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* Q2 adjusted EPS 41 cents; Street view 37 cents
* Expenses down 20 percent
* Stands by full-year forecast
* Shares up 5.6 pct (Adds conference call comments, analyst quote, timeshare details)
NEW YORK, July 29 (Reuters) - Wyndham Worldwide Corp (WYN.N), operator of Ramada, Days Inn and Super 8 hotels, posted better-than-expected quarterly profit on Wednesday as expenses dropped 20 percent.
Wyndham, the world's largest timeshare operator, also affirmed its full-year earnings outlook, citing its emphasis on midscale and economy chains, and its shares rose 5.6 percent.
"Generally, when things are tough, (people) tend to look for ways to get more value for their money," Chief Executive Stephen Holmes said in a phone interview.
The company posted second-quarter net profit of $71 million, or 39 cents a share, compared with $98 million, or 55 cents a share, a year earlier.
Excluding one-time items, earnings were 41 cents per share, besting analysts' average forecast of 37 cents, according to Reuters Estimates. Wyndham's own forecast was 36 cents to 41 cents per share.
Revenue slumped 19 percent to $920 million, but expenses were cut to $769 million from $961 million.
Wyndham said it expects to earn 53 cents to 57 cents per share in the third quarter. Analysts expect 58 cents.
It expects full-year revenue of $3.5 billion to $3.9 billion and adjusted EBITDA of $760 million to $810 million.
Holmes said the company trimmed costs in the second quarter by adding technology that smoothed the process of exchanging timeshares, saving a "couple million dollars" during the period.
Wyndham also saw the benefit of the restructuring of its international operations that it launched last year, and a cutback in its timeshare business.
During a conference call, the company said revenue per available room (RevPAR) at its hotels could fall between 12 percent and 14 percent this year from 2008, worse than the 6 percent to 10 percent drop it forecast previously.
But systemwide RevPAR rose in the second quarter from the first quarter.
Wyndham shares were up 71 cents to $13.38 in midday trade on the New York Stock Exchange.
Wyndham's timeshare business, also known as the vacation ownership business, once did about $2 billion in sales, Holmes said, but the company downsized the segment by cutting staff and dramatically slowing development.
Sales for the segment have since shrank to about $1.2 billion, Holmes said.
"I don't think you'd see us go back up to $2 billion even if the environment got a lot better," he said. "I think we're going to have that business be a stable, slower-growing business."
FBR Capital Markets analyst Patrick Scholes said, "There's certainly a bit of ambiguity out there about what ... next year's timeshare earnings are going to look like." (Reporting by Deepa Seetharaman; editing by Jeffrey Benkoe and John Wallace)