Wyndham Hotels & Resorts executives believe the brand's footprint in infrastructure-heavy markets will position the company for future revenue per available room and unit growth.
Data center construction is starting to pick up in markets that Wyndham is heavily concentrated in such as Texas, Georgia, New Jersey, New York and Florida, President and CEO Geoff Ballotti said during the company's 2024 third-quarter earnings call.
"As Google, as Amazon, as Meta all expand their infrastructures, what we're seeing [is] data center construction across the U.S.A. is just exploding — significant new-construction pickup in major markets where centers are concentrated today," he said.
Ballotti said this will drive Wyndham's weekday market share gains, which started to pick up in the third quarter.
"It could accelerate into 2025 and ... fuel our record development pipeline with those new-construction prototype brands, because there's just a lack of lodging around those centers," he said.
Wyndham expects to see further tailwinds as the $1 trillion infrastructure bill continues to get dispersed across the U.S. Ballotti said less than 20% of the funds have been allocated to date, which is a long-term positive for the company.
"It is a very meaningful multiyear driver for our franchisees over the next 10-plus years," he said.
Development pipeline
Wyndham's development pipeline grew 5% year over year in the third quarter and is now at a record 248,000 hotel rooms. Of those rooms, 85% are in the midscale, extended-stay and higher segments, Ballotti said.
Wyndham opened 17,000 rooms globally in the quarter, including about 7,000 in the U.S. — a 15% increase year over year.
Wyndham opened its second Echo Suites Extended Stay by Wyndham property in the third quarter in Plano, Texas. It signed an additional new 10 contracts for the brand in the quarter and has more than a dozen Echo Suites properties under construction.
"Our Echo Suites owners are telling us that these hotels are performing ahead of their expectations and pro formas," Ballotti said.
Michele Allen, chief financial officer at Wyndham, said the company has set aside $100 million of capital for the Echo Suites brand and it will ramp up its deployment of that capital over 2025 and 2026.
Segment demand outlook
Wyndham hasn't seen leisure demand wane, but if it does and a demand slowdown affects the hospitality business, Wyndham would be well-positioned compared to the broader lodging industry, Ballotti said.
"We are not seeing any significant softness or any trade-down as those gaps between the chain scales continue to strengthen. I mean, think about it, there is no signs yet of any discounting or compression," he said.
All leading indicators for the segment "remain positive," he said, including increasing booking windows and lengths of stay coupled with positive leisure travel sentiments.
The economy hotel segment has improved quarter to quarter in 2024, and is already up 330 basis points in the fourth quarter, Ballotti said.
"We believe that we'll continue to see positive momentum, no waning in leisure travel demand as we head into the [fourth quarter] and as we continue through Q4 and throughout 2025, especially as our economy and midscale brands continue to gain market share during the midweek and we pick up on that infrastructure business," he said.
By the numbers
Across its global hotel portfolio, Wyndham achieved RevPAR of $49.33 in the third quarter, a 1% increase compared to the third quarter of 2023. International or non-U.S. RevPAR grew 7% year over year in the quarter to $38.60, while U.S. RevPAR decreased 1% to $57.98 in the quarter.
Wyndham’s adjusted earnings before interest, taxes, depreciation and amortization was $208 million in the third quarter, up 4% compared to the same quarter last year. Its net revenues for the quarter were $396 million, which was down from $402 million compared to last year.
The company’s net income for the third quarter was $102 million, down 1% from the same quarter last year..
As of press time, Wyndham’s stock price was trading at $87.39 per share, up 8.7% year to date. The New York Stock Exchange Composite Index was up 16.3% for the same time period.