Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 2: Steneveek on Bloomberg Radio. Just well, Wyndham Hotels and Resorts
Speaker 2: is some twenty five brands, ninety five countries, ninety one
Speaker 2: hundred plus hotels, and it just opened up the Echo
Speaker 2: Suits Extended Stay by Wyndham Dallas in Plano, Frisco, Texas.
Speaker 2: It's the second extended to say Echo property to open
Speaker 2: in the US.
Speaker 1: Yeah, here to talk about it and the hotel business
Speaker 1: and really what's up with leisure and business travelers. It's
Speaker 1: a great read on the economy. Is the president's CEO
Speaker 1: of Wyndham Hotels and Resorts, Jeff Blatti. He joins us
Speaker 1: from Plano, Texas. Jeff, great to have you here. We
Speaker 1: have kind of a million questions.
Speaker 2: I think he's in one of the rooms. Play is
Speaker 2: that true, Jeff?
Speaker 3: I am. I left here last night. It was it
Speaker 3: was a great sleep. Is for your viewers watching on
Speaker 3: YouTube who could see this beautifulum This is the first
Speaker 3: hotel that a developer of the name of Ian McClure
Speaker 3: of Gulf Coast Hospitality based here in Texas.
Speaker 4: Texas, a very important state for us.
Speaker 3: He's building twenty five of these echo suites by window.
Speaker 4: The demand for.
Speaker 3: This type of product's incredible. It's it's a very comfortable room.
Speaker 4: If you could, if you can see around, I won't
Speaker 4: give you a tour of my other unmade bed on
Speaker 4: the other side.
Speaker 3: Yeah, it's it was a great event we had yesterday,
Speaker 3: and it's it's our fastest growing brand because of the demand.
Speaker 4: That's out there.
Speaker 1: Well, tell us about that, why it is your fastest
Speaker 1: growing and what is the demand specifically? Who wants to
Speaker 1: stay there? Who's demanding like, hey, we need these kind
Speaker 1: of places.
Speaker 4: Gosh.
Speaker 3: Last month, I was sleeping up out in Spartanburg, South Carolina,
Speaker 3: where Spartanburg has received a billion of the nine billion
Speaker 3: that that state, that single state has been awarded of
Speaker 3: this want so far, of this one point five trillion
Speaker 3: dollar piece of legislation, the most historic piece of legislation
Speaker 3: this country's ever seen. There are one point eight million
Speaker 3: companies that are contracting their workers for projects that are
Speaker 3: now just beginning to get started, and they're looking for
Speaker 3: this type of affordable, a clean economy accommodation to put
Speaker 3: them in.
Speaker 4: I mean here in Plano, perfect example. There is so
Speaker 4: much development.
Speaker 3: Going on around the community here that I'm in today
Speaker 3: and that i'll be this evening with developers looking to
Speaker 3: build more of these in other brands, from a medical profession,
Speaker 3: from the automotive profession, and a litany of projects that
Speaker 3: haven't yet begun that are going to begin. Zoon and
Speaker 3: companies are out contracting right now for lodging accommodations like this.
Speaker 4: It's it really is. It's it's an amazing I've been
Speaker 4: in this industry for thirty years. I've never seen anything
Speaker 4: quite like it.
Speaker 1: It's really fascinating. I'm just kind of going back to
Speaker 1: what you kind of kicked off with. So you're talking
Speaker 1: about the spending bills and the legislation that's come out
Speaker 1: of the US Congress, and that is really shaping kind
Speaker 1: of where you develop exactly.
Speaker 3: I mean, our teams have identified about four thousand of
Speaker 3: the forty thousand projects that will be funded by the
Speaker 3: one point five trillion dollar bill and the two hundred
Speaker 3: and fifty billion dollar Chips.
Speaker 4: Act bill, those Chip Acts built.
Speaker 3: That bill has has begun funding projects in here in
Speaker 3: Texas as well. We have this this is our six
Speaker 3: hundred and ninety first hotel that we've opened as a
Speaker 3: company yesterday. But in Taylor Tech this Samsung is building
Speaker 3: a plant where they will a chip plant where they
Speaker 3: will spend seventeen billion dollars over the next ten years.
Speaker 3: And they have thousands of workers right now who are
Speaker 3: looking for long term lodging accommodation. They're checking in for five, six,
Speaker 3: seven months, some are checking in for.
Speaker 4: Over a year.
Speaker 3: Many are from other parts of Texas and driving home
Speaker 3: on the weekends.
Speaker 4: But they want a.
Speaker 3: Place that they can that they could cook. As you
Speaker 3: see behind me, the two soaptops put their dishes in
Speaker 3: a full sized dishwasher, having full sized refrigerator and in
Speaker 3: a great microwave. They want a place that feels like home.
Speaker 3: And and that's what's that's what's fuel and Carroll demand.
