Wyndham’s third-quarter print clarified a turn in the cycle: demand at the economy/midscale end has cooled, with global RevPAR down 5% and the U.S. off 5%. Management trimmed 2025 RevPAR guidance to –3% to –2%, acknowledging softer leisure and weaker China. Yet earnings held, thanks to an expanding system and fee streams. For real-estate owners, that mix—flat to lower room revenue and firm brand fees—compresses margins. For franchisors, pipeline growth keeps EPS resilient. It’s a plateau, not a cliff.

The softness is occupancy-led. Wyndham cited a 300 bps occupancy and 200 bps ADR decline in the U.S., with notable weakness in Texas, Florida, and California—high-flyers of 2024 now normalizing. Internationally, China fell 10% on macro headwinds, while Canada (+8%) and EMEA (+4%) leaned on price. In turn, owners tied to highway/leisure corridors face thinner shoulder-night demand, even as ADR resists broad discounting. Still, rate discipline persists.

A 5% RevPAR dip can hit GOP more than 5% when labor and insurance run up mid-single digits and brand fees remain revenue-based. Wyndham’s asset-light model absorbed the shock—net income ticked up and ancillary revenues jumped 18% YoY—but those fees arrive before owner profit. As a result, underwriting needs higher opex growth (≈4–5% in 2025) and slightly lower EBITDA margins, particularly in economy/midscale. On balance, coverage ratios are the pinch point where debt costs remain elevated.

Hilton’s Q3 shows the broader air pocket: system-wide RevPAR –1.1%, with the U.S. –2.3%; luxury held up while mainstream softened. STR trend lines through late summer echoed this: U.S. RevPAR was roughly flat to modestly negative as occupancy lagged supply growth and ADR stalled. For now, the top-25 U.S. markets underperformed the rest by ~140 bps in early September reads. Nonetheless, limited new supply is a buffer.

Wyndham opened >32,000 rooms in Q3 and lifted its pipeline to 257k rooms, with signings up 24%. That is bullish for the flag—but introduces competitive pressure for older assets that delay PIPs. Expect brand standards to tighten. In practice, buyers should underwrite 4%+ of revenue for ongoing CapEx and a near-term PIP reserve ($5k–$10k/key in economy/midscale) where scopes are dated. Ultimately, newer product will win share in flat markets.

Base case: a high-plateau 2025–2026 with RevPAR flat to +2–3% annually after this reset, led by selective urban/group recovery rather than highway leisure. Owners should run dual exit cases with +25–50 bps to going-in cap rates to reflect softer NOI and dearer debt. Meanwhile, watch two swing factors: (1) rate cuts that help interest expense but may coincide with slower macro; (2) China demand stabilization. For transactions, expect a pick-up in motivated sales among smaller economy portfolios as budgets miss and refis test DSCR. Franchisors remain comparatively insulated; owners must be surgical.