Buried within Wyndham Hotels & Resorts' upbeat Q1 2024 earnings call lies a potential game-changer that seems to have slipped under the radar of most analysts: a quiet resurgence in oil and gas markets. While the company trumpeted its record net room growth, impressive international performance, and promising infrastructure-related tailwinds, CEO Geoff Ballotti casually dropped a hint about a less obvious driver of future success: the comeback of natural gas.

This seemingly offhand comment might hold the key to understanding a crucial piece of Wyndham's growth strategy. The company, known for its dominant presence in the economy and midscale segments, has over 10% of its system strategically positioned in oil and gas markets. As Ballotti noted, "With over 10% of our system positioned in oil and gas markets, we’re also feeling, in addition to infrastructure looking ahead, very well positioned to capture that comeback as a tailwind as well.”

But is this mere wishful thinking or is there real data to support this bullish outlook? A closer look at Wyndham's Q1 performance reveals a compelling trend. States with significant oil and gas activity, like West Virginia and Louisiana, experienced RevPAR growth exceeding 5% year-over-year. Furthermore, Alaska, a state heavily reliant on the oil and gas industry, witnessed a double-digit RevPAR surge. These localized gains offer a glimpse into the potential impact of a broader energy sector upswing on Wyndham's bottom line.

The underlying drivers of this resurgence are multifaceted. Ballotti pointed to a surge in power demand fueled by data center construction, the burgeoning AI sector, and the rapid expansion of EV charging infrastructure. All these trends point to a significant uptick in natural gas consumption, breathing new life into an industry often perceived as being in decline.

For Wyndham, this translates into a potential double-whammy of growth drivers. In addition to the anticipated boost from infrastructure spending, the company stands to benefit from increased occupancy and ADR in its oil and gas market hotels. These properties, often located in secondary and tertiary markets, cater to a workforce that is highly mobile and sensitive to economic fluctuations. A rebound in energy sector activity could inject fresh demand into these regions, bolstering Wyndham's occupancy rates and potentially allowing for more aggressive pricing strategies.

"RevPAR Growth in Key Oil & Gas Markets (Q1 2024)"

Source: Wyndham Q1 2024 Earnings Call

While the exact financial impact of this "oil gambit" remains to be seen, the potential is undeniable. Wyndham's strategic positioning in oil and gas markets could provide a significant earnings boost in the coming quarters, exceeding the expectations of those focused solely on the infrastructure narrative.

This potential is further amplified by Wyndham's impressive track record of system growth and its aggressive focus on expanding into higher RevPAR segments. The company's recent partnership with SBE Entertainment to launch Project HQ under its Registry Collection Hotels brand exemplifies this strategy. Targeting millennial and Gen Z travelers, Project HQ aims to open 50 upscale, lifestyle-focused hotels by 2030, adding approximately 7,500 rooms with higher fee PARs than Wyndham's current system average.

Projected Incremental Revenue from Oil & Gas Market Revival

Coupled with the anticipated growth from Echo Suites, infrastructure spending, and the expansion of ancillary revenue streams, Wyndham appears to be firing on all cylinders. The oil and gas market revival, while still in its early stages, adds yet another layer of potential upside to this already compelling growth story.

It's a testament to Wyndham's strategic foresight that it has quietly positioned itself to capitalize on this underappreciated trend. While the market grapples with macroeconomic uncertainty and obsesses over infrastructure, Wyndham's oil gambit might just be the silent engine propelling it towards sustained, outsized growth in the years to come.

"Fun Fact: Did you know that Wyndham's Super 8 brand, celebrating its 50th anniversary this year, was co-founded by Ron Rivett, an industry icon who sadly passed away in late December 2023. The very first Super 8, located in Aberdeen, South Dakota, is still part of Wyndham's system and is run by Rivett's family. This legacy of owner-centricity, deeply embedded in Wyndham's DNA, could be a key differentiator as it navigates the competitive landscape and capitalizes on emerging growth opportunities."