Speaker 2: You know, what does it feel like? Waterville, Maine, Jeff,
Speaker 2: which is I'm just now learning where you and I
Speaker 2: both went to college, a small school called Colby, where
Speaker 2: we found ourselves freezing pretty much November through April every year,
Speaker 2: hold up in our dorm rooms playing beer pong because
Speaker 2: it was so cold. And main it's main, I know, Tim.
Speaker 3: I don't know if you've been back to Waterville lately,
Speaker 3: but it has been transformed. The development that's going on
Speaker 3: in downtown Waterville is really impressive to see, and I
Speaker 3: was thinking to myself, it's fine, I'm smiling so lively
Speaker 3: that Waterville needs an echo. Sweet's extended stay by Windham
Speaker 3: because we would kill it in that market, as you know,
Speaker 3: with parents who did not have the logic accommodation, so
Speaker 3: when we were there that are available today.
Speaker 4: On the new construction round.
Speaker 2: Yeah, just so everybody knows. It's an old mill town that,
Speaker 2: like many mill towns in New England, had fallen on
Speaker 2: hard times years ago. The college and the hospital, at
Speaker 2: least when I was there in Waterville, main were the
Speaker 2: biggest employers and you can see it. But since I've
Speaker 2: been there, I graduated close to twenty years ago, and
Speaker 2: there has been incredible development in the area, really a
Speaker 2: revitalization of downtown, which makes sense to.
Speaker 1: Yourself, you're laughing, Wait, how many years ago did you graduate?
Speaker 1: Or can I not even aunk that I want to.
Speaker 4: I think I'm older than we were.
Speaker 2: We weren't pumping the kegs together, we.
Speaker 4: Were not.
Speaker 1: All right, So I'm curious though, so exciting growth development.
Speaker 1: But what happens I don't know when the money kind
Speaker 1: of runs out in terms of the development from like legislation.
Speaker 1: Do you worry about that you won't have the people
Speaker 1: who will be demanding these kind of rooms in Plano,
Speaker 1: Texas or elsewhere throughout.
Speaker 4: The state that Carol, that is a long time away.
Speaker 3: I mean we are in the very early endings less
Speaker 3: than twenty percent. I think the figure from the COB
Speaker 3: is less than seventeen percent of the one point five
Speaker 3: trillion has been allocated, and even a smaller percentage of
Speaker 3: that has been spent in terms of shovels on the ground.
Speaker 3: The projects that you and Tim are probably hearing about
Speaker 3: and reading about, I mean you think about big projects
Speaker 3: in the New York area like the Hudson Top, those
Speaker 3: projects are so far out there. This is certainly helping
Speaker 3: us from a demand standpoint, demand generation standpoint. I mentioned
Speaker 3: that we've identified four thousand of those forty thousand projects
Speaker 3: so far, and maybe there'll be thousands more.
Speaker 4: That will be funded, but that is that is a
Speaker 4: long long way away. I'm not thinking that far out.
Speaker 3: It's at least ten years, and who knows in ten
Speaker 3: years what's to come in terms of new projects that
Speaker 3: could be could be funded. There is again just such
Speaker 3: a lack of demand for this, for this type of
Speaker 3: extended to day lodging product. And that's what has our
Speaker 3: two hundred and seventy developers who have signed contracts and
Speaker 3: been warted territories to build this type of lodging so excited.
Speaker 1: So you don't ever say the word right now recession
Speaker 1: based on what you're seeing. Is that fair?
Speaker 4: Well?
Speaker 3: Look, I mean, our brands have always outperformed anydownturn they
Speaker 3: did after nine to eleven. They certainly did during the
Speaker 3: eight and nine Great Financial Crisis, and there was no
Speaker 3: better outperformance in the industry than the economy and mid
Speaker 3: scale lodging brands of Wyndham hotels and resorts throughout Covid.
Speaker 4: Our brands were the very first to recover. Our brands
Speaker 4: are known as.
Speaker 3: Days In by Windom, Super eight by Windom, Lakita by Windom,
Speaker 3: very large systems of thousands of units in this country
Speaker 3: that have great brand recognition, where franchisees never had to
Speaker 3: close their hotels because they were able to break even
Speaker 3: at thirty percent occupancy.
Speaker 4: Where there while we're a leisure.
Speaker 3: Based company, and seventy percent of our business is relying
Speaker 3: on the leisure travel demand, which is still pointed still
Speaker 3: out there.
Speaker 4: That thirty percent that is non leisure.
Speaker 3: Is that essential everyday worker whose offices is not in
Speaker 3: downtown office building that's been closed as it was throughout COVID,
Speaker 3: but whose office is the front seat of their construction
Speaker 3: or utility vehicle, or is one of my traveling nurse
Speaker 3: daughters who who have to go to work that that
Speaker 3: are are traveling and need accommodation.
