FEATURE ARTICLE, OCTOBER 2008

WYNDHAM HOTEL GROUP BROADENS ITS PORTFOLIO
Coleman Wood

Even with energy prices at record highs, Americans are still traveling more than ever. The hospitality market in the country is enormous, none more so than along our nation’s interstate systems, where at least one hotel dots most highway exits. Take a trip anywhere in this country and beyond, and you are bound to come across one of the more than 6,500 hotels that make up Parsippany, New Jersey-based Wyndham Hotel Group. But the company is not content to stay at that size for long.

Over the summer, Wyndham made a move to increase its hotel portfolio size with the purchase of US Franchise Systems, Inc. from a subsidiary of Global Hyatt Corporation. USFS controls the Microtel Inns & Suites and Hawthorn Suites brands, which together total more than 29,000 rooms. The Microtel Inns & Suites chain consists of 292 new-construction economy hotels, with 38 more currently under development. Hawthorn Suites is an extended-stay hotel with 91 locations nationwide.

This is not the first time that Wyndham has made such a move. Of the 12 brands the corporation owns, only one, Wingate by Wyndham, is homegrown. The rest were acquired either through legacy or purchase. These include economy brands such as Super 8, Knights Inn and Days Inn; mid-range brands such as Howard Johnson, Travelodge, Ramada Inn Amerihost Inn and Baymont Inn & Suites; and luxury brands such as Wyndham Hotels & Resorts.

“With the most recent acquisition, we filled one of the sectors that we did not have representation in, which was the extended-stay sector. The Hawthorn Suites brand fills that void,” says Keith Pierce, group president for Wyndham Hotel Group.

Hawthorn Suites is an all-suite, extended-stay hotel that is located in more than 30 states and four countries. In addition to the brand’s U.S. locations, Hawthorn Suites can be found in cities as diverse as Melbourne, Australia; Bodrum, Turkey; and Dubai, United Arab Emirates. The brand focuses a lot of its attention on the traveling business crowd, but does not neglect the casual traveler that may need more space than a traditional hotel room can provide.

“It was a great acquisition, because not only did we acquire a brand and fill that extended-stay void that we had [with Hawthorn Suites], but we also picked up a best-in-class economy brand in Microtel,” Pierce says.

Microtel Inns & Suites has made a name for itself in the economy segment as a seven-time J.D. Power & Associates award winner. The brand has hotels open or under development in 44 U.S. states and five countries, including Argentina, Honduras, Mexico, Canada and The Philippines. Microtel hotels thrive on efficiency, but not at the cost of the comfort of its customers. While Wyndham already owned three large economy brands, the acquisition of Microtel allows the company to increase its footprint within the segment. It plans to continue Microtel’s rapid expansion efforts, at a rate of approximately 30 new hotels per year.

As opposed to some chains that own their hotels outright, Wyndham is built on a franchising platform. In exchange for assuming the debt, construction and management of the property, Wyndham provides the franchisee with a stable brand name and assistance keeping that brand successful. In the current economic downturn, this method proved especially successful.

“We tend to fair better from a franchising standpoint [in times like this], because properties need that branding as an extra source of business to help them through difficult times,” Pierce says. “So we tend to be, from a business model, insulated from extreme downturns. So it’s a very sound model.”

Pierce also believes that Wyndham’s diverse assortment of brands keeps the portfolio diversified and, thus, resilient to down cycles. While other hotel chains may be halting expansion efforts or downsizing, Wyndham Hotel Group is expanding. The company is pursuing a three-pronged approach: continued North American growth through acquisitions and franchising; the strengthening of the Wyndham Hotels & Resorts brand; and international expansion. The company is pursuing expansion in Western European markets such as Germany and the United Kingdom, but is also targeting the booming hospitality markets in India and China. With globalization becoming the rule rather than the exception, expect to see Wyndham’s brands in far-flung places in the future.

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