Jan. 26, 2003 - Wyndham International Inc. had $3.7 billion in debt when Fred Kleisner took the reins 3 1/2 years ago. It also had nine different companies, two CEOs, seven accounting systems and nine headquarters buildings. 

"It was a loosely fit confederacy of 10 companies," said Mr. Kleisner, Wyndham's chairman and chief executive. "It was clear we needed a union. We needed one headquarters, one president and one enterprise accounting system." 

Battered by a recession, the post-Sept. 11 business-travel slump and the specter of a war with Iraq, the Dallas-based hotel operator continues to work on what was supposed to be a three-year restructuring plan. 

But Mr. Kleisner remains optimistic that 2003 will be the year that Wyndham completes its restructuring. Corporate America is signaling a rebound in earnings, and that will help the business-travel industry. 

"We're poised and ready for a recovery," he said. 

Finishing the restructuring isn't the same thing as erasing all of Wyndham's difficulties. Mr. Kleisner reckons that the debt should be down to $2 billion by year's end -- not large by big-business standards but hard to overlook for a company with only a $40 million market capitalization. 

On the agenda this year: continuing the focus on Wyndham-branded products and selling off the last of its hotels that don't carry the corporate flag. 

It's a turnaround being done in installments, as Wyndham executives work through a mountain of problems from its predecessor company. Through all the turmoil in business travel, though, Wyndham's strategy hasn't changed. 

"We've been nimble to react to the changes in our industry," Mr. Kleisner said. 

Mr. Kleisner was brought into Wyndham when an investor group put up $1 billion to bail out its predecessor, Patriot American real estate investment trust. To rebuild, the group turned to Mr. Kleisner, then the president and chief operating officer of the Americas for Starwood Hotels & Resorts. 

The restructuring plan identified $2.3 billion worth of nonstrategic assets -- 154 properties -- out of the 488 the company managed, leased, owned or franchised. 

To date, the company has sold $1.41 billion of those assets. Wyndham now has 201 luxury and upscale hotels and resorts, and Mr. Kleisner expects that in 2003 the company will be able to dispose of the last 34 that are targeted for sale. 

Mr. Kleisner has taken a similar scythe to administrative costs, slashing what was once $112.5 million in annual spending to a projected $43 million for 2003. 

But cost-cutting can carry a company only so far. Sales must grow, too. 

In the first nine months of the year, revenue was down 12 percent to $1.3 billion. Losses climbed to $462.7 million. Annual earnings aren't due until Feb. 6. Revenue-rebuilding efforts are still under way. 

As a brand, a No. 5 ranking for Wyndham behind industry heavyweights Marriott, Hilton, Hyatt and Sheraton meant that, as Mr. Kleisner put it, "we had to do things differently." 

The company has renovated each of its hotels -- 95 percent of them are corporate-owned -- to provide a uniform look and customer experience. And, having measured the strength of the Wyndham brand, it looks to use that brand to bring in more business. 

Guests responding to the Wyndham name should account for 70 percent of the company's revenue this year, Mr. Kleisner said. In 1999, that figure was 40 percent."That puts us up there with the leaders in the industry, like Marriott," he said. 

At the heart of that effort is Wyndham's 2-year-old customer loyalty program, "ByRequest." It promises to give customers what they want in a room each time they stay, whether it's extra pillows, bottled water or a nonsmoking room. The twist: ByRequest isn't based on the points earned by frequent guests. 

Last year, Wyndham added even more perks: free long-distance telephone and fax service and free high-speed Internet access. That move garnered plenty of attention. Membership tripled to 1.2 million. 

The program sets a new bar for the industry, one expert says. 

"It was a clear move to tell the marketplace that they recognize that no two travelers are the same, and they have a program that acknowledges that," said Mark Woodworth, executive vice president of Atlanta-based PKF Consulting. 

ByRequest, Mr. Kleisner said, "created our distinguishing edge over our competition." 

"It's the reason we've taken market share," he said. 

The hotel market is one thing. The stock market is another. 

Weighed down by all that debt, Wyndham's shares have wallowed below $1.50 since September 2001, recently trading for around a quarter. Only two analysts cover the company -- an indication that investors aren't yet ready to proclaim a turnaround. 

Mr. Kleisner believes a rising economy will boost earnings and pique Wall Street's interest. 

"As we execute our plan, the market will wake up," he said. And, he added, an economic rebound will enable the company to boost room rates. 

Occupancy is up, in the 70 percent range. But, like many hotel companies, Wyndham has had to cut prices to keep heads in beds. 

And with a looming conflict in the Persian Gulf, a return to "normal" travel patterns may be difficult. 

"There's a travel stigma," said consultant Mr. Woodworth. "Lodging customers have held back, trying to understand if we're going to war or not." 

Mr. Kleisner concedes that a war could set back Wyndham's plans again, but not permanently. 

"When Sept. 11 hit, no one expected it," he said. "It took us 14 days to tie down the cash, furlough employees and tighten up the budget. If there's a war in Iraq, we have a playbook now, and we can implement in 24 hours. 

"We're sitting with plenty of dry powder. We can wait out the storm." 

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