, which excludes any potential share repurchases.
Finally, we are expecting free cash flow conversion from adjusted EBITDA of 50%-55%, which reflects the impact from our expected increase in development advance spend from $48 million in 2022 to approximately $60 million in 2023, as well as higher interest expense. As a reminder, we have provided two slides in our investor presentation to help with your modeling. Slide 40 provides the historical financial impact of our select service management business and owned hotels, which will need to be adjusted from your base. Slide 41 provides revenue sensitivity. In closing, we are very pleased with our 2022 performance. We successfully executed on our key business objectives, growing our system, increasing our owners' profitability, and simplifying our business model while generating significant adjusted EBITDA and free cash flow and returning a record amount of capital to our shareholders.
We enter 2023 with a strong balance sheet, a record pipeline, tremendous momentum behind our new extended stay brand, ECHO Suites Extended Stay by Wyndham, and a great deal of optimism surrounding the largest infrastructure bill in our nation's history. With that, Geoff and I would be happy to take your questions. Operator?
The floor is now open for questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any time your question has been answered, you may remove yourself from the queue by pressing star two. Again, we ask that you limit yourself to one question and one follow-up. Thank you. Our first question comes from Joe Greff with JPMorgan.
Good morning, everybody. Geoff, can you talk about the environment for, I guess what we characterize as tuck-in acquisitions? How much is out there? Is there anything warm that you're working on? How competitive is the environment today for tuck-in acquisitions, versus a year or two years ago? I have a follow-up.
I think the environment will continue to improve, Joe. you know, Vienna House is a good example of that, our latest tuck-in acquisition. I think, you know, when you look at it domestically and internationally, it will continue to pick up and deals will continue to present themselves. We'll be strategic, we'll be methodical in evaluating the deals as they come along. We're gonna be looking for brands that are both EPS and NRG accretive as Vienna House was, so brands that are of high quality and brands with high ROI potential. four of the last five brand launches, though, for us, Trademark, Alltra, Registry, and ECHO, have all been launched organically, and there's no reason we can't continue to do that. We now have great brands in every segment of the industry.
You know better than anyone that M&A is always in our DNA, having covered us for as long as you have. With 19 of the 24 brands we have been acquired, and we do believe that size matters, scales matters, and we'll continue to look for deals. We're not gonna do a deal just to do a deal. We'll remain disciplined and ensure that any deal that we do in the next year or two have compelling returns for our shareholders as Vienna House had.
Thank you for that. Then switching over to ECHO, nice to see the sequential growth continue here. I heard both Geoff, your comments, and Michele, your comments. It doesn't sound to us that your 2%-4% 2023 system-wide rooms growth incorporates much from ECHO. Is that more of a 2024 contributor? Then is there any pivot, Geoff, on multi-development ECHO deals as yet to single?
Questions you've asked before, off-offline. There is a pivot. We have not yet offered ECHO to the thousands of individual franchisees, which we expect to do later this year. To your direct question, there is no impact, really, much impact to 2023 net room growth. We will have our first ECHO openings later this year. We have broken ground in just some phenomenal RevPAR markets, Plano, Texas, Sterling, Virginia, Richmond, Virginia. The team's unbelievably excited. I mean, we said on the Q2 call that we'd have 100 in the pipeline. We're at 170.
Those are, as you say, all with multi-unit development agreements, with some of the nation's most successful extended stay developers, because we wanna really open these, develop these, build these, and open these, to have as big an impact as we can.
Thank you.
You're welcome.
Thank you. Our next question comes from Stephen Grambling with Morgan Stanley.
Hey, thanks. This first one may be a follow-up to those comments on ECHO and just development more broadly. Was just hoping to dig into the components of your room growth guidance in the context of gross additions and attrition, especially in the context of a pipeline. I guess it's now up 13% year-over-year in attrition rates that continue to improve. I guess any color you can provide kind of splitting out as we think about the guidance and gross adds, attrition, and any nuances by geography.
Yes, sure. good morning. I would say, from a net room growth perspective, we don't see significant impact in 2023 from the growth in the pipeline. 80% of the pipeline today is new construction. In The U.S., construction starts within about a year or two of the deal being signed. On average, there is a 18-24 month build from there. It's typically in the pipeline for about four years, and internationally it's a little longer. Overall, we would expect the pipeline to be realized over a four to five year period. A big part of our pipeline growth is the ECHO brand, and that's not gonna have a material impact to 2023, as Geoff just mentioned.
