As part of the Americas Lodging Investment Summit’s Patron sponsorship program, ALIS organizers asked Wyndham’s Chip Ohlsson eight timely questions as we prepare for the 21st annual event January 24-26, 2022, at the JW Marriott/Ritz-Carlton Los Angeles L.A. LIVE. Following are his responses.
You’ve been in senior positions of hotel development for nearly 30 years. From the development perspective, how does the beginning of this recovery differ from the recoveries you experienced after the events that led to downturns in 1990s, 2001 and 2008?
This truly was more of a black swan event, most other downturns happened when there was a fundamental breakdown in economics that have leading and trailing indicators. Yet, despite new variants, our select-service business has surpassed 2019 levels. Domestic leisure trips are leading the recovery, and our booking data shows that Americans are booking travel further out and staying longer at hotels.
The key for this particular recovery has been collaboration. We've seen the best progress in locations where industry and brand organizations are working together with government organizations to develop solutions. Labor is important, whether it is availability, wages, or training/skill level, we are a service industry and we rely heavily on the teams at our hotels to deliver to our customers. The path to success is collaboration and continuing to develop our service culture.
You’ve been on the road at conferences, visiting your partners and for other business-related purposes. What is the most common question franchisees/owners are asking you during your conversations with them—and what is your response to the question?
It wasn’t so much the questions as the desire for our owners to be heard, so listening and providing solutions became more important than fielding questions.
Earlier this year we proactively launched a "Count on Wyndham” roadshow, where the company’s top executives visited hotels across the U.S. to hear from owners firsthand what they needed, to determine how we could best support them during this challenging time and help them take advantage of the travel rebound.
We are proud to have been able to provide franchisees relief through various programs to help owners manage costs and operate more efficiently while continuing to provide high levels of service. Some of the changes we made that help our owners reduce their operational costs while enabling them to continue to deliver Wyndham's 'Count on Me' service include:
• Suspended certain non-room revenue related fees
• Deferred property improvement plan deadlines and certain non-essential brand standards requiring cash outlays
• Provided payment relief by deferring receivables and suspending interest charges and late fees through September 1, 2020
• Partnered with industry associations to advocate for government relief for our franchisees and their employees
• Continued marketing and sales efforts during the higher demand summer travel season to drive bookings for our hotel owners
How do you see the hotel industry’s expansion in the Americas taking shape through 2022, and specifically what is Wyndham’s plan to grow its footprint during that time?
We are seeing momentum in a number of areas from conversions to momentum in midscale and dual brands as well as select service new construction.
• Conversions – We awarded ¬¬¬151 new hotel agreements in the third quarter, which was 3% higher than the number of contracts we awarded in third quarter 2019. As expected, conversion activity continued to accelerate.
• Upper midscale -- We announced the opening of La Quinta by Wyndham Selma, N.C. the milestone 120th hotel in the La Quinta portfolio featuring the sought-after Del Sol prototype. The opening grows the upper mid-scale brand to nearly 940 locations worldwide. There are 175 La Quinta hotels in the development pipeline.
• Dual Brand – Our new La Quinta and Hawthorn Suites by Wyndham dual brand prototype is experiencing momentum. It is very efficient to build and operate and it enables the hotel to reach guests that appeal to either brand. There is one lobby and one front desk and other shared efficiencies. We are scheduled to open the first La Quinta and Hawthorn Suites dual-brand hotel concept in Pflugerville, Texas. This marks the first-ever pairing of these two flags under the same roof. There are already 36 La Quinta and Hawthorn dual-branded hotels in the pipeline in markets such as San Antonio and El Paso, Texas; Yuma, Ariz.; Wichita, Kan.; and Charlotte, N.C.
• Select Service New Construction – We have seen continued demand for our select service new construction prototypes. The Microtel brand has proved its resiliency as a brand that can be built in any cycle. The brand’s new Moda prototype has a highly efficient design catering to drive-to travelers and has been on a steady growth trajectory helping to drive approximately 140 hotels in the brand’s development pipeline that are projected to add more than 12,000 guest rooms. At around 70K per key there are still opportunities to finance and build in this space.
Wyndham recently announced a strategic alliance with Playa Hotels & Resorts that resulted in the launch of a new upper midscale all-inclusive brand called Wyndham Alltra. How does Alltra fit into Wyndham’s overall development plan, and does that plan include developing the Alltra brand within the United States?
Wyndham Alltra is an exciting new brand launch, combining Wyndham’s robust distribution capabilities and award-winning loyalty program with Playa’s highly acclaimed all-inclusive expertise. There is now a new experience in the upper-midscale resort segment to reach more first-time all-inclusive guests, and we are providing an opportunity for hotel developers, owners, and investors to welcome new customers to all-inclusive hotels with unmatched support from Wyndham. The two new beachfront resorts in Mexico mark the first of many properties to be developed under an exclusive strategic alliance between Wyndham and Playa, to grow both companies in the upper-midscale, all-inclusive resort sector in the Caribbean and Latin America. We do believe there could be opportunities in other parts of the world, but we’re focusing first on these two regions.
How are increasing costs—from raw materials to shipping to labor—affecting the overall industry development pipeline, and how long do you expect those higher costs to remain an issue?
Supply chain issues are impacting all major industries and it’s something that must be considered during development and renovations, which is why having the right franchise partner is essential.
Fortunately, we work with suppliers to help mitigate many of these costs through negotiated agreements. Through our mass economy of scale, we can simplify operations and help reduce costs for owners and franchisees. For new owners, we can help decrease their overall costs and source product they wouldn’t be able to get on their own with a lower cost per unit on products they commonly use at their hotels.
What’s the one word that best describes the current hotel lending environment in the U.S., and why did you choose that word?
I would say “local,” because the vast majority are financing through local lenders. Pre-pandemic, most of our owners were financing through local lenders at ~70% loan-to-value. During the pandemic, those same local lenders were requesting closer to 60% LTV, but we have seen those rates start to creep back closer to pre-pandemic levels.
What consumer patterns have changed? And what’s here to stay?
Consumer patterns have changed as a result of this new, remote, work-from-anywhere world. We are seeing a trend of "longer long weekends," with Thursday & Sunday night occupancy climbing to record highs in the third quarter, including our highest non-holiday Sunday in the U.S. on record, ever.
As we rebuild the hospitality standards and norms, we have the opportunity to focus on the factors that best drive the experience. This aligns the needs/goals of the guests, owners, managers, and brands so that we’re focused on the most important aspects of our service.
What’s the one takeaway people should know about Chip Ohlsson?
I am a passionate person and put my heart into everything I do which is why I love working in this industry. At Wyndham we all feel strongly that we should put owners at the forefront of everything that we do, and I’m so proud to have developed some incredible relationships over the years with owners and their families. We need to continue to be a great partner by utilizing our powerful marketing and sales programs to drive direct bookings to their hotels and use our size and scale to continuously offer resources, support, and new opportunities to our franchisees.
Throughout the pandemic we’ve been laser focused on helping our hotel owners. We suspended certain fees, provided payment relief, deferred nonessential standards, and advocated with government officials. For developers, the Wyndham Advantage—our comprehensive, personalized, and highly valuable suite of benefits for owners—provides a wide-ranging and personalized structure of support. Our goal is to leverage our size and reach to simplify daily operations, reduce the total cost of doing business, and connect owners to our over 90 million enrolled loyalty members of Wyndham Rewards.
* As of December 20, 2021