PARSIPPANY, New Jersey—Wyndham Hotels & Resorts today unveiled new details about its upcoming economy extended-stay hotel brand. Among them, newly awarded contracts to develop 50 new construction projects with its first two partners: Sandpiper Hospitality and Gulf Coast Hotel Management.
Operating under the working title “Project ECHO”—an acronym for Economy Hotel Opportunity—the all new-construction brand fills whitespace within the larger Wyndham Hotels & Resorts portfolio while expanding the company into a segment that has seen growth and resiliency, not just amid the pandemic but throughout the last lodging cycle. Wyndham has been developing the brand since summer 2021.
“Over the last two years, economy extended-stay hotels outperformed all other segments, and in 2021, set new records for occupancy, ADR, and RevPAR,” said Geoff Ballotti, president and CEO, Wyndham Hotels & Resorts. “Demand for these accommodations only continues to climb—both from guests and developers alike—making now the right time for Wyndham, the definitive leader in the economy segment, to bring our experience and expertise to this high-potential space.”
Economy extended-stay hotels perform throughout all stages of the lodging cycle and are particularly resilient amid a downturn. During the global pandemic, U.S. RevPAR for the segment grew 8 percent versus 2019 while the rest of the industry declined 17 percent. Further, in 2021, the average U.S. occupancy for economy extended-stay hotels was over 78 percent—20 points higher than all other U.S. segments combined.
A Developer-Driven Approach
Project ECHO was created with the help of a seven-member development council, which consists of owners and operators currently in the economy extended-stay segment. The council’s insights are being paired with those of Wyndham’s in-house design and construction team. In recent years, the team has spearheaded the creation of La Quinta by Wyndham’s highly successful Del Sol prototype, currently at over 130 hotels with another 56 in its pipeline; and more recently, Microtel by Wyndham’s Moda prototype, which has another 40 hotels under development. At a time when rising construction costs are driving the need for efficiency, all three prototypes prioritize owner return on investment with an emphasis on value engineering and streamlined operations, helping optimize operating margins on a recurring basis.
“Wyndham not only understands its owners and developers but listens to and acts on their needs,” said Carter Rise, chairman and CEO, Sandpiper Lodging Trust. “That commitment, paired with best-in-class design and a deep, fundamental understanding of the economy guest, is a differentiator in our industry and is ultimately why we chose to partner with Wyndham.”
The 124-room Project ECHO prototype requires just under two acres of land, has a competitive cost per key, and features multiple characteristics that separate it from traditional economy brands. Coming in at just over 50,000 square feet—nearly 74 percent of which is rentable—individual rooms average 300 square feet and consist of single and two-queen studio suites with in-suite kitchenettes while efficiently-designed public spaces—a lobby, fitness center, and guest laundry—help to limit labor needs.
“From day one, Wyndham has made a point of reaching out and asking, ‘What should be done differently?’ It wasn’t about dictating to us what the brand would be but rather, wanting to understand its potential and how our experience and expertise could best help developers meet their goals,” said Ian McClure, CEO, Gulf Coast Hotel Management. “For us, that went a long way. It showed they’re committed to getting this brand right.”
Strategic Growth via Multi-Unit Operators
With 50 hotels already in the initial pipeline—25 each from Sandpiper and Gulf Coast over the next five years—Wyndham is now eyeing additional growth opportunities. The brand expects to open its first hotel in 2023 and is talking to additional multi-unit operators with experience in the segment.
Wyndham intends to be thoughtful with early development partners, prioritizing brand integrity while building a multi-year pipeline. To assist developers, the company has identified possible development markets across the United States and will make available various incentives to select early developers. Wyndham is targeting at least 300 hotels over the next ten years in the United States with potential for additional growth internationally.
Extended-Stay Leadership and Support
Recognizing the importance of early franchisee success and the business model of economy extended-stay, Wyndham has assembled a leadership and operations support team around Project ECHO, one with experience in extended-stay brands.
Led by Vice President of Operations Dan Leh, the team brings expertise across all facets of extended-stay operations, including but not limited to, design and construction, pre-opening operations, sales, revenue management, labor management, owner relations, and more. Their efforts are complemented by Project ECHO sales teams, both at the local and national level, who will focus on matching hotels with Wyndham’s list of long-term guests.
On a broader scale, Project ECHO enables Wyndham to now offer guests and developers a portfolio of extended-stay offerings. Hawthorn Suites by Wyndham, the company’s existing midscale extended-stay brand, is a part of the Company’s new dual-brand concept with La Quinta by Wyndham, which continues to see interest from developers with 36 hotels currently under development—two of which are being developed by Trusha Patel, inaugural member of Wyndham’s Women Own the Room program.