What is fuelling Wyndham Hotels regional midscale growth?

Hotelier Middle East sits down with executives from the hotel group to know more about their plans

Wyndham Garden Dammam is the latest opening for the company in the Kingdom.
Wyndham Garden Dammam is the latest opening for the company in the Kingdom.

More than 12 months have passed since Hotelier Middle East first met with the then Wyndham Hotels & Resorts regional vice president Ignace Bauwens. At the time, he said that the operator had only just begun the journey of expanding its mid-market segment.  It was a “giant about to wake up,” he claimed.  But with a slew of recent openings across the Middle East – since January 2017, Wyndham’s hotel room portfolio across Middle East and Africa (MEA) has grown by approximately 25%, from 8,813 rooms in January 2017 to 10,977 today  and with more in the pipeline –  has the ‘giant’ finally woke up?

Wyndham Hotels & Resorts has seen changes since that initial meeting more than 12 months ago. Not least, the departure of Bauwens.  The hotel group’s mid-market segment expansion in the Middle East has also grown and is arguable now past the beginning stage.  The group’s footprint in Saudi Arabia has increased. Today, it has 15 hotels and 2,347 rooms in the Kingdom, with the Wyndham Garden Dammam being the latest opening at the beginning of 2019.

In Bahrain, the group launched the largest Wyndham Garden Hotel in the world when the 441-key Wyndham Garden Manama, Bahrain, opened in November 2017.  Here in the UAE, the Wyndham Deira Waterfront and Super 8 Deira Waterfront are expected to open during the early part of 2020, with the Days Hotel Deira Waterfront target completion date expected in 2022.

Adding midscale brands

Both Dimitris Manikis, president & managing director EMEA, and Panos Loupasis, vice president development, Middle East, Eurasia & Africa both reveal how middle class travellers and government-led tourism initiatives are fuelling the group’s regional expansion plans in midscale brands in the UAE and Saudi Arabia.

According to Panos Loupasis, Wyndham’s vice president development, Middle East, Eurasia & Africa, when the region’s Wyndham office opened, there was a limited portfolio of franchise hotels at that time. “Over the years, Wyndham started to reinforce the presence of the Ramada brand, which is the most well-known mid-scale brand in the region and our core brand,” he says.

The Ramada brand was introduced in almost 32 locations in MEA. Additional brands were launched, reinforcing the 3- and 4-star segments with the midscale brands Ramada Encore and TRYP by Wyndham, and economy brands Days Inn, and Super 8.

“Last year, we opened the largest TRYP by Wyndham in the world in Barsha Heights [Dubai], with 650 units,” adds Loupasis.  “We also introduced Wyndham Garden in Manama, Bahrain, which is the largest Gardens in the world with 441 rooms. We also brought the brand to Ajman, UAE, and in Dammam, Saudi Arabia.” 

Other midscale and economy brands in the MEA include the midscale Howard Johnson (293 rooms, three hotels) and Hawthorn Suites by Wyndham (470 rooms, four hotels) and the economy Days Inn.The total of midscale and economy hotels combined in the region is 53 properties and 4,966 rooms.  The upscale and upper upscale brands in the region include Wyndham (1,002 rooms, two hotels) and Wyndham Grand (509 rooms, two hotels).

Loupasis admits that there “has been an awakening,” through further expansion in areas like the UAE and Saudi Arabia. But what is driving the growth? 

In December 2018, Hotelier Middle East reported how Wyndham Hotels & Resorts is to open three new hotels in the Deira Waterfront Development by Ithra Dubai, a wholly owned subsidiary of Investment Corporation of Dubai (ICD). The hotels will operate under the Wyndham, Days by Wyndham, and Super 8 by Wyndham brands.

