Six executives from six sectors of the travel industry hotel, cruise, aviation, tours, retail and destination marketing are making assumptions about the year ahead as they plan for 2017. The interviews were conducted by Travel Weekly editor in chief and senior vice president Arnie Weissmann.
Geoff Ballotti
CEO, Wyndham Hotel Group
We had a great year, and we're looking for another great year in
2017. There's so much written about this industry slowing down, but the
fact of the matter remains that the industry is at a record level of
RevPAR. And no matter whom you talk with, no matter whom you read, next
year's going to be better.
The U.S. economy is in great shape, incomes are rising, unemployment is falling and industrial production is up.
When
real disposable household income is up and gas prices are so low, it
puts several thousand dollars in families' pockets. It's a big reason
that we're looking at record RevPAR, record revenue, record earnings and
why we're seeing growth in the U.S. across the board, from California
to Texas to Florida.
We're very optimistic about the new administration coming in. When
you listen to the rhetoric and dialogue right now, in terms of investing
in infrastructure, and from an economic growth standpoint and a
pro-competition standpoint, I think this industry has a lot of upside
ahead of it. And I don't think there's