Wyndham Sees Tech Upgrades as Driving Higher Hotel Revenues

25.07.2024 - 17:55 / skift.com / Sean Oneill / Patrick Scholes / Geoff Ballotti

Wyndham Hotels & Resorts said Thursday that its recent technology investments have helped keep profits flowing to the bottom line, even as traveler demand for the hotel group’s core economy segment moderates.

“We’re bringing technology typically offered in luxury and upscale segments to select-service hotels,” said Geoff Ballotti, president and CEO.

Since 2018, Wyndham has done a $275 million tech overhaul, attempting to improve its digital game — especially in the select-service hotel space.

Three weeks ago, it began rolling out its new “Wyndham Connect” guest engagement platform. Ballotti highlighted that more than 2,000 North American hotels have already adopted the system, which leverages “one of the most substantial AI-driven, large language models in the industry.”

Key features include:

The company’s executives claimed the tech improvements are benefiting franchisees.

“Our business is getting more efficient, particularly on the technology side,” said Michelle Allen, Wyndham’s chief financial officer. “We’ve integrated our commercial organization, we’re leveraging third-party partners, and we’re seeing benefits in G&A [general and administrative expense] line items.”

On the one hand, Wyndham revised its full-year 2024 global revenue per available room growth outlook to “approximately flat” from the previous guidance of 2-3% growth.

Despite this reduction, Wyndham maintained its adjusted EBITDA guidance range of $690 million to $700 million. “The EBITDA guide was unchanged despite the RevPAR guidance being lowered by 250 basis points at the midpoint,” wrote analysts Patrick Scholes and Gregory Miller in a report for Truist Securities. “This may be the only time we have seen a guidance move like this.”

Wyndham execs said the tech gains helped enable its EBITDA guidance move.

Company executives noted that some of their brands were doing exceptionally well at winning market share.

As Michelle Allen, Wyndham’s CFO, put it: “The fact that we’re seeing incremental demand for our brands, especially in tough markets, is something we view very positively.”

The company’s extended stay gambit seems to be paying off.

The first Echo Suites by Wyndham hotel opened in Spartanburg, South Carolina, earlier this month. The brand has become the fastest-growing brand in Wyndham’s portfolio, with over 33,000 rooms in the pipeline.

Ballotti noted, “Most of those in attendance were developers who have either broken ground or soon will be breaking ground. There are developers who have built hundreds of competitive economy, midscale, upper-midscale extended stay products, and they were absolutely thrilled with the finished product.”

Across its full portfolio, Wyndham expects some occupancy improvement in the U.S.