Skift Take

Launching a midscale brand isn't as sexy as introducing a lifestyle hotel these days but the growth opportunities in midscale brands may rival the lifestyle segment.

Amid the whirlwind of lifestyle brands launched by most major hotel chains over the past couple of years, Wyndham remains focused on its economy and midscale brands to cater to a middle America that travel brands often ignore.

Speaking during Wyndham Worldwide’s third quarter earnings call on Tuesday, CEO Stephen Holmes said the company isn’t as concerned with revenue per available room as it is with room growth.

Travelers who stay in economy hotels believe there are different categories within the economy segment and this growing middle class, projected to be nearly five billion people by 2030, presents great growth potential for the economy hotel space, Wyndham CMO Josh Lesnick told the Skift Global Forum earlier this month.

“We don’t want to say we only want to grow our midscale segments to the detriment of anything else,” Holmes said today during the earnings call. “We are pushing the growth of the midscale brands that we have and we’re pushing development of those brands by bringing in better property. We’ve seen a lot of interest in the Dolce, Tryp and Wingate brands, which all happen to be in the midscale segment.”

“We understand the power and reach of our unique portfolio of 13 brands and see a great opportunity…not only in our upscale and midscale brands but in our economy brands as well.”

Wyndham’s domestic revenue per available room for the third quarter increased 5.1 percent, with its Super 8 and Days Inn economy brands beating and performing on par with the industry, respectively. Its Wingate, Hawthorn and Ramada midscale brands showed more than 7% growth year-over-year for the quarter.

Hilton Worldwide is another major chain eyeing the midscale segment, with CEO Chris Nassetta pointing earlier this year to the launch of a midscale brand and in July announcing that it would arrive in early 2016.

Coming off Wyndham’s acquisition of Dolce Hotels and Resorts earlier this year, Holmes was asked about his acquisition strategy heading into 2016.

“I’m always thinking about expanding our hotel business through acquisitions,” said Holmes. “But we won’t chase growth for the sake of going into a segment. We’re going to do deals like Dolce and Tryp that make sense. These weren’t huge deals but they were great deals for us and we’re seeing the benefit of those going forward.”

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Tags: wyndham

Photo credit: A Ramada Hotel in Bochum, Germany. Frank Vincentz / Wikipedia Commons

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