Moving our net room growth up will also then require, as we've always talked about, improvement in the retention rate. I think, you know, if you look back to pre-2019, we were in a 93, 94% range, we've been steadily improving at 20 basis points to 30 basis points every year since then. We are marching toward that 96% target. When you see us get there, that's when you could expect to see our overall net room growth expectations lift.
Sounds good for 2024 and 2025 then. Maybe changing gears. You had some good details on China and the direct component there. Can you provide a bit more color on how the reopening there may not only impact domestic RevPAR in the country, but also the broader region as outbound potentially resumes?
Yeah. We see the, as outbound resumes, a big beneficiary, certainly for our hotels, where the Chinese are gonna be looking to travel. I mean, we're already seeing and hearing from our teams in South Korea, where we have over 10,000 rooms that they're seeing more Chinese arrivals. Thailand, Indonesia, Australia, Singapore, those are all big, big beneficiaries. China represented over 150 million international travelers in 2019, Stephen. you know, that number, as we know, dropped to under 20 for the last two years. We're excited to see that. On the ground, we're just encouraged as all get out to see the strong rebound during the Chinese New Year. Our last three weeks of RevPAR were up 60% in China to last year and 8% to 2019, given that pent-up family holiday travel demand.
Our resorts in the vacation destinations, we've got big resorts in Hainan and Sanya came back really, really strong. Through the last 14 days after Chinese New Year, our Wyndham Sanya was up 30% to last year. Our hotel in Hainan, our Big Wingate was up 60% to last year. Importantly, they were up over 10% and 30% respectively to 2019. While that was Chinese New Year driven, it was great to see the results that came out last night from Smith Travel, where overall China last week RevPAR was up 1% in what was almost a clean comp week versus 2019, with occupancy running around 90% of 2019 levels.
We're really, really excited about what we're hearing from our teams over there and just thrilled with everything our team accomplished, despite the challenges with that 10% Q4 net room growth in our direct franchising business, and how many more hotels they were able to open in a tough quarter than they were last year.
Thanks so much.
Thanks, Stephen.
Thank you. Thank you. Our next question comes from Dany Asad with Bank of America.
Hi, good morning, Geoff and Michele. When we look at your 2023 guidance, so if we just look at, you know, your unit growth expectations, your RevPAR growth expectations, kinda if you combine them, you're looking at like, you know, a 6%-10% fee growth as a whole. Your EBITDA guidance, if we strip out marketing reservations, is more like 5%-6%. Can you maybe just help us understand what's causing, you know, a drag on the algorithm for 2023, and how should we think about that dynamic longer term?
Yeah. Yeah, Dany, your math there is correct. I think there's two contributing factors. The first one is higher expenses, mostly due to inflation. Some of that we saw roll on in 2022, but we didn't have a full 12 months of it, and we will have a full 12 months in 2023. The second impact really is the mix effect of higher RevPAR growth internationally versus RevPAR growth in The U.S. That really is because the international regions are still in recovery mode in 2023, while The U.S. business had been fully recovered as of the second half of 2021.
How that plays into the long-term growth algorithm, I would say, typically, if all regions are growing at similar rates of growth, the algorithm works. We knew, over these, you know, last two to three years with the COVID impact playing out, we knew that there was going to be some differences in the algorithm, which is why when we provide the sensitivities, we provide sensitivity per point of RevPAR for The U.S. business separate and apart from the international business.
Perfect. Thank you very much.
Thank you.
Our next question comes from David Katz with Jefferies.
Hi. Morning, everyone. Thanks for taking my question. You know, following through on, you know, some of that, one of the themes we've started to focus on, you know, largely one of your peers, is revenue intensity. As you build out internationally, I wonder if you can shed some light on the deals that you're making or the signings that you're making in China, where I think the intensity has historically been a bit lower, but, you know, in the other areas of the world, how those compare with The U.S.
Thanks for the question, David, and it's good to hear your mom's doing better. God bless her.
Appreciate that.
In China, certainly, yes. I mean, where we're growing our rooms, the growth is coming in our direct franchising business, which as you know, is three times more revenue intensive than our master license agreements, which have nowhere near the growth that we're seeing with our direct franchising right now at double-digit. You're correct in, and on slide 9 in the IP that Matt put out last night, you see that over 70%, 73% of our pipeline are in that higher revenue generating segments in the midscale and above brands that are driving that. Over 60% of our domestic pipeline are in the midscale and above, and over 85% or about 85% of our international pipeline.
