Wyndham Hotels & Resorts is a stalwart of the economy hotel segment — always has been , ever since its origins and core four brands of Days Inn , Super 8 , Howard Johnson and Ramada . Today , the company , which spun off from Wyndham Worldwide in 2018 , has 25 brands and has made a concerted effort to move up the chain scales , while still remaining true to its lower-segmented business . And while that segment flourished post-COVID , torpid growth and performance has caught up to it four years after , something Geoff Ballotti , president and CEO of Wyndham Hotels & Resorts , addressed on his company ’ s second-quarter 2024 earnings call . |
“ We believe that the current RevPAR environment is transitory in nature despite the occasional downturn ,” he said , adding that since 2000 , and through four lodging cycles , U . S . RevPAR for the select-service segments has grown at a 2.6 % compounded annual gross rate .
In June , STR projected RevPAR growth of 2 % for 2024 and 2.6 % for 2025 across all chain scales , but in the midscale and economy segments , it forecasted negative RevPAR growth of -1.2 % and -3 %, respectively . “ We have seen a bifurcation in hotel performance over the first four months of the year , which we don ’ t believe will abate soon . The increased cost of living is affecting lower-tomiddle income households and their ability to travel , thus
|
lessening demand for hotels in the lower price tier ,” said STR President Amanda Hite .
The upshot for Wyndham is a renewed focus in the economy segment , but in extended-stay product , where it launched Echo Suites Extended Stay by Wyndham in 2022 and opened its first , in Spartanburg , S . C , in early July . Echo Suites ’ development pipeline now stands at more than 270 properties .
On the earnings call , Ballotti and CFO Michele Allen were asked about the lack of new supply growth in the economy segment and the overall shape of it , with the former citing older legacy economy hotels being repurposed for other uses . “ If you look at economy supply over the last few years , it ’ s down
|
between 1 % and 2 %, as those older legacy hotels move out of the system , and many of them are in urban , downtown areas ,” Ballotti said .
Ballotti added that Wyndham did experience its high economy hotel addition rate in 2023 — Days Inns and Super 8s — because of “ how well those brands performed in the downturn in terms of the cashon-cash returns ,” adding that gross additions for the second quarter were up about 3 %.
Allen returned to Echo Suites and economy , extended-stay , in particular . “ New supply for many years is growing in extendedstay , projected to grow 6 % annually over the next several years , and that ’ s where our growth strategy has been focused for the economy segment , with
|
|
14 hotelsmag . com September 2024 |