Wyndham Sees Cracks in Economy Hotel Market as Pricing Power Erodes
Photo Credit: Exterior of a Wyndham hotel in Bloomington Minnesota. Wyndham Hotels & Resorts
Skift Take
Management's tone during Thursday's earnings call betrayed an uncomfortable truth: September caught Wyndham off guard with a sharp deterioration in hotel demand in a few U.S. Sunbelt states and in China.
Wyndham said its U.S. budget hotel business showed strain in September, as demand softened in several key markets. Its revised full-year forecast implied that fourth-quarter U.S. RevPAR would continue to slump, down 6.4%.
During its third-quarter earnings call Thursday, the company said revenue per available room fell 5% in the U.S. and 10% in China. The weakness was concentrated in the economy and midscale hotel segments where Wyndham does much of its business.
The divergence reflects broader economic anxiety hitting lower-income consumers. President and CEO Geoff Ballotti acknowledged that guests at the company's limited-service hotels are "more price sensitive" when they feel economic uncertainty.
That's a problem when room rates for economy hotels are up only about 10% since before the pandemic, while rates for luxury hotels have jumped 30%, according to Ballotti's figures.
