Dive Brief:
- Wyndham Hotels & Resorts posted a strong year for development, opening a record 68,700 rooms globally and 28,000 in the U.S., or 4% year-over-year rooms growth, in 2024, the company announced in an earnings report Wednesday.
- U.S. RevPAR, meanwhile, was flat in 2024 compared to the prior year, though the fourth quarter brought 5% growth compared to the prior year quarter, due in part to “favorable” impacts from hurricane season, according to Wyndham.
- Despite a “soft RevPAR environment” in 2024, Wyndham expects its openings to fuel further RevPAR growth in the U.S., particularly as properties open near infrastructure projects and data centers, CFO Michele Allen said on a Thursday earnings call.
Dive Insight:
Wyndham’s development pipeline grew 2% sequentially and 5% year over year to a record 252,000 rooms in the fourth quarter, according to the earnings report.
Development growth can be attributed in part to Wyndham’s focus on extended stay, CEO Geoff Ballotti said on the call.
“The extended stay market is predicted to grow nearly 30% from $21 billion in 2024 to $27 billion by 2028 and it’s a segment with Echo Suites, Hawthorne Suites, WaterWalk and Wyndham Residences that now represents nearly one-third of our growing domestic development pipeline,” Ballotti said. He added that the company’s newly launched Echo Suites brand is now open in markets including Indianapolis; Madison, Wisconsin; Nashville, Tennessee; and Richmond, Virginia.
In 2025, new construction will account for a larger share of rooms growth as Echo Suites openings accelerate, according to Allen. Ballotti said the young brand is “ramping faster” than anticipated.
Wyndham is also growing its upscale extended stay portfolio this quarter with the apartment-style Reside brand in Washington, D.C., and Houston, Ballotti added.
Within the U.S., weekdays outperformed weekends for bookings, driven in part by infrastructure-led demand.
“Throughout 2024 we saw over 2,200 major infrastructure project starts totaling nearly one-quarter of a trillion dollars in value, with nearly 80% of these projects located near at least one, and often several, Wyndham-branded hotels,” Ballotti said on the call. “Wyndham franchisees in these markets experienced a RevPAR increase of more than 6% in the fourth quarter alone.”
The surge in data center projects, in particular, boosted demand for Wyndham rooms. Ballotti noted that Wyndham has “dozens of hotels” within a 10-mile radius of the top 10 data center projects started in the U.S. in 2024.
Ballotti said the data center push — ”a defining trend in the digital era” — gives Wyndham “increased confidence in continued outsized RevPAR improvements” for existing and pipeline hotels in top data center markets, such as Dallas; Columbus, Ohio; and Jackson, Mississippi.
Meanwhile, Wyndham’s marketing strategy is increasingly targeting younger and more affluent customers, with the aim of attracting more Gen Z and millennial guests, Ballotti shared.
Wyndham is one of several hotel companies, including competitor Choice Hotels International, making strategic pushes in extended stay.