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