REPORT FROM THE U.S.—Wyndham Hotel Group on Wednesday reported fourth quarter hotel revenue gains above forecasts—revenue per available room was up 5% over the same timeframe last year—and company executives partly attributed the boost to gains in online demand.
Wyndham has nearly completed a rollout of new brand websites across the board and made concerted efforts in 2011 to drive more direct traffic, said Wyndham Worldwide Chairman and CEO Stephen Holmes on an investor relations call.
“Online bookings are a growing portion of traffic; they provide over one-third of global hotel and lodging industry revenue,” he said. “Travelers are spending an increasing amount of time shopping and comparing options, often visiting eight to 15 websites. Our goal is to capture that traffic and ensure pageviews become bookings.”
Wyndham Hotel Group’s revenue climbed 15% in the fourth quarter to US$188 million, which was helped by the October opening of the Wyndham Grand Orlando Resort Bonnet Creek in Orlando, Florida, Wyndham’s first owned hotel. A third factor in RevPAR gains was the fact that Wyndham added more upper-tier hotels to its system in 2011 as compared to its economy brands.
Wyndham’s plan to direct more traffic to its own websites started with updating those sites. Since then, conversion rates are up 20%, on average, Holmes said. Wyndham also added user-generated reviews from TripAdvisor to wyndhamworldwide.com, which Holmes said keeps potential guests from leaving the site and looking for reviews elsewhere. Reviews will be implemented across all of the respective brand sites—Tryp by Wyndham, Wingate by Wyndham, Howard Johnson, Days Inn, Super 8, etc. Wyndham has 17 brands total.
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Additional efforts
Holmes noted other efforts by Wyndham to increase direct traffic: the launch of wyndhamhotelgroup.com—which launched in late January and was designed to aggregate Wyndham hotel booking features—and participation as a founding member of Room Key.
“Room Key will provide the consumer with an uncluttered and trustworthy way to search for hotels while driving bookings directly to our own channels,” he said. “It’s cost-effective for owners and will better meet the needs of consumers.”
Holmes said Wyndham will make additional initiatives to drive direct traffic during 2012. However, he said he does consider third-party intermediaries Wyndham’s partners.
“We work with them closely,” he said. “There’s a place for the agency model within our distribution channels, and we embrace that.
“Having said that, we’d love to get more done on our own sites because it’s most cost-effective, and we’re finding ways to do that.”
Holmes said most individual hotels have found that dumping inventory and relying on merchant-model OTAs to sell hotels rooms is not an efficient way to do business. Because hotel demand is returning, he said agency models will receive a bigger push in the future.
Booking windows, Holmes said, continue to shrink, particularly in Wyndham’s vacation-rental segment. As summer approaches, Wyndham expects family vacationers to book even later, particularly in the U.K.
“If I tried to guestimate how much that booking window will slide, it would be weeks not months. We’re not suggesting the bookings are changing from all in January to all in June, but there will be a tighter window toward summer travel.
Tom Conforti, Wyndham Worldwide’s CFO, said the tightened booking window is not relegated to a certain region or a certain segment, rather it’s more of a secular trend.
“As technology improves people look at more options before making their decision,” Holmes said.
Other notes from Wyndham’s Q4 earnings call:
• Excluding US$44 million of non-cash impairment charges, Wyndham’s adjusted earnings before interest, taxation, depreciation and amortization was US$41 million, an increase of 3% compared with the fourth quarter of 2010.
• As of 31 December 2011, Wyndham’s development pipeline included 850 hotels and 111,900 rooms, of which 57% were new construction and 60% were international.
• Wyndham Worldwide expects to spend up to US$210 million in capital expenditures in 2012 and between US$110 million and US$210 million on timeshare development, Holmes said.
• Conforti said he expects the acquisition environment in the beginning of 2012 to be just as it was in 2011: quiet. “It’s a tough thing to do—put our finger in air and see what direction wind is blowing. We’re more reactive,” he said. “We feel like going in to 2012 there hasn’t been a tremendous amount of activity. Deals were overpriced. Deals are out there; if they’re at prices that make sense to us, we’ll consider them, if not, we’ll pass on them.”