What that means for us is that our average deal values per room in the pipeline are increasing. They're up 800 basis points domestically, which is important, and up 240 basis points internationally. That represents over $100 million of royalty fees for us over the next four years. Domestically, as they're more weighted to higher RevPAR, higher segments, upscale brands, and internationally as they're weighted in higher RevPAR markets, especially notably in Latin America and in Europe with some of our more upper midscale brands, our upscale brands, our Wyndham Hotels & Resorts full service brand, our Registry Collection luxury brands. Yeah, we're very excited about that.
Understood. If you could just talk a bit more. I think, you know, one of the issues we're all trying to process is what people being you, are factoring into your guidance with respect to the macro environment as the year progresses.
Sure. I would say, what we really are factoring into our guidance is, well, first, our US business has been fully recovered to pre-COVID levels since the second half of 2021, I mentioned, and finished 2022 9% above 2019. We're looking to add another 4%-6% on top of that growth this year. And I would say from a macro perspective, you know, in The U.S,, we began to lap more normalized comps in the second half of 2022. We were seeing about 3% year-over-year growth. We're expecting a continuation of that trend into 2023. Internationally, where not all markets are yet recovered to the pre-pandemic levels, there's a bigger year-over-year growth opportunity.
We're expecting all of our international regions, with the exception of Asia Pac, to get pretty close back to 2019 occupancy levels. Overall, we're looking for about half of our growth to come from occupancy recovery and the other half to come from some modest ADR growth.
Okay. Thank you very much.
Thank you. Our next question comes from Michael Bellisario with Baird.
Thanks. Good morning, everyone. Michele, just one follow-up there. Just the 4%-6% sort of system-wide globally. Can you give any more specifics on just what The U.S. expectation is versus international, just the spread, and the components of the 4%-6%? I know you sort of touched on it a little bit, but any more specifics would be helpful.
US is certainly going to be lower growth overall compared to international since they'll still be in recovery mode for sure. Like I said, there's probably in the US, there's gonna be a few points of occupancy growth and a few points of ADR growth. Whereas internationally, we're expecting to see, again, some modest ADR growth, but a much bigger lift coming out of occupancy.
Okay. Thank you. Jeff, for you have a big competitor now getting into the economy space. Maybe big picture, what are the risks to you on the conversion front, and what are you hearing so far from your franchisees?
Yeah. Thanks, Mike, and hey, congrats to you and Mary on the birth of Lucy last Tuesday.
Thank you.
Annie needs a playmate. As a father of 4 girls, I wish you 2 more. We can talk about that offline. Yeah, we're not seeing any impact to your question on our economy brands. We have the most recognized economy brands in the space, and we've been in this space for over 30 years. We know these customers, we know these owners, and we know what's important to both. You know, the one thing that COVID has demonstrated to our economy owner base is that they wish they own more Wyndham product, given just how well our brands performed throughout COVID and how well they performed after 9/11 and the great financial crisis.
You know, these everyday essential construction and infrastructure workers never stopped traveling, and they were staying in our economy brands in record numbers, which was what allowed our franchisees to never have to close down. We'll continue to provide the most flexible and the most competitively priced economy brands with a focus on what we know is important to our guests and what we also know is important to our owners. Our renovation and our PIP costs run 3-5 times less than many of our larger brand peers. Our technology stack installation and our technology stack operating costs remain the lowest at 4-6 times less, with just a continued focus on generating the best cash-on-cash returns in the economy segment.
Helpful. Thank you.
Thank you. Our next question comes from Patrick Scholes of Truist Securities.
Hi. Good morning, everyone.
Morning, Patrick.
One question. You talked in your press release about achieving your goal of retention rate of 95%. You know, going forward, you know, do you see that as sort of the equilibrium level at this point, or do you see there's continued opportunity to improve that? Thank you.
Absolute opportunity to continue to improve it, Patrick. You know, we, as Michele said, we were in the 94s in 2019. We moved that to 95% in 2021, and we've moved it to 95.3 in 2022. Our teams are incredibly focused on that. You blend that in with what we're doing on the gross unit addition sides, which we've also been moving up. We achieved 7% gross additions in 2021. We moved that organically, take out Vienna House, to an 8% organic gross addition in 2022, an all-time record of organic gross room additions for our system. You blend those two, and it's, to Michele's point, how we're confident that we can move over time that 2%-4% to 3%-5%.
