In recent months, economic uncertainty has impacted various businesses, including the hospitality industry. With tariffs specifically raising concerns, fears of a potential recession continue to swirl. However, Wyndham Hotels & Resorts had a record first quarter in which its global openings increased 13 percent year-over-year, and the company awarded 181 development contracts globally. This momentum was highlighted at the Wyndham Global Conference at Caesars Forum in Las Vegas, Nevada, where Geoff Ballotti, president and CEO, Wyndham Hotels & Resorts, discussed the company’s growth. Ballotti emphasized Wyndham’s momentum moving forward and his confidence in its proven ability to endure economic downturns.
During the conference, Wyndham showcased several new initiatives, including Wyndham Marketplace, a hotel shopping platform that helps owners find products at lower prices. This is one of many ways that the company has actively worked to mitigate the impact of tariffs, and Ballotti made it clear that doing so has been a top priority. He noted that sourcing brand prototypes in the United States has been one crucial method and explained that the decreasing cost of labor has been an important factor as well.
“So many of our brand prototypes, our teams have successfully been able to source entirely here in the United States,” Ballotti said. “Some of the components that are coming over, let’s say hanging TVs on walls might be coming from China, many of the suppliers are helping us mitigate the impact of those costs. It’s still very early days, but I’d say that, aside from onshoring where it’s possible, working with our suppliers in terms of sharing that cost increase, the sentiment of our small-business owners is that it’s hopefully temporary. The developers who are building the fastest-growing brands right now, they’re actually finding the biggest component. If you take Echo Suites, it’s our fastest-growing brand—275 executed contracts, 16 under construction or open, another 16 about to break ground. It’s about a $10 million to $11 million build, depending on where in the country you’re building. Take a guess at what the largest percentage of the cost is. It’s labor. Labor is actually, according to them, coming down. They’re actually finding the cost of construction labor in markets like Texas to be lower than it was a year or two ago.”
Ballotti then said that it’s a good time to be breaking ground on properties, and Wyndham has not seen a slowdown in new construction. He pointed to the company’s record first quarter and stated, “We had a record quarter of openings. We opened more hotels in the first quarter than in any first quarter in our young company’s history. We’re only seven years as Wyndham Hotels & Resorts on the New York Stock Exchange, publicly traded. Our new construction and ground-breaks were higher than last year.”
This confidence is not strictly limited to Wyndham’s recent success, as Ballotti expressed his optimism that the company would do well in a potential recession due to its historic performance in downturns. He pointed to 9/11, the 2008 economic crisis, and the COVID-19 pandemic and stated that, in all three cases, Wyndham outperformed the rest of the industry. Ballotti said that the company isn’t recession-proof, especially when considering franchisees and owners. However, he used the company’s past to explain his belief that it would endure another downturn in a similar way and stated that the performance of its brands was a key element of Wyndham’s success, regardless of external conditions.
“I think what’s driving our success, all things point, good times, bad times, when revenue’s rising or revenue’s falling, to how well your brands are performing versus the competition,” Ballotti said. “Wyndham has come a long, long way in terms of quality. When you look overseas, we’re much more upscale, upper upscale, luxury. Our growth is coming in the midscale and above segments, so that’s been really exciting. The reason for that is how well our brands have been performing. What’s driving that improved performance is Wyndham’s continued improved brand positioning in terms of quality in service domestically, which is really benefiting I think our growth.”
