LAS VEGAS - At the second day of the Wyndham Hotel Group Global Conference at Mandalay Bay Resort, Wyndham Hotel Group President and CEO Geoff Ballotti and COO Bob Loewen expanded on Monday’s themes of how the growing global middle class will affect hotel brand positioning worldwide.
Wyndham, Ballotti said, is planning its growth in markets with strong economies to cater to a rising demographic. “The global middle class of 2 billion will grow to 5 billion,” he said. “That’s happening in China, so we’re very focused on China.” The company, he added, has 1,200 hotels in China with a strong pipeline for future development. “It’s happening in India—we have a massive development pipeline underway in India. And it’s happening here in the United States.”
In China, the company is developing new hotels directly. “We’re introducing Microtel, Wingate and Wyndham Garden, and we’re doing it direct,” Loewens said. This ability to work independently came from several factors, he said, including the established strength of the Howard Johnsons, Super 8 and Days Inn brands in the country, and a strong team that has been in well-established China for years. “We’ve gone from an expat team to having locals in China running our business, and they have great relationships,” he said. “They like that the other companies are partnering with Chinese companies, because a lot of the owners want to to deal with a large international company, not necessarily a Chinese company.”
China has approximately 200,000 hotels across the country, Ballotti said, and fewer than 40,000 of those are branded. “Developers that are coming to us are looking for distribution, they’re looking for branding,” he said. “Western brands appeal to Chinese travelers in the economy and midscale segments.” For a Western company, he said, those two segments are in demand—thanks, in part, to crackdowns on governmental corruption and stays in luxury hotels—so there is still room for supply in that segment to grow. “We’re growing more quickly in China than we’ve ever grown. We’re not in the luxury space. We’re in the economy and midscale space, but we’re growing in upscale.”
Many cities in China with more than 1 million residents still have no branded hotels, Loewen said, so there is plenty of room for Wyndham to bring additional brands to the country and expand its development team. “If the whole country’s [hotel industry] is growing at 6 percent, that’s still three times the growth we’re getting here,” he said.
Canada, meanwhile, is an “unbelievable” market for Wyndham, Ballotti said, with 10,000 rooms already open and more to come. In the spring, Wyndham announced plans to expand its existing partnership with Canadian hotel chain Canalta Hotels and build 20 Ramada hotels in Eastern Canada over the next 15 years. The company also signed multiunit agreements with PHI Hotel Group to develop 25 Wingate by Wyndham hotels in Canada over the next 25 years, and a further 15 Hawthorn Suites by Wyndham in the country over the next 15 years.
“Canada is critical for us,” Ballotti said. “It’s a tale of strong growth on both coasts—in spite of some challenges in the oil and gas markets.” Those challenges, of course, have not only affected overall economies, but have also affected business travel numbers and the average daily rates of hotels that cater to those business travelers. Still, Ballotti expressed optimism for the region’s future. “We’ve been talking with developers who see in the downmarket a great opportunity to begin buying again and begin building again,” he said. “With 16 brands, and only five with critical mass [in the country], there’s another brand or two in our immediate future.”
While Loewen said that the best way to grow in a market like Canada is through local partners, Ballotti said that the company’s growth in India, as with China, is more direct, with the company’s own development team. “We can do development there without a partner,” Ballotti said.
And then there’s the Middle East, a region that Loewen calls “oversaturated” with luxury hotels. With a need for economy and midscale properties, the company is looking to open Days Inn and Super 8 properties in the United Arab Emirates.
Argentina is seeing “a lot of investment” and a lot of opportunities, Loewen said, and the company’s Tryp brand is strong in the country as well as in Brazil.
With Starwood breaking barriers earlier this year by becoming the first U.S.-based company to operate a hotel in Havana in more than 50 years, Loewen said that the Wyndham team is exploring opportunities in Cuba. “We’re looking to bring our brands there,” he said. “We’ve talked to people who want upscale hotels and some who see the need for economy options.” The biggest challenge, he said, was finding a way to partner with the Cuban government on ownership. “And anywhere outside of Havana, the utilities just aren’t there,” he said, noting the challenges Cuba faces in terms of infrastructure improvements. “The government has a lot of work to do. But it will be a great location.”