BTNonline.com Exclusive: Wyndham CEO Details International Strategy
Wyndham Hotel Group president and CEO Steven Rudnitsky spoke with Business Travel News hotel editor Michael B. Baker during Wyndham's 2007 Franchisees' and Owners' International Conference in Budapest, Hungary, about the company's international growth, midprice tier development and the industry outlook.
BTN: To what extent is international growth a part of Wyndham's strategy?
Steven Rudnitsky: The Wyndham Hotel Group has roughly 6,500 hotels worldwide, and most of those hotels are still within the United States and Canada, but we embarked on a big international growth platform three years ago when we acquired the Ramada brand in December 2004 from Marriott. This gave us the real underpinning for the international growth platform. Three years ago, less than 2 percent of our total rooms were outside North America. Today, over 15 percent of our rooms are outside North America. We want to grow that to 25 percent of our total room count outside North America. We're still relatively young on the international front. Think about the inroads that we've made: We have a couple hundred properties in Europe alone already. We're the largest North American hotel company in China by virtue of number of hotels, not by virtue of number of rooms—InterContinental has a few more rooms than we have, but we have more hotels—and we're only three years old, and our company is only a year and two months old.
BTN: Where and with which brands is international growth focused?
Rudnitsky: There are four key brands we focus on internationally: Wyndham, Ramada, Days Inn and Super 8. The opportunities we're focusing on are in Europe, the Middle East and Africa; the Asia/Pacific region, with China being the really big focal point; and Latin America, with Mexico and the Caribbean being the focal point.
BTN: Has there been an increase in your sales structure as a result?
Rudnitsky: Our worldwide sales infrastructure has grown dramatically in terms of headcount in just the past 12 months. It's a big number of people that we've added to that infrastructure. We're staffing as we're growing this business as opposed to building the infrastructure and then trying to sell it.
BTN: Where does your joint venture with Corinthia Hotels International fit into this strategy?
Rudnitsky: Marketing and development. It's as much a sales and marketing joint venture as it is a management company joint venture.
BTN: Domestically, how is the midprice Wingate by Wyndham brand resonating with corporate travelers? Are you seeing an interest from buyers looking to get more midprice properties in their hotel programs?
Rudnitsky: The contribution of the Wingates has been remarkable because of the distribution points that we have in certain markets in the United States with the Wyndham brand. We haven't fully converted the Wingates to Wingate by Wyndham, but we put them on the Wyndham Web site. It has been like flipping the switch in terms of total room nights we provide Wingate owners. We haven't even begun to start merchandizing yet.
BTN: Any other signs of increased interest in Wyndham brands?
Rudnitsky: Our loyalty program has leapfrogged so many other loyalty programs in short order. We launched the loyalty program four years ago in January. We now have well over 7 million active members and 12 million overall members.
BTN: How do you see the hotel industry shaping up next year?
Rudnitsky: Flip a coin. The trends are still pretty positive. Is the revenue per available room performance as strong as it was in 2005? No, but the industry is going to grow in North America around 5-plus percent this year. From 1986 to 2002, it grew on average 3 percent. I think that in other parts of the world, you're going to see better growth rates. Canada has just exploded with huge double-digit RevPAR growth. You'll still see some pretty solid growth out of Europe and solid growth out of Asia/Pacific. With the Olympics coming down the pike in August, you're going to see China's RevPAR explode.
BTN: How will it be specifically for Wyndham?
Rudnitsky: If you look at Choice, for the past 10 or 12 quarters, we've outperformed their RevPAR. When you look at Choice's product, they're primarily a midscale product. The vast majority of our product in the U.S. is in the economy segment, and our RevPAR growth is notably higher. The macroeconomic factors are going to be what they're going to be, but with what we're doing now, we've been able to outperform our competition.