Technology changes underway at Wyndham
28 JULY 2015 8:26 AM
The company is hard at work implementing new PMS and CRM platforms, as well as an automated revenue management system for 4,500 properties.
PARSIPPANY, New Jersey—Following Wyndham Worldwide’s announcement at its brand conference of changes to its hotel group’s operations, the company is heavy into the implementation process, said Stephen Holmes, chairman and CEO of Wyndham, during the company’s second-quarter earnings call Tuesday morning.
Up first? The company is tackling the problematic Wynguest system in favor of a third-party property management system and central reservations platform, as well as an automated revenue management tool.
“We’re moving away from building in-house systems,” Holmes said. “(Doing so) helps ensure our franchisees around the world are using the best technologically advanced systems.” The company has 21 North American hotels piloting the program with plans to migrate about 100 hotels each month. Wyndham plans to at some point to up implementation to 400 hotels a month, and full implementation is expected by 2016, Holmes said.
“The level of insight and pricing capability will provide unprecedented value,” he added. Costs to owners are on par with those of Wynguest.
The new Wyndham Rewards program also is helping the company lift performance. The program is based on simplicity and attainability, Holmes explained. He said consumers love it so far. Since re-launching the rewards program, the company has seen a 7% increase in loyalty bookings year over year, and redemptions are up 60%.
“We see great potential for our loyalty program in the future,” Holmes said.
During the quarter, Wyndham Hotel Group saw total system-wide revenue per available room increase 2.5%. Domestic RevPAR increased 4.5%, while international RevPAR declined 1.2% in constant currency, which reflects higher unit growth in lower RevPAR countries such as China, according to a news release.
“Domestic RevPAR continued to perform well,” said Tom Conforti, the company’s CFO, adding that the Pacific and South Atlantic region performed the best. However, weaker occupancy at hotels in oil-producing regions somewhat offset domestic RevPAR performance, he added.
Revenues in the hotel unit were $334 million in the second quarter of 2015, an 18% increase over the second quarter of 2014. In constant currency and excluding acquisitions, revenues increase 8%, reflecting higher domestic RevPAR and worldwide room growth. Foreign exchange reduced Wyndham Worldwide’s total revenues by $48 million, Conforti said.
As of press time, Wyndham Worldwide’s stock price year to date was down 4.2%. By comparison, the Baird/STR Hotel Stock Index was down about 6% year to date.
As of 30 June 2015, Wyndham Hotel Group’s hotel system consisted of more than 7,700 properties comprising 668,500 rooms, a 2.8% increase compared with the second quarter 2014. The development pipeline included 895 hotels and approximately 116,800 rooms, of which 61% were international and 66% were new construction.
During the call, Holmes told analysts that the company is not in need of more brand refreshes (akin to what InterContinental Hotels Group did with the Holiday Inn brand, one analyst pointed out).
“I don’t think that we are pushing a reset button on our brands. Some of our brands are getting J.D. Power awards. We are, however, very focused on enforcing our brand standards,” Holmes said. “During the downturn, we did show flexibility with our franchisees. We weren’t as aggressive in terminating properties that didn’t fit brand standards.”
The company plans to be much less flexible now, he said.
“Now is the time when people should be investing in their properties. The thing I hear most strongly from our franchisees is, ‘Make sure you keep on the quality of our fellow franchisees.’ That is something we have dedicated ourselves to. I think we can get a lift just from the sheer fact that we are going to remove some of the weaker players in the market,” Holmes explained.