Great. Thank you.
Thanks, Patrick.
Thank you. Our next question comes from Brandt Montour of Barclays.
Hey, good morning, everybody. Thanks for taking my questions. So maybe on that same theme, Geoff or Michele, the retention goal of just over 95.3% this year versus 95.3% last year. You know, I'm just curious because it seems to me that, you know, a lot of folks in the industry think this is the year where the brands will start pushing back on owners that, you know, maybe have some deferred CapEx via during COVID that they held off, and this is the year that the brands sort of, you know, the rubber meets the road on a lot of hotels having to deal with that.
We saw Marriott guide to higher deletion rate this year versus what they had last year. Just curious, you know, what you guys think about your system, about your brands and your owners that you think you'll be able to sort of move in the opposite direction of that?
I think the progress that, you know, we've been making, Brent, from the 93 to 94 to 95 to 95.3, to your point, gives us confidence. You know, I think there's still an opportunity out there with the best brand value proposition in the economy and midscale space to pick up on the conversion front. We think transaction volumes are gonna continue to accelerate. Distressed sales are expected to increase by the second half of this year. We saw good movement on, you know, the adds, as we've said, and we've been really focused over the last few years.
We had significant substandard deletions that were very targeted and very focused in 2018 and 2019 when our retention rates were lower than where they are today. You know, our brand quality and all of the efforts that we're doing on the quality front, you know, continue to give us great confidence that we can move that number higher.
Okay. Okay, great. If we move to the other side of the equation to gross adds, 'cause if you, if you say, retention might get a little better or stay the same, if you look at your, you know, sort of the midpoint of your net unit growth guidance, would it, you know, maybe we're splitting hairs here, but it would imply, you know, not a slight decel versus what you actually did do in 22. Is that just conservatism or is there a part regionally or, you know, part of the chain scales that you would focus on in terms of your gross adds that isn't as strong as last year?
Yeah, Brandt, I don't think it's actually a slight decel. I think when you look at the net, the net room growth in 2022, you have to remember there's 80 basis points of growth in there from the tuck-in acquisition of the Vienna House. I think we delivered at 3% on an organic basis, and the midpoint of our guide this year would imply 3%. I would say we're looking for 20 basis points-30 basis points of improvement every year in the retention rate. You know, that 3% is a rounded number, so it could be 3.2, it could be 3.3, it could be 2.8.
We're expecting it to be 3% or better at the midpoint. I think if you target a retention rate of 95.5%, and you're looking at 3% net room growth, then that would imply that you're driving somewhere between 8%-9% in gross opens.
Super helpful. Thanks so much, everyone.
Thanks, Brandt.
Thank you. Our next question comes from Ian Zaffino with Oppenheimer.
Hi. Great. Thank you very much. You know, just, you know, another question on guidance here. When do we expect the impact of the government spending, you know, on the infrastructure build, you know, other bills, to kind of flow through in 2023? I don't know if you really can do this, but any sort of magnitude you may be able to give us or at least directionally what we should expect? Thanks.
Sure. We would expect in the back half of the year, if you follow everything that's being put out by the Congressional Budget Office, that next round of the $1 trillion will set to fund in late 2023. There certainly are many pre-existing and time-sensitive projects that have moved forward. The $350 billion Highway Reauthorization Act is a good example of that, with $40 billion already being spent on bridges. You know, in terms of the size, I think we said in our prepared remarks that it's over a $3 billion revenue opportunity for our franchisees over the next five to eight years, which would mean another $150 million-ish of incremental royalties over that period.
We're super excited about it, Ian. We have been making investments in people for a while, in processes and technologies. We're adding more sellers to win a greater share of these federal and state allocations. We're creating a dedicated business-to-business sales team to identify the biggest opportunity targets out there. There are 1.8 million infrastructure company businesses in the United States today, we're leveraging our relationships with our third-party partners, our travel management companies like CLC Lodging, who have over 1,400 buying centers across the country. We're sending our teams to events and conventions and conferences they've never been to before, like the American Society of Concrete Contractors, and calling on companies we haven't called with before.
