Wyndham's China Problem Is The Growth of Its Super 8 Brand

Limited-service hotels are trending in the U.S., and it seems from Wyndham's third quarter financial results, at least, that they are the rage in China, as well.

And, that's sort of dragging down the company's global room revenue, for the time being.

That's because Wyndham's fastest growing brand in China is its budget brand, Super 8.

While Revpar (revenue per available room) growth in the U.S. was 5.2% in the third quarter, global Revpar growth came in at just 3.4%, and company officials attributed the downward pressure to the expansion of Wyndham's Super 8 brand, with its lower Revpar hotels, in China.

"With respect to China, our issue in China ... is really a mix issue," Wyndham CEO Stephen Holmes told analysts today during the chain's third quarter earnings call. "Our largest growth is coming in our lowest-priced product, which is the Super 8 product, where we're adding a lot of hotels."

So Wyndham is a victim of its own success in the limited-service sector, and doesn't see the Revpar picture improving in China for another 18 months when it should be able to open additional full-service Wyndham Hotels in China's primary and secondary markets.

Some of the Wyndham Hotels slated for opening in China will come from new construction and others from re-flagging existing properties, Holmes said, adding that in China "we are so lightly penetrated on the Wyndham side."

Wyndham hopes to better organize its hotel pipeline in China, and then its Revpar problem might get straightened out, too.