According to Manikis, there is today a proliferation of upper midscale, upscale, upper upscale luxury brands throughout the GCC and wider Middle East. “What’s missing,” he says, “is internationally branded three star economy hotels and internationally branded extended stay products [hotel apartments]. Both are underrepresented in the internationally branded arena here in the region. This has been a change in strategy in our objective over the past years to introduce more of our extended stay hotel suites Wyndham brands and introduce more of our economy and additional midscale brands.” 

World stage

Wyndham is no stranger to expansion. Manikis explains how Wyndham Hotels & Resorts is the world’s largest hotel franchising company and a provider of hotel management services, with approximately 9,200 hotels across more than 80 countries. Added to this is the acquisition 18 months ago of American hotel franchising and hotel management business La Quinta Holding. The addition earlier this year of La Quinta’s more than 900 franchised hotels with a total of nearly 89,000 rooms has built Wyndham Hotels & Resorts’ midscale presence, helping to increase its European footprint, and expanding its reach further into the upper-midscale segment of the lodging industry.

Financially speaking, the group revealed in its 2018 fourth quarter and full-year 2018 results that its global revenues increased to US$1.87 billion in 2018, compared to $1.28 billion in 2017. Furthermore, its adjusted net income increased by 45% compared to 2017. In the fourth quarter, the company’s revenues increased by 69% and its adjusted net income increased by 50% over the prior-year quarter.

Tourism strategies

Here in the Middle East, usurprisingly, Wyndham closely follows what is happening in the market place. “We see more middle class travellers, low-cost airlines coming in, more airlines, airports expanding, and local regions actually creating independent tourism strategies,” Manikis says, referring to tourism initiatives such as Dubai’s Vision 2020 and Saudi Vision 2030, among others. 

“For us, watching these trends was an eye-opener to where things are heading, with every single market in the region actually creating a strategy related to tourism. This is a great message for our hotels brands, but firstly it is a great message for the owner of businesses that tourism is a key component of a business strategy for a region.  It is also a great message for tourists that tourism has become a key focal point for a country’s development,” he says.

He points out how for nationals such tourism strategies mean that tourism is no longer a given, and that the strategies have to be built, either by welcoming tourists, speaking [different] languages, having amenities and facilities in place, having decent airports, expanding terminals. “It’s about   getting more low cost airlines to fly here [to the region] so you can increase the capacity of the middle class.

“These are trends that you cannot keep your eyes off.  At Wyndham, we look at this and say there are some really important trends happening in the Middle East. We cannot afford being who we are – the world’s biggest franchiser of hotels – to not be here, not to be part of this evolution that is happening,” he says.

Manikis underscored how at the recently held World Travel & Tourism Council (WTTC) in Seville, Spain, world tourism leaders said that tourism is going to be the second biggest employer in the world and is going to be the driving force of communities, addressing the needs of the growing middle class, either in the emerging  markets of India and/or China.

“This is an amazing opportunity for Wyndham with its brands to cover the needs of these new consumers. Look at our brands. Midscale is our game, it’s our field. We love playing that segment because it has made sense and made Wyndham what it is today.  We have brands that cover the needs of many consumers, but the midscale one is the one we are comfortable with. That is the segment of the market that has an enormous future the region,” he says.  

Spending power

Targeting emerging markets like India and China seems like an obvious move. But compared to the established source markets of Europe and North America, would such tourists have less to spend?

He disagrees, saying the way airlines operate today with more budget airlines, allows travellers to get here cheaper than before, and therefore giving them more access to disposable income, to ‘stay better, buy better,” he says.

Manikis returns to the tourism strategies that GCC countries are currently implementing, saying that such initiatives address the emerging tourist markets. “This is why airports are being expanded, and why they are bringing different market segments. They [governments] understand that in order to move from a developing to a mature market you need every single component and segment to play in that market.” The strategies that the regional countries are building actually speaks to that.

“If we look at Wyndham we have what every traveller wants from economy to upper scale. So the travellers in this part of the world (Middle East), if you look at the demographics and the way that the market is shifting, I think that it is important that we put our brands where the consumers want us to be.

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