Wyndham Hotels & Resorts has become the latest of the global operators to offer a shared room concept, under its Super 8 by Wyndham brand.
The new room was released as the company reported its third-quarter results, which saw “softer-than-expected” revpar growth, as its estate grew by 3% on the year.
The new Super 8 concept, Room 8, will be piloted in a number of locations from next year and will include space for up to four people in each room, with bunk beds alongside living and cooking areas.
Mike Mueller, Super 8 brand president, said. “More and more, we’re seeing groups of guests who want space to stretch out and relax, but without the sacrifice of giving up their own private sleeping space. The unique design is the ideal solution. Whether it’s a group of millennials, a young family or an on-the-road construction crew, Room 8 delivers the perfect balance of privacy and community.”
The launch followed the release of Hilton’s latest brand, Motto, at the end of last year, which featured wall-beds, lofted beds, segmented shower and toilet stalls, and multi-functional furniture that can be stowed when not in use. Hotels will also have the option for guests to book multiple connecting rooms in advance.
At Wyndham, the company’s third-quarter results saw adjusted Ebitda increase by 14% compared with the prior-year quarter, to USD190m. US revpar declined 1% year-over-year, and international revpar declined 1% year-over-year in constant currency.
Geoff Ballotti, CEO, told analysts: “Our experience over the last three months reflects continued softness in ADR, especially in the mid-scale midweek segments and most noticeably in the oil and gas markets. However despite this industry wide softness we’re not seeing any signs of overbuilding, as supply growth remains steady at sub-2% in the roadside markets that are important to our pipeline growth.”
The group updated its outlook for organic global revpar growth to zero to minus-1% to reflect a softer revpar environment than it had anticipated, from a previous forecast of 1% growth. Its adjusted Ebitda forecast was lowered accordingly, to between USD610m and USD615m, against USD610m to USD618m. Rooms growth remained steady, at 2% to 4%.
The company saw growth accelerate away from its domestic market, opening 5,400 rooms in the third quarter in the US, an increase of 6% versus last year’s third quarter. Internationally it opened over 9,000 rooms, 20% more than the previous year.
The fastest-growing region was Southeast Asia which grew 23%. In China the company grew its direct franchise system by 7%, including the addition of its first Microtel in the region. Earlier this year Wyndham reacquired exclusive rights for its Days Inn brand in China as the company looked to grow its direct franchising business in emerging markets.
The company’s development pipeline grew 7% year-over-year to 190,000 rooms. Approximately 56% of Wyndham’s development pipeline was international and 74% new construction, of which there was 10% growth in domestic new construction and 13% growth in international new construction.
Ballotti said: “The international growth opportunities continue to be very significant and we want to take advantage of those. We’ve been investing over time to build up the position and the strength we have in international markets, to be able to deliver the high single digit direct franchising growth we’re seeing in a lot of markets
“Developers are looking to this select service market in our brands, we’ve seen great interest domestically in our new construction prototype brands, but we are also increasingly seeing interest in some of our more traditional brands, our Days Inn pipeline is improving, our Super 8 pipeline is improving.
“A lot of what we do is conversions and that’s a really exciting thing to see, so we’re not seeing any slowdown domestically and we’re certainly not seeing it internationally. During slower economies we have seen consistent 3% net unit growth. We saw that in ’07, ’08 and ’09. Our conversion activity during that period picked up, our brands becoming more attractive during slowdowns.”
The CEO added that the group was targeting independents for further conversions, commenting that he had not seen any impact from the entry of OYO into the US.
HA Perspective [by Katherine Doggrell]: As even the most casual observer of the sector will tell you, with every pop of a cuckoo out of the clock pops a new hotel brand. You’re no-one if you don’t have a flag which offers something for every single part of the customer’s whim and these days, the customers whim is flexibility.
This is not only a direct response to Airbnb and its seven million listings, but a response to the growing appreciation that there is a thing called a leisure customer, and that, if you have an award-winning loyalty programme – and Wyndham does – then they are more likely to be the ones spraying corporate-earned points around.
Unlike Motto, Room 8 is a new room, not a new brand. This speaks not of a lack of gumption, but a realisation. Customers don’t need a whole new brand to be flexible, there are already brands which they like and want to stay in. The sector needs to appreciate that leisure travellers exist across the brands and flexibility is required throughout. The wise brands will modify their existing brands and save their efforts of their logo designers for another day.