Speaker 4: During the week.
Speaker 3: So yeah, again, our brands have always outperformed right in
Speaker 3: economic downturms. We're not seeing our recession to your point
Speaker 3: right now, and we're feeling very confident about the about
Speaker 3: the year ahead.
Speaker 1: I think room Service is knocking on the door. I'm
Speaker 1: only kidding. We're going to take a break, do some news.
Speaker 1: Are we going to come back and continue the conversation.
Speaker 1: We're going to come back with president CEO of Wyndham
Speaker 1: Hotels and Resorts, Jeff Fialotti. We're talking with him. He
Speaker 1: is in Plano, Texas, which, as we just talked about,
Speaker 1: just opening up another Echo Suites extended stay. Uh they
Speaker 1: did that. I believe yesterday, So we'll continue because I
Speaker 1: want to get a little bit more too on curious
Speaker 1: about the leisure business, a little bit what it says
Speaker 1: about the consumer, and just talk a little bit more
Speaker 1: about their model.
Speaker 2: Yeah, and also remember there are those other brands, Hawthorne,
Speaker 2: the Missisi, so many, water Walk, the Upscale brand, so
Speaker 2: you know there's a lot of segmentation happening. I want
Speaker 2: to get right back to Jeff Belati, the president and
Speaker 2: CEO of Wyndham Hotels and Resorts. He joins us from Plano, Texas. Jeff,
Speaker 2: just remind everyone of Wyndhom Hotels and Resorts business model.
Speaker 2: Are you one hundred percent franchise owned and operated?
Speaker 1: I e.
Speaker 2: You guys actually don't own and operate any of the
Speaker 2: Windom resorts and hotels that that people see exactly.
Speaker 3: Tim, and that's what investors wanted to see when we
Speaker 3: went public five six years ago. They wanted to see
Speaker 3: a company that got out of the ownership game we
Speaker 3: had owned hotels at that point in time, out of
Speaker 3: the management game, which we have. We are a one
Speaker 3: hundred percent franchise company. We're the world's largest hotel franchise company.
Speaker 3: We franchise about six thousand hotels here in the United
Speaker 3: States and another three thousand, two hundred and ninety five
Speaker 3: countries around the world.
Speaker 2: So it's it's it's less risky, right.
Speaker 4: Oh, completely.
Speaker 3: You know, our business model is extremely as we were
Speaker 3: talking about, in periods of downturns, we've actually been able
Speaker 3: to even in periods we're revenue per available room might
Speaker 3: generate more earnings for investors.
Speaker 4: We have. We have many levers to pull.
Speaker 1: One thing I'm curious about, and the levers, like you
Speaker 1: have lots of different brands and you hit at different
Speaker 1: you know, economic individuals or families or consumers. So I
Speaker 1: am curious about. You know, I was looking at some
Speaker 1: of the bi research our our team does and it
Speaker 1: talked about your US room base, including a larger percentage
Speaker 1: of lower price economy hotels and other lodging companies. You
Speaker 1: did though by American American Inn and Lacinta la Quinta
Speaker 1: excuse me, and that he like he died. Sorry, sorry,
Speaker 1: You're right that that really helped boost your mid scale
Speaker 1: and upper mid scale presence UH and fee exposure. But
Speaker 1: I do wonder that you do have some exposure if
Speaker 1: there's a downturn an economic downturn. So you sound upbeat.
Speaker 1: We talked about that before, but there is some exposure
Speaker 1: right if especially the lower income consumer who continues to
Speaker 1: be squeezed, and we talk about that a lot here at.
Speaker 3: Bloomberg and your previous guest Amy talking about.
Speaker 4: The great prints from three great companies.
Speaker 3: I think one of the biggest missobers is that our
Speaker 3: guest is low income.
Speaker 4: It is squarely middle class.
Speaker 3: When you look at the demographics of our guests, and
Speaker 3: those middle class income Americans who are staying at Thank
Speaker 3: You American or Lakita or Days In or Super eight
Speaker 3: are feeling better about life today than they were, certainly
Speaker 3: in the middle of COVID or pre COVID levels, and
Speaker 3: in the consumer sentiment that we're seeing continues to improve.
Speaker 3: We look at many leading indicators in terms of how
Speaker 3: we believe the consumer is feeling. Booking windows continue to increase.
Speaker 3: People have reprioritized their vacations as to the very top
Speaker 3: of the list. They want to spend their disposable income
Speaker 3: on vacations more than on any other consumer spend we're seeing.
Speaker 3: We're seeing longer lengths of stay and certainly the ability
Speaker 3: for so many of our consumers to work remotely on
Speaker 3: a Monday and Friday is helping drive that trend. And
Speaker 3: we're seeing demand can continue to pick up after the
Speaker 3: normalization of that revenge travel that we all knew had
Speaker 3: to normalize.
