At the end of every day, the workers shoring up our nation’s infrastructure will need a place to stay.
Two Sundays ago, Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts, was watching “60 Minutes” and loving what he heard. U.S. Transportation Secretary Pete Buttigieg and Anderson Cooper were discussing the $1.2 trillion bipartisan infrastructure bill that President Joe Biden signed into law in November. “When it comes to roads and bridges,” said Buttigieg, “we haven’t invested at this level since the Eisenhower administration, since they built the interstate highway system in the first place.”
Those roads and bridges won’t build themselves, of course. Workers helping to shore up the country’s infrastructure will need affordable places to stay, and Wyndham’s sales teams have been laser-focused on wooing them. “I got so excited listening to Mayor Pete talk about the awarding of those contracts,” Ballotti says. “There are over 10 million construction workers who travel every week. And these are our customers, these are our business accounts.”
“What’s coming with this $1.2 trillion infrastructure bill is going to create a demand for this type of lodging unseen ever in our industry’s history.”
For many months now, Ballotti and his team have been zeroing in on a new breed of business traveler that doesn’t wear a suit and tie but rather a hardhat and work boots. They are the construction crews, electricians, rail workers, carpenters and road crews hired for major projects around the country.
“In the last year alone, we have added 1,000 newly negotiated corporate accounts that we didn’t have before,” the Wyndham CEO says. “And over half of those corporate accounts that are staying in our 6,200 hotels in the United States of America were infrastructure-related business accounts.”
Biden’s infrastructure package guarantees at least $850 million in spending over the next five years, but Ballotti thinks the effect of the enormous federal investment will be longer lasting. “I think we’re talking the cycle,” he says, noting that the last hotel industry cycle, which ended in 2019, ran for 11 years. “I think the cycle that we’re beginning right now has the ability to run that same stretch, especially given that the great financial crisis of 2008 did not have this type of spending built into it,” he says.
Two years of Zoom calls have forever altered the traditional white-collar business travel paradigm, spurring a rise of “bleisure,” or the blending of leisure and business travel. Ballotti and his team saw evidence of that trend revealed through a noticeable shift in data for Thursday and Sunday night stays, historically the industry’s two softest days of the week. During the pandemic, those two nights turned into rock stars according to two important performance metrics — occupancy rate and revenue per available room (RevPAR).
“I mean, we have seen our Thursday and Sunday nights just take off,” says Ballotti. “Why? Because most white-collar businesses are allowing people to work from home on Mondays and Fridays. That is that is the the trend that we’re seeing.”
With over 9,000 hotel properties around the world, Wyndham Hotels & Resorts ranks as one of the largest hospitality companies in the world and a top 10 hospitality brand based on earnings. Last year, the company reported $590 million of adjusted earnings—only 5% below pre-pandemic levels in 2019.
Looking forward, Ballotti likes where he sees the zeitgeist heading in the coming years. “We’re a company that’s not urban, thankfully. We’re not downtown, thankfully. We’re not meeting, we’re not group,” he says. “We’re the world’s largest hotel franchise company and have never been better positioned.”
The 22 brands that make up Wyndham Hotels & Resorts run the gamut from economy chains like Days Inn and Super 8 to mid-range brands like Ramada and La Quinta to upscale hotels like the eponymous Wyndham. Right now, Wyndham’s stable includes just one extended-stay chain, Hawthorn Suites. But Ballotti knows he needs another.
Next year, Wyndham will launch Project ECHO, a new economy extended-stay hotel brand.
As the lines between work, leisure and travel have blurred during the pandemic, extended-stay hotels emerged as the hospitality industry’s biggest success story. Over the past two years, these flexible-living chains proved to be exactly what value-minded travelers were looking for—fewer amenities, perhaps, but more apartment-like conveniences like kitchens and laundry facilities, along with free Wi-Fi. Last year, the extended-stay segment boasted an average occupancy rate of 73% compared to just 56% for traditional hotels, according to the research firm STR.
“We are focused on who is building our nation’s broadband, who is building our new water and energy systems,” Ballotti says. “And those accounts are saying we need an extended-stay product, because our guests are going to be on the road not a couple of nights, but a few weeks or potentially a few months.”
Ballotti is plugging that hole with “Project ECHO,” an economy extended-stay brand that will launch in 2023. Guestrooms will average 300 square feet and feature in-suite kitchenettes, while the public spaces will include a fitness center and guest laundry. “This could be one of the fastest growing brands we have among our 23,” he says. “Franchisees love our other 22 brands and say they’d love to see an extended-stay brand in the economy space because of how much just how much demand is out there.”
“We’re very bullish right now, both about our business franchising and about adding product in segments that are right now on fire,” says Ballotti. “What’s coming with this $1.2 trillion infrastructure bill is going to create a demand for this type of lodging unseen ever in our industry’s history.”
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