A new growth momentum
Wyndham Hotels & Resorts posted a small profit in the third quarter and similarly attributed the financial strength to its own drive-to and leisure hotel mix.
La Quinta Inn & Suites by Wyndham Niagara Falls
“As a lodging leader for these everyday business travelers, we are not reliant on air travel, international inbound, or large convention-based corporate travel, which is one reason why our business is uniquely positioned to continue to outperform,” said Wyndham CEO Geoff Ballotti. “Our drive-to, leisure business has never been better positioned for growth”.
The company’s weekend drive-to and leisure travel is up 26 percent since the second quarter, and mid-week business travel is up 19 percent, Ballotti added. Roughly 70 percent of Wyndham’s overall bookings come from leisure travelers while 30 percent stems from “everyday business” travel - largely on-the-road employees working within industries like infrastructure, construction, or logistics.
Choice Hotels is another profitable proof, owner of brands like Comfort Inn & Suites and Clarion. This group managed to pull off a $14.5 million third quarter profit amid the worst year on record for the greater travel industry. But even during the second quarter - the financially worst so far for the greater hotel industry - Choice only had a $2.4 million loss compared to the hundreds of millions of dollars in losses seen by bigger brands like Marriott and Hilton.
Choice’s relative financial strength stems from the company’s portfolio largely rooted in drive-to and leisure hotels.
“These core strengths have positioned us well to capture the shifts in consumer demand that occurred over the last eight months,” Choice Hotels CEO Patrick Pacious said.
Guests’ new expectations
While travelers may hesitate about hopping on a plane to take a vacation during a pandemic, there is less fear around road trips.
Scott LePage, president of the Americas region at Wyndham Hotels & Resorts, said that Wyndham considers drive-to markets to be places travelers can easily reach by car in one day. On average, they might drive for a span of three to four hours. But since the start of the pandemic, he noticed that travelers driving from both further and closer locations than they have before.
LePage also added what’s interesting about travel this year is that people don’t just want to get away, they want to go to places where they can easily practice social distancing.
“For those reasons, markets with easy access to beaches and national parks are in more demand than traditional urban destinations,” he said.
LePage said Wyndham’s portfolio is in a unique position to benefit from that. More than 90% of its hotels in the U.S. are in secondary and drive-to markets, and 75% of its U.S. hotels are in the economy and midscale segments. This also puts Choice at an advantage, according to company leaders. Roughly 4,000 of Choice’s hotels are within a mile of a U.S. interstate highway exit. Another 2,000 hotels are near beaches or national parks.
On the other hand, many hotel experts forecasted that travelers should be more interested in affordable and select-service hotels upon the tighten spending during the crisis. Meanwhile, owners of independent properties are gradually accepting a bigger brand may be their best option to get to the other side of the pandemic.
“There are so many independent developers that are out there that are realizing a brand could provide [revenue per room] premiums and lower distribution costs and operating cost savings, but they’re just not ready to make that decision”, Ballotti said.