Wyndham Worldwide Corp. (NYSE:WYN) late Monday announced that it plans to eliminate 4,000 jobs in its timeshare business, Wyndham Vacation Ownership. The job cuts are part of a strategy to increase cash flow and eliminate reliance on the asset-backed securities market by reducing the sales pace and cost structure of Wyndham Vacation Ownership.
“With the credit markets showing no signs of improvement, we are effectively eliminating our need to access the securitization markets to support an otherwise well-performing vacation ownership business,” said Stephen P. Holmes, Wyndham Worldwide chairman and CEO in a press release. “These proactive steps will ensure maximum flexibility across all our businesses irrespective of conditions within the asset-backed securities market. If the markets are available, we will certainly utilize this effective form of financing, but we are assuming that the markets will be unattractive for the foreseeable future.”
The company now expects to reduce gross vacation ownership interest sales in 2009 to approximately $1.2 billion from expected sales of approximately $2 billion in 2008 by eliminating sales offices and marketing programs. The realignment will reduce costs and capital needs and enhance cash flow, according to the Wyndham.
The company expects to take a charge of approximately $50 million to $60 million in the fourth quarter of 2008 and $10 million to $15 million in the first quarter of 2009 related to these initiatives.