While no official name has been publicly announced, Wyndham Hotels & Resorts now has 50 properties signed for the new economy extended-stay brand it first mentioned in February.
Under the working name Project Echo (an acronym for Economy Hotel Opportunity), Wyndham has awarded contracts to develop 25 new-construction projects each with its first two partners—Richmond, Va.-based Sandpiper Hospitality and Dallas-based Gulf Coast Hotel Management.
“This is our 23rd brand, it really is a whitespace that we were not in, and it's something that we've been looking at for the past few years,” said Chip Ohlsson, Wyndham's chief development officer. After the COVID-19 pandemic made the extended-stay segment the most profitable in the industry, the concept seemed even more timely.
Developer Focus
With a concept in mind, Ohlsson’s team sought out developers to collaborate on the project, creating a development council of seven to determine what makes economy extended-stay hotels work. “How do we make the product the best-in-class product out there? How do we build it at the right cost and how do we operate it at the right levels?” Input from Carter Rise, chairman and CEO of Sandpiper Lodging Trust and Ian McClure, CEO of Gulf Coast Hotel Management was particularly helpful, and the companies began working on development agreements for the brand, eventually signing deals to open 25 hotels with each company over the next five years. Rise expects Sandpiper will have a property open within 12 months.
Ohlsson called the project a “developers'-forward model,” explaining that hotel companies traditionally create a concept and then put it out in the market for developers to approve. “And then there's this maturation that happens as developers start to develop it,” he said. “But because we had people like Carter and Ian involved from the get-go, this was built with the developer in mind.” Instead of having multiple versions of a hotel prototype evolve over several years, Ohlsson said this brand is “launching with the latest version because we've had so many people involved with it.”
Efficient Concept
The development council, including Rise and McClure, created what Krishna Paliwal, Wyndham’s head of architecture, design and construction, called a prototype designed with efficiency in mind. “It was starting with the box, but then really understanding how the operating model impacts the box, which is very different [from what you] see in any other brand creation or prototype creation,” McClure said.
The brand’s initial prototype was developed “on the heels of” La Quinta’s Del Sol and Microtel’s Moda prototypes. “We have taken the same approach on design as well as constructability of this building,” Paliwal said. The new-construction hotels will cover approximately 50,000 square feet—nearly 74 percent of which is rentable—on approximately 1.79 acres of land. Each unit will have approximately 124 rooms, and while Ohlsson acknowledged that costs are a moving target, he estimated that each property will cost between $70,000 to $75,000 per key to build.
The prototype’s rooms average 300 square-feet and will have single and two-queen studio suites with in-suite kitchenettes. Public spaces—including the lobby, fitness center and guest laundry—are designed to limit labor needs. For example, the front door can have an access code for guests to use if the lobby is unattended. The front desk has visibility into guest laundry facilities as well as the fitness room, so these rooms do not require regular visits from staff to oversee.
In designing a prototype, Paliwal said, square footage allocation is top of mind for hotel companies. “You want to allocate the maximum amount of square footage of the building to the rentable square footage,” he said. “[Rentable] square footage is going to make money for our developers.”
Paliwal said that average daily rates would depend on markets, but said in some markets RevPAR could be between $50 and $55. “But knowing the market, seeing the box out there and seeing how hot the segment is, we do expect that to flex up,” Ohlsson added, noting that it could still be profitable to the owners even if the RevPAR drops.
Next Steps
Lisa Checchio, chief marketing officer at Wyndham, said a quarter of the company’s guests last year were extended-stay guests staying in a number of its economy brands. “There's already an established relationship with our core demographic that we would go after,” she said, adding that Wyndham is targeting a minimum stay of more than seven nights, but expects the hotel to attract stays of more than 30 nights. “We will have dedicated development teams, operating teams as well as a global sales team to support this brand,” she added. “We will market it in very different ways in our transient brands with the goal of really maximizing [those] property-direct and brand-direct bookings.”
Ohlsson said Wyndham would be looking to partner “only with really seasoned, experienced developers” for the brand's growth. “Because the model is different, the way you handle the operation is going to be different,” he said. Paliwal noted that the company is working with partners who can get a good lead time on necessary products. “So all of the [furniture, fixtures and equipment] models, all the interior design models are considered that way so that our partners will be fully supported by us in terms of getting the product in time for the hotels to open within [the] 12-month timeframe,” he said.
Ohlsson expects the new brand to fit in metropolitan areas, and McClure said Gulf Coast’s initial properties would likely be in major Texas markets like Dallas, Houston and Austin. Rise, meanwhile, said the Washington metro area through Virginia would be a core market for Sandpiper, as would the west coast of Florida and western cities like Reno, Nev., and Phoenix. “But this box works phenomenally in smaller and midsize cities of 100,000 to 200,000 individuals that really don't have this type of an asset class in it,” McClure added. “So although they will start originally in major metro [markets], you'll begin seeing them in some smaller secondary [and] tertiary markets.”
And then there’s the issue of the name. “We took a very, very long approach to make sure we got the box right, to make sure we got the operations right,” Ohlsson said. “We're doing the same thing with the naming. We want to make sure that it's perfect for everybody.”