Wyndham Hotels & Resorts has ramped up the expansion of its ECHO Suites Extended Stay brand, which presently has more than 200 hotels in its development pipeline.
With its ECHO Suites Extended Stay by Wyndham, Wyndham has tapped into the popular extended-stay market, which continues to benefit from the post-pandemic trend of booking longer stays.
According to a recent study by JLL, select-service and extended-stay investment volume in the U.S. accelerated further in 2022, with liquidity nearing $20.5 billion, a 5.5% increase YOY. The sector has accounted for 51.1% of the total hotel investment volume in the country, increasing by 210 bps to 2021 and the highest portion in the history of the U.S.
The extended-stay hotel market has remained stable during periods of economic disruption because it caters to a larger customer base, but it has achieved more consistent and higher yields than other commercial real estate types, according to the report. The sector experienced a faster recovery in RevPAR than the overall U.S. lodging sector and is expected to grow even more this year.
Late last year, ECHO Suites broke ground on the first of the brand’s three hotels. Around two dozen more ground breaks are scheduled for this year.
The first ECHO Suites hotel is expected to open by the end of this year, with more openings scheduled in 2024.
ECHO Suites has become the biggest brand launch in Wyndham’s history, said Chip Ohlsson, chief development officer, Wyndham Hotels & Resorts. “Its rapid growth is a testament to the power that comes with the scale and resources of the world’s largest hotel franchising company and what can happen when brands take the time to truly engage and understand the needs of the development community.”
The launch of ECHO Suites coincides with the historic $1.2 trillion approved funding as part of the 2021 Infrastructure and Jobs Act, the biggest ever funding in the history of the U.S. Seeking to repair the country’s major roads and highways, airports, bridges and rail system, these projects are creating a tailwind for Wyndham and business travelers, mostly construction and other trade workers. Many of these business travelers and workers will require long-term accommodations as they travel across the country to job sites.
Even in its early stages, the Act is already benefiting Wyndham and its brands, with general infrastructure-related revenues increasing by more than 20% in Q4 2022, the seventh consecutive quarter of double-digit growth.
Adding to the opportunities is the $280 billion CHIPS and Science Act of 2022, of which more than $50 billion is earmarked for American semiconductor research, development and manufacturing, is adding to the opportunities by speeding up the construction of new chip manufacturing plants in the nation. Over 22 plants have been declared in several states since the act was signed.
Between these two legislations, Wyndham sees a long-term opportunity for franchisees to realize $3.3 billion in extra room revenue, generating more than $150 million in incremental royalties for the company over the multi-year period of expenditure.
“The investments we’re seeing in infrastructure represent an incredible opportunity poised to pay dividends for select-service and extended-stay hoteliers for years to come. It’s truly one of the most exciting times to be a part of our industry, Wyndham and ECHO Suites,” said Ohlsson.
ROI-FOCUSED DESIGN
ECHO Suites was designed by a council comprising owners and operators in the extended-stay sector. The council’s insights were accompanied by the knowledge of Wyndham’s in-house construction and design team, which led to the creation of La Quinta by Wyndham’s Del Sol prototype and, more recently, Microtel by Wyndham’s Moda prototype.
All these three prototypes are focused primarily on owner ROI, emphasizing value engineering and streamlined operations, helping optimize operating margins regularly.
The attention to owner ROI attracted Co-founder of SPI Holdings, Dennis Wong, and his business partner, Richard Squires of Lennox Capital, to ink a deal with Wyndham to develop multiple ECHO Suites properties in markets like San Diego, Seattle, Las Vegas and others.
“Extended-stay is the hot segment within hospitality right now and ECHO Suites Extended Stay by Wyndham is undoubtedly the hot brand within that segment,” said Wong. “What differentiates Wyndham is their owner-first approach, a commitment to ROI-driven design and best-in-class technology, marketing and distribution. As developers, it’s everything we’re looking for.”
The purpose-built, all-new construction, 124-room ECHO Suites prototype will require less than two acres of land and comes in at 50,000 square feet (of which around 74% is rentable). Individual rooms average 300 square feet and comprise single and two-queen studio suites with kitchens and public spaces — lobby, fitness center and round-the-clock guest laundry — which will lower labor needs.
With 9,100 hotels totaling 843,000 rooms across more than 95 countries on six continents, Wyndham is one of the largest hotel franchising companies globally.