Hotel companies which haven’t announced extended-stay brands in the past year are growing far and few between as the segment remains white hot. The latest to add to its portfolio is Wyndham Hotels & Resorts, which on Tuesday unveiled a still-to-be-named, new construction economy extended-stay brand operating under the working title Project ECHO. What separates Wyndham from the pack is the additional news that it has two developers lined up – Richmond, Virginia-based Sandpiper Hospitality and Dallas-based Gulf Coast Hotel Management – to build 50 projects over the next five years.
The 23rd brand in the Wyndham stable expects to open its first hotel in 2023 and is actively talking to additional, multi-unit operators with experience in the segment, a key part of the brand’s growth strategy. To assist qualified developers, Wyndham has identified possible development markets across the U.S. and will make available various incentives to select early developers. Wyndham is targeting at least 300 hotels over the next 10 years in the U.S. with potential for additional growth internationally.
Under development since 2021, Project ECHO (Economy Hotel Opportunity) gives Wyndham a horse in the race for a segment that has seen U.S. RevPAR grow 8% since the start of the pandemic and versus 2019, while the rest of the industry declined 17%. Further, in 2021, the average U.S. occupancy for economy extended-stay hotels was over 78% — 20 points higher than all other U.S. segments combined.
“One of the things that attracts us and continues to attract us to this space is the supply demand expectation continues to be better than just about any other space in the hotel industry,” said Wyndham Chief Development Officer Chip Ohlsson. “I think that’s critically important. There’s still plenty of room to run.”
The Wyndham executive team told HOTELS that development costs will range from about US$70,000 to US$75,000 and projected RevPAR is between US$50 and US$55.
Created with the help of a seven-member development council – including Carter Rise, chairman and CEO, Sandpiper Lodging Trust, and Ian McClure, CEO, Gulf Coast Hotel Management – the purpose-built, 124-room Project ECHO prototype requires just under two acres of land, has a highly competitive cost per key. Coming in at just over 50,000 square-feet — nearly 74% of which is rentable — individual rooms average 300 square-feet and consist of single and two-queen studio suites with in-suite kitchenettes.
Wyndham said all three prototypes prioritize owner return on investment with an emphasis on value engineering and streamlined operations. For example, public spaces – a lobby, fitness center and guest laundry – are designed to control labor costs because they are all set within close proximity to the front desk. Wyndham estimates full-time employee requirements sitting at six to eight individuals.
From a marketing perspective, Wyndham is already well entrenched in the economy lodging space and expects to capitalize on those existing relationships. “We’re targeting a minimum of seven-plus nights, but really expect this guest to be more in that 30-plus night range,” said Wyndham Chief Marketing Officer Lisa Checchio. “The other relationship we have that is very strong is with numerous underserved industries like infrastructure, traveling nurses and construction. We’re seeing over 10 million construction workers traveling weekly, traveling nurses are up 300% year-over-year… The other trend that we’re seeing is relocations. We’ve seen over 20 million Americans relocate in the past year… We think that this hotel product will uniquely serve those guests needs because they will be able to live in a market for a month, six months, one year without having the commitments that short-term housing would come with.”
Additional details around Project ECHO—including the brand’s official name—are slated to be announced when the brand formally launches later this year.