Moody's Investors Service moved toward lifting Wyndham Worldwide Corp. (WYN) to investment-grade territory, citing expectations of improved operating results at all the hotel operator's businesses and reduced risk from its timeshare unit.
The operator of the Ramada, Howard Johnson and Days Inn hotel chains in July posted a 34% increase in second-quarter earnings and raised its forecast for 2010. A number of hotel operators reported better-than-expected results for the latest quarter as demand strengthened amid recovering corporate and overseas travel.
Moody's on Wednesday said Wyndham has a leading market position in each of its business segments and gave a nod to the high margins and low capital intensity of the hotel-franchise and vacation-exchange and rentals operations. The timeshare business is less risky now because of lower development spending and a higher level of cash sales, the rating agency said.
Moody's has Wyndham at Ba1, the verge of investment-grade territory, and its rating outlook was raised to positive from stable. An upgrade could come if improving operating trends continue.
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