Wyndham Hotels & Resorts announced Tuesday it has awarded development contracts for its new economy extended–stay brand, operating under the working title “Project ECHO.”
The company awarded contracts for 50 new-build projects and plans to open its first hotel under the currently unnamed brand in 2023.
Project ECHO, which stands for Economy Hotel Opportunity, has been developing under Wyndham since summer 2021, according to a news release. Wyndham President and CEO Geoff Ballotti said the success of economy extended-stay brands in average daily rate and revenue per available room performance over the past two years drove the company to look into developing one of its own.
“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,” Ballotti said in the news release.
Development
In a call with media about the new brand, Wyndham and development company executives spoke of efficiency as the main goal and standard.
Krishna Paliwal, Wyndham's head of architecture, design and construction, said the hotel prototypes for the new brand have been designed with efficiency and profitability in mind.
The price per key is estimated to be in the $70,000 to $75,000 range with overall revenue per available room in the $50 to $55 range, but that metric and average daily rate will be market dependent, Paliwal said.
The majority of the 50,000-square-feet buildings will be allocated toward the guest rooms, and amenities have been selected with the guest in mind to ensure profitability, he said.
“When we were designing this, the basic, fundamental goal was how to create the most efficiencies to maximize the profitability and the bottom line for our owners,” Paliwal said.
Wyndham partnered with Richmond, Virginia-based Sandpiper Lodging Trust and Dallas-based Gulf Coast Hotel Management for the initial construction projects, with each development company taking on 25 hotels. Chip Ohlsson, Wyndham executive vice president and chief development officer, said the construction of the hotels will take place over the next five years, with multiple hotels breaking ground this summer.
Carter Rise, Sandpiper president and CEO, said the company will have at least one hotel open within the next 12 months and has one in review now. Ian McClure, Gulf Coast CEO, said his company is on a similar timeline, expecting to start construction by the end of the year and ramp up production in 2023 or 2024.
Wyndham is targeting a goal of 300 hotels under the Project ECHO brand over the next 10 years in the U.S., along with an opportunity to expand internationally.
“As you see us going forward, we’re going to be looking to develop only with really seasoned, experienced developers in this space,” Ohlsson said. “Not necessarily just developers, but developers who understand this space because the model is different, the way you handle the operations is going to be different.”
Markets
The majority of the first 50 hotels will be developed in major metro markets, Ohlsson said. Wyndham will follow the “hub and spoke” methodology, starting in heavily concentrated urban markets and then moving out to the suburbs after the brand is established.
Rise said Sandpiper's core markets for the brand will likely be the Washington, D.C., metro area down through Virginia, along with cities in the West such as Reno and Phoenix, where it already has existing operations.
Gulf Coast will focus on Texas-area metros such as Dallas, Houston and Austin in its initial constructions, McClure said.
“This box works phenomenal in smaller and midsize cities of 100,000 to 200,000 individuals that really don’t have this type of an asset class,” he said. “Although it’ll start originally in major metros, you’ll begin seeing them in some smaller secondary and tertiary markets for sure.”
Wyndham’s Venture Into Economy Extended-Stay
Project ECHO is joining Hawthorn Suites as the second extended-stay brand in Wyndham’s portfolio; however, the latter is in the midscale segment.
Wyndham isn’t the first company to take advantage of the positive performance demonstrated in the economy extended-stay segment; Choice Hotels International announced March 16 a rebrand of its Suburban Extended Stay Hotel brand as Suburban Studios and unveiled a new room design.
Ohlsson said what sets Wyndham’s Project Echo apart from the field is its commitment to new construction rather than conversions, which is the blueprint for Suburban Studios. Launching a new brand now that the economy extended-stay segment is established has helped the company analyze what has worked and what hasn’t, he said.
“It was much easier to start a brand from scratch at this point, knowing exactly what we know now,” Ohlsson said. “We’re really light years ahead of some of our competitors who may have had a product out there that was built at a different time.”