Wyndham Hotels & Resorts’ new economy extended-stay brand has reached a development milestone of 100 signings, months ahead of projections.
Chip Ohlsson, executive vice president and chief development officer at Wyndham, said in an interview that the company expected to reach 100 signings by the end of the year if the economy and the segment continued to perform well. Wyndham announced the brand, currently operating under the name Project ECHO, in March at the Hunter Hotel Investment Conference.
“In all my years of doing this, it’s absolutely stunning,” he said about the pace of signings.
One of the developers building a Project ECHO hotel in Plano, Texas, broke ground just weeks ago and expects to have the property open within 12 months, Ohlsson said. The company expects to announce several more groundbreakings by the end of the year.
Wyndham expects to be able to announce the official name of the brand within the next month or two, Ohlsson said. The main obstacle has been the backup at the U.S. Patent and Trademark Office. The company filed names more than a year ago.
Designed for Efficiency
Announcing a brand in the spring with the first groundbreaking in the late summer for a hotel that is expected to open in 12 months is fast even by pre-pandemic standards.
Most of the developers that have signed on to build the brand's first 100 hotels are new partners for Wyndham, which has operated mostly in the transient space with some midscale extended-stay hotels, Ohlsson said. The company created a board of advisers with 10 of the biggest developers of extended-stay hotels in the country to create a prototype for the new brand, he added.
The developers that Wyndham has partnered with all understand the economy extended-stay segment and have helped to identify locations and sites with the right demand for the hotels.
The process of launching a new-construction hotel brand can take two to three years before the first hotel opens, Ohlsson said.
Wyndham was able to cut that timeline by half or more due to having “the most efficient prototype in the industry right now,” he said. “Everything we did in this hotel is efficiency.”
Pricing and construction costs are going to be incredibly important to owners in this segment, Ohlsson said. Fixed costs are important because extended-stay hotels aren’t positioned the same as transient hotels with rates changing nightly.
Though construction will depend on the size and location, the brand prototype has 124 rooms. The first floor will most often be concrete construction, but then stick-built construction on the upper floors for the four-story prototype.
“When you have somebody in there that's signing a longer-term contract with you to stay with you, you're setting a price with them, so it's really important to understand your fixed costs and your fixed labor costs,” he said. “Efficiency became the word of the day.”
Extended-Stay Guests
The targeted demand segment for Project ECHO hotels is long-term guests, and that’s why Wyndham chose the owners it did to kick off the brand, Ohlsson said.
“They understand the model better than anybody,” he said. “We knew that if we brought a lot of transient hotel owners into the segment, they may be tempted on that big college football weekend to sell for one or two nights and miss out on a week or two- or three- to four-month stay.”
The extended-stay market in general has been underserved by the U.S. hotel industry, he said.
“We know there’s a big traveling public out there that spends 30 to 45 to 60 days to over a year in some cases” at hotels, he said. “We know that the digital nomad exists today like it never has before. We know that corporations are changing the travel patterns of employees by saying, 'You don’t have to be in the office on Mondays and Fridays anymore.'”
In designing the Project ECHO prototype guestrooms, Wyndham and its developer council focused on what long-term guests want, he said.
“What they want is to be left alone, like it’s their apartment and just to feel like it’s their own place,” he said.