So look, this has been a competitive strength of ours forever. Um, we're continuing to invest heavily in it. Uh, the best is yet to come. And, uh, for the seventh consecutive quarter, we've seen, we've seen a pickup in terms of, uh, what our franchisees are experiencing. We were up sixteen percent in this business, uh, in the third quarter, and that, that accelerated to twenty-one percent in the fourth. Uh, so we're, we're, uh, we're really excited about what's to come.
Okay, great.
Let me just add to that, really quick. You know, we're generating about $17 million a year from this part of our business. If it does continue to increase in the double-digit category, it would be about $3 million of incremental EBITDA. Of course, we're not looking just for continued share capture. We're looking for an expansion in the size of the pie once the spend actually hits the markets.
That's really good color. Thank you. Just as a quick follow-up, you know, on the room growth, you know, projections, you know, can you give us maybe the puts and takes on, like, what you're assuming, you know, with rates going higher, maybe a softening in the economy? How does that algorithm change, you know, with those two factors? Thanks.
Yeah. Look, let me start by saying, you know, half the rooms in the current pipeline are either conversions or new construction projects that are already in the ground. That's gonna significantly reduce our exposure to the current market dynamics. Then, and then we're just dealing with the other half of the pipeline. And yeah, I'd say the rapid rise in interest rates have impacted all asset classes, including hotels. But hotels are unique in that they are, they have daily rates and can offset the cost side of that equation, whether it be inflation or interest on higher pricing. And they have the ability to do that daily, which is what we saw all during 2022.
Developers. Our underwriting sustained increases in ADR, which is either partially or in some cases fully offsetting the higher interest expense. We and the well-capitalized developers that we're working with, we all believe this is the best time to build, even though interest rates are higher than the historic lows that we've seen over the past decade, we are all expecting that they will decrease a bit once inflation is under control and the economic uncertainty that we're facing passes over. These select service hotels have minimal staffing requirements for delivering really high ROI for our owners and offering very attractive rates even in this environment.
Okay, great. Thank you very much.
Thank you.
Thank you. Our next question comes from Dan Wasiolek with Morningstar.
Hey, good morning, guys. Thanks for taking the question. Maybe wondering if you'd give a update on your loyalty membership, where that's at, how that's grown, and the engagement of it, you know, pertaining to the number of room nights or percentage of room nights that's being booked by that loyalty base. Second question, just, I think you mentioned that the direct bookings were up 23%. Was that for 2022? Wondering if you could also give a similar figure for the OTA channel. Thank you.
Sure. Our enrollments to the first part of that question grew 8%, Dan, year over year. We're at 99 million members globally. And it is what's driving that double-digit year-on-year percentage you quote. Our Brand.com growth is at the highest level it's ever been. To the OTA piece, it is outpacing the OTA growth. Our share of occupancy has increased 500 basis points domestically to where it was pre-pandemic, which is pretty remarkable. Nearly one out of every two check-ins to our economy mid-scale, upper mid-scale, upscale brands are coming through the program. We've got nearly that same percentage now in the economy space, and we have certain brands like La Quinta and AmericInn that are pushing 60% share of occupancy. Blended, it's about a 50% share of occupancy domestically.
Great. Okay. Thank you.
Thanks, Dan.
Thank you. At this time, I show no further questions in queue. I'll turn the call back to Geoff Ballotti for closing remarks.
Thanks, Todd, and thanks everyone for your questions and your interest in Wyndham Hotels & Resorts. We'd like to once again thank our valued team members for their significant accomplishments around the world and for helping us deliver our eighth sequential quarter of organic net room growth, along with a 12% growth and at a development pipeline that's never been stronger than it is today. Domestic and global RevPAR growth accelerated to both prior year and 2019 levels, and occupancy continues its recovery, providing a meaningful tailwind for us in the year ahead.
With consumer travel demand holding steadfast in our iconic and trusted brands, delivering record levels of direct contribution through our Brand.com channels, we are very enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, our guests, our franchisees, and our team members. Michele, Matt, and I look forward to talking to and seeing many of you in the weeks and months ahead, and at many of the upcoming investor conferences we'll be attending. We wish everyone a happy President's Day weekend and look forward to seeing you soon. Thank you. This does conclude today's Wyndham Hotels & Resorts fourth quarter and full year 2022 earnings conference call. Please disconnect your line at this time, and have a wonderful day.