Speaker 4: So we're seeing the.
Speaker 3: Start of we're not we're heading towards obviously Labor Day,
Speaker 3: but Memorial Day was very strong. It was up four
Speaker 3: percent versus last Memorial Day here in the United States.
Speaker 3: July fourth, Triple A reported was up eight percent versus
Speaker 3: where it was versus last July fourth, and we're expecting
Speaker 3: the same for Labor Day. So these middle income Americans
Speaker 3: want to travel. The number one preference for vacations in
Speaker 3: the United States of America is drive to, and ninety
Speaker 3: percent of our business is drived to. And these middle
Speaker 3: income travelers are with unemployment where it is, as we
Speaker 3: all know, more employed than they were, yeah, and most
Speaker 3: more savings in their bank accounts than they did pre COVID.
Speaker 2: So Jeff, help us understand, Help help us understand the
Speaker 2: segmentation because ECHO is for the you know, economy traveler,
Speaker 2: that's where where you are right.
Speaker 4: Now, and the economy business travel.
Speaker 2: Economy business travel. Okay, where really blue collar water Walk.
Speaker 2: Water Walk is upscale, more upscale, and then you have
Speaker 2: Hawthorn and mid scale. Give us sort of the price
Speaker 2: point for Echo versus water Walk, Yeah, I.
Speaker 3: Mean price points look obviously are determined by the.
Speaker 4: Markets and the location they're they're in.
Speaker 3: But the Hope guest room I'm in tonight, we'll be
Speaker 3: checking guests in at an eighty dollars price point that
Speaker 3: water Walk average daily right, it could be depending on
Speaker 3: the market double that. And sure we have but we
Speaker 3: have lots of aspirational windows Windom, Grands, Doulce. We have
Speaker 3: a new luxury brand, the Registry Collection, which which might
Speaker 3: have a three or four hundred dollars handle to its
Speaker 3: average daily rate. But but for the for that blue
Speaker 3: collar travelers who's staying at an Echo suites, uh, it
Speaker 3: is it is by and large often being paid for
Speaker 3: by their obviously their their employer. And and also the
Speaker 3: demand for this type of product is being driven by
Speaker 3: how much transient motion there is out there in our
Speaker 3: country for people looking for short term and meetium term
Speaker 3: and long term accommodations on.
Speaker 4: The relocation front, given al act of housing in this.
Speaker 1: Country, Hey, one thing I want to do what's cool
Speaker 1: is you guys are global your second quarter reb par,
Speaker 1: so we're talking about revenue per available rooms, so key
Speaker 1: when we're talking about anybody in the hospitality industry. Second
Speaker 1: quarter red par was flat for the US, down two
Speaker 1: percent for economy hotels up seven percent internationally, and you
Speaker 1: had a thirty seven percent gain in Latin American and
Speaker 1: fifteen percent in Europe and Middle East Africa. What can
Speaker 1: you tell us about kind of the global economy based
Speaker 1: on what you guys are seeing.
Speaker 3: The biggest trend for all of the lodging companies out
Speaker 3: there for the next quarter, the quarter ahead, in the
Speaker 3: year ahead is still there is a lot of occupancy
Speaker 3: still left to recover. The occupancy tailwind really around the world,
Speaker 3: with very few exceptions, country by country, still has room
Speaker 3: to grow. And so yes, international it was a big
Speaker 3: bright spot for US. Our international red park revenue per
Speaker 3: available room was up seven percent in the quarter versus
Speaker 3: the same time last year. And here where things normalized. Economy,
Speaker 3: as you pointed out, was down, but it was improving
Speaker 3: from where it was last year. Is things normalized, and
Speaker 3: it was up in some of the other segments. There's
Speaker 3: great pricing power out there, Carol, I always remind investors
Speaker 3: that that pricing still hasn't caught up in the lodging
Speaker 3: industry to inflation. I think inflation's up something like twenty
Speaker 3: three twenty four percent pre COVID days, and our average
Speaker 3: daily rate is up over only seventeen percent. Our hotels
Speaker 3: are operated by small, mom and pop business owners who
Speaker 3: feel very confident about holding on to that average rate
Speaker 3: the gain.
Speaker 4: During COVID and continuing.
Speaker 3: To improve it, but at the same time building the
Speaker 3: business base of business on the book with a business
Speaker 3: transient that allows them in periods of demand to price up.
Speaker 1: Jeff, great to check in with. You really appreciate it,
Speaker 1: Jeff Bilotti. He's the PRESIDENCYEO of Wyndhom Hotels and Resorts,
Speaker 1: joining us from Plano, tex As.
Speaker 4: Jeff B.
Speaker 1: Well, you're listening and watching Bloomberg Business Week.