Wyndham flexes midscale muscle, plus, why it dropped 44,000 rooms last year

LAS VEGAS - If one hotel group is trying to corner the downscale market, it's Wyndham Hotel Group. At the its global conference at Mandalay Bay Resort, several leaders from the company discussed the advantages of focusing on the economy and midscale segments of the industry, while improving brand standards. 

The changing demands of the middle class are not only affecting hotels, WHG President and CEO Geoff Ballotti said, but also timeshares and vacation rentals. “All three of our business units—our timeshare development business, which is the biggest business in the world when it comes to timeshare development; our timeshare exchange business, RCI, which is the world’s largest timeshare exchange provider; and the Wyndham Hotel Group, which is the world’s largest hotel company by number of hotels out there—all appeal to the economy and midscale classes,” he said.  “We are uniquely positioned in that [midscale] space that we believe it is a space we can own.”

Luxury hotel brands, he continued, have created brand definition and, perhaps more importantly, a new initiative for service programming very well. “It’s never been tried in the economy and midscale space at the size or the scope or the scale that we’re trying now,” he said. 

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While the experiences themselves would naturally differ across segments, Lisa Checchio, VP of brand marketing & insights at Wyndham Hotel Group, believes that even economy and midscale hotels can offer something special that sets the brands apart from competitors at the same tier.

“Everyone deserves to have a special moment regardless of price point,” she argued. “That’s what’s so unique in our portfolio. Because 90 percent of our brands and our groups sit in economy and midscale, no other company can match what we’re trying to do.” At a Super 8 charging $39 per night, she said, a guest should still get a better experience than at a competing hotel at the same price point. 

Push for Quality

To keep and retain the growing middle class, Wyndham took a long, hard look at its properties and closed hotels with the lowest scores on TripAdvisor and other review sites. Last year, Wyndham tripled the number of properties cut from the system representing 44,000 rooms. A full 92 percent of those, COO Bob Loewen said, were “substandard,” but as he told the crowd at the opening general session on Monday, the move would let the company focus on adding hotels with higher scores, which would raise the entire system’s profile. 

Supply in the economy segment, Ballotti said, is beginning to grow, but is still “way below historic norms.” Growth in the economy and midscale space has been much lower than in the  upper-midscale, upscale and upper-upscale spaces. “The best and most encouraging thing for us is that when we look at our pipeline, almost 70 percent of the pipeline is new construction,” he said. “And a lot of that is coming into markets where owners are buying properties at the end of their life and building new prototypes. We’re seeing tremendous demand for new construction for all of brands. We will continue to focus very heavily as we take our capital expenses and resources out of technology and put them into prototype development.”  

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