Wyndham Hotel Group has continued to pursue its expansion strategy, following last year’s acquisition of the Tryp brand from Sol Melia and the licensing of the Planet Hollywood brand, with a deal to franchise and manage Chatwal Hotels & Resorts’ Dream and Night brands.
The deal adds further variety to Wyndham’s brand stable and comes after the company had warned that it could see room openings for last year at the lower end of its guidance, as terminations by franchisees hit by the downturn grew.
The Night brand, which Wyndham plans to develop in primary and secondary markets, will be positioned as an ‘affordably chic’, while Dream is positioned as a full-service, lifestyle brand for gateway cities and resort destinations.
At the time of the comments over its openings target in November, the group said that it would continue to use its own balance sheet to push expansion, as it did with Tryp. This deal looks to take the more traditional franchise route, which sees Wyndham benefit from taking on design-driven brands at a time when no operator can be without them, while Chatwal Hotels & Resorts’ enjoys the brands’ expansion.
Sant Singh Chatwal, chairman and CEO of Chatwal Hotels & Resorts and its management arm, Hampshire Hotels & Resorts, hailed the deal as a chance for the brands to expand globally, from their current locations in New York; Bangkok, Thailand; and Cochin, India. Chatwal Hotels & Resorts opened its first hotel in New York in 1999, driven by Sant’s son, Vikram, who founded the group as Vikram Chatwal Hotels and is now president.
Vikram followed his father, who founded Hampshire Hotels & Resorts and restaurant group Bombay Palace, into the hotel sector, after stints as a model and Bollywood actor. In addition to Night and Dream, he also created The Time and Stay hotels, which are not part of the Wyndham deal.
Although details around the family-owned group’s operations are hazy, it is thought that the company built its current estate by partnering with investment funds to provide the equity to open hotels, which were then managed by Hampshire Hotels & Resorts. The family’s cut of the profits was then taken as an ownership stake rather than cash, allowing them to build a hotel portfolio to replace one which the Wall Street Journal reports was hit by bankruptcy in the recession of the 1990s.
The group has not come out of the current downturn unscathed. Last year Sant Chatwal told the newspaper that the group had been forced to restructure the securitised mortgages on two of their New York hotels after going delinquent. Following the move, Sant said that he was still looking to expand globally, with a further 10 potential sites purchased with a partner in India and an eye on London.
Dream and Night now look set to fulfil that ambition, utilising Wyndham’s established development and expansion skills, headed up by its global distribution system and loyalty programme.
HA Perspective: Wyndham seems to be facing two ways at once. It is both pursuing a strategy of building a hotel brand company and a strategy of developing its management operations. It has still to be seen whether this is wise or will result in a lack of focus.
There is also a risk of appearing to pick up brands and then fail to back them with adequate resource to take them forward. Perhaps the philosophy is to acquire a sizeable portfolio of brands and then see which ones gain traction in the market.
This might make sense for the brand owner but potential franchisees would be wise to be cautious.