Relationships matter. Such was the case with Wyndham Hotels & Resorts’ September acquisition of Berlin-based HR Group’s Vienna House brand for US$44 million as the two parties already had a trusted franchise relationship with the Central European multi-brand operator already running several Wyndham hotels in the region.
“When I get asked about the acquisition of the brand, I often say that it is its curiosity – its approach to design, style and individuality – that really inspired us,” said Dimitris Manikis, president for Europe, Middle East, Eurasia and Africa (EMEA) at Wyndham Hotels & Resorts. “All in all, the strengths of a hospitality brand like Vienna House and our expanded collaboration with HR Group, is the perfect combination to expand our market presence even further, adding immediate scale and capability and supporting our ambitions for growth in important destinations across EMEA.”
The deal initially adds an upscale and midscale portfolio of approximately 40 hotels and more than 6,000 rooms to Wyndham’s EMEA portfolio. Vienna House, now Wyndham’s 23rd brand, caters to a wide demographic of business and leisure travelers with a portfolio of assets under both Vienna House and Vienna House Easy brands located in destinations across Europe, including Berlin, Munich, Prague, Krakow, Bucharest and more. It also has Vienna House Townhouse in the extended-stay space.
Manikis said the initial focus is on integrating the brand into the Wyndham system predominantly under the Vienna House by Wyndham moniker. “While we are in continuous talks on developing the brand, during this initial phase we will select very carefully how we go about expanding it,” he added. “We need to pay particular attention to its DNA, positioning and its brand standards. We want to ensure guests will continue to experience that same Viennese-German hospitality as we bring Vienna House by Wyndham to more locations. Essentially, we want to grow without compromising any of its elements.”
The plan is for both Wyndham and the HR Group to develop the brand independently, and for Wyndham to take advantage of its franchise prowess to expand the brand under a direct franchise relationship with existing and new owners and business partners across the EMEA division. HR Group can trade on its reputation, as well, as it already has more than 145 hotels in more than 100 cities and 10 countries with some 20 projects signed and under construction.
Manikis said that while there were no confirmed plans in mid-October, Wyndham’s ambition is to double the size of the brand portfolio in the next five years, predominantly in Germany, Austria and Poland, but looking further afield destinations like Turkey and Greece are also possibilities. “Our initial goal is to add five to 10 new hotels to the Vienna House by Wyndham portfolio in the first year,” he said. “Again, Wyndham will develop the brand, without compromising and keeping the brand DNA intact.”
Headwinds or tailwinds?
When asked how macroeconomic conditions might impact development, Manikis referred to the hospitality sector’s demonstrated resilience over the past two years and how it has shown really strong recovery as soon as people were able to travel again. “While there are reasons to be cautious due to the broader macro-economic climate, we remain optimistic about the performance of the hospitality sector, and confident in the continued resiliency of our franchise model,” he said.
In Europe, Manikis said Wyndham is seeing sustained consumer confidence when it comes to travel. “In fact, our booking rates through summer and early fall for 4Q22 and into early 2023 have been stronger than last year,” he added. “Our hotels in Europe largely receive domestic and intra-European leisure travel demand – which continues to lead bookings in the region.”
One of the main reasons Wyndham looked at the Vienna House brand and portfolio in the first place was its strong market performance where it currently operates, as well as its potential to grow in new destinations, according to Manikis. “Our forecast is for the brand to continue to perform and over exceed expectations as it currently does in many destinations and do the same in more cities where we will look to expand.”
The acquisition of the brand has added 28 hotels in Germany alone, further cementing Wyndham’s foothold in one of its largest European markets with over 130 franchised hotels and more than 20,000 rooms, but also expanding across surrounding countries. “Wyndham will provide the strength, scale and expertise needed to grow the brand faster and ensure more guests experience what Vienna House has to offer, while also tapping into the renowned benefits of Wyndham Rewards,” Manikis said.
Manikis concluded that Vienna House is a brand that complements Wyndham’s existing portfolio and therefore there is no intention to move these hotels into other Wyndham brand categories. “We intend to grow the brand within the midscale and upscale where it is so strongly positioned and expand in Europe and beyond,” he said.
“We found an excellent like-minded partner in Wyndham Hotels & Resorts, sharing the same passion to bring high-quality accommodations where travelers want to be,” said Ruslan Husry, sole shareholder and CEO of HR Group. “The Vienna House brand has built a fantastic reputation in many European destinations, and our expanded and close-knit collaboration with Wyndham will provide the strength, scale and expertise needed to grow the brand faster and ensure more guests experience what Vienna House has to offer, while also tapping into the renowned benefits of Wyndham Rewards.”