One thing was clear at Wyndham Hotel Group’s annual conference: With its flag planted firmly in the economy sector, the company is confidently surveying the territory and seeing plenty of room – for expansion, if not continued acquisition – just about everywhere in the world, now as a collection of brands newly unified with “by Wyndham” monikers.
The past year has seen the AmericInn and the Trademark Collection brands, along with Latin American brands Dazzler and Esplendor, joining the portfolio, and Knights Inn exiting in a sale to RLH Corp. The coming few months will see the spinoff of the vacation ownership business, the expected purchase of La Quinta closing and the introduction of Wyndham Hotel Group as a pure-play hotel company. Along the way, the company says it will continue to jettison lower-performing properties.
“We always want to work with an owner, and we always want to move him or her into a position of strength and quality, but there are times when our quality assurance teams aren’t able to get there, and we have had a lot of rooms exit the system that are substandard over the years,” President and CEO Geoff Ballotti said. “That number has been coming down slightly over the last three years … and I don’t think we’re in any way done.”
“Quality is going to remain our focus,” he said. “Something we talk about all the time with owners and investors and shareholders is improving the strength of each one of our brands.” With four of the five midscale brands tracked by J.D. Power belonging or soon to belong to Parsippany, New Jersey-based Wyndham, “that’s exciting,” he said. “And the only way we’re going to maintain that is with a focus on quality.”
Ballotti, who with his leadership team repeatedly emphasized that size and scale matter in a consolidating and shifting industry, says that he’ll continue to be selective with future purchases. “But as we always say, we will look at anything that’s out there and available in the market,” he said. AmericInn was a “rare” find that complements Wyndham with its regional U.S. footprint, economy sector standing and high quality rankings.
La Quinta was a mostly unspoken presence at the conference, held at Mandalay Bay Resort and Casino in Las Vegas, since the deal hasn’t closed. As for AmericInn, “everything’s working just like it should be,” Ballotti said.
Ballotti said the biggest opportunity around the world remains the midscale segment. “We operate 40 % of the nation’s economy hotels today. We operate roughly 30% of the midscale hotels. La Quinta will push us to 38% of midscale hotels, and there is tremendous unbranded opportunity out there, which was why we launched the Trademark collection brand.” While he is frequently asked if he wants to buy a luxury brand, Wyndham Grand is doing just fine, thank you, against luxury competitors in places like China.
Regional player
Regionally, the focus is on introducing and growing brands that make sense in, say, Brazil, Argentina and China; and on taking advantage of tourism booms in places like Vietnam and China; and on gaining first-mover advantage in lower-tier but potential-laden cities in places like China.
Did someone mention China?
Wyndham entered the Chinese market less than 15 years ago and is now the third-largest international brand in that market, with nine brands, 140,000 rooms and about 1,400 hotels. “There will be more to come in this marketplace,” said Leo Liu, Wyndham’s managing director in China since 2013. “All brands, all categories.” He’s targeting the younger generation of travelers more focused on services and amenities than the number of stars on a property, without forgetting the 138 million Chinese outbound travelers who might seek out a Wyndham flag on their next international trip. Wyndham, like other hotel companies, is still figuring out the technology challenges of the Chinese traveler that overwhelmingly prefers to use payment methods like Alipay and WeChat Pay.
“Typically, the brand we bring to the market, like Tryp, is telling to the market that we can do things differently,” Liu said, referencing the Tryp by Wyndham Hotel Xian’s family room with a double bunk bed, and rooftop basketball court. “It’s not having these empty, huge 5-star lobbies. We want to bring life back to hotels. That is the power of our brands. So there is no need to talk about 5-star … Emotions come first. That is the power of the brand.”
And with 90% of the Chinese population lacking a passport, Liu said the internal tourist has just as much untapped potential to become a loyal Wyndham customer. “We position ourselves as a challenger and game-changer. That is making a huge difference. We’re not positioning ourselves as the biggest American company in the world. It’s not meaningful to a simple Chinese consumer.”
Beyond China, the model is shifting toward managed business in places like the Middle East and Africa, said Dimitris Manikis, president and managing director of Wyndham’s Europe, Middle East, Eurasia and Africa territory. “I think it’s a new breed of owners. You are talking about people who are more focused on asset management themselves. They manage the asset and then they want you to put your money where your mouth is, or your experience where your mouth is. That’s why we’re hiring people with more experience just in the franchise business, in the opening of new markets,” said Manikis, who was hired in February from vacation exchange company RCI and officially starts work at the end of the month.
The challenge in Latin America, said Alejandro Moreno, president and managing director of that region, is determining the right brand for the countries, with many new brands being introduced. Name recognition and remembrance is another, hopefully mitigated by the addition of “by Wyndham” to the names. But the company is the largest international player in Ecuador, Argentina and Uruguay, and it’s opening its first hotel soon in Bolivia. “What we’re looking at now is what makes sense to the region, and to make sure that we have a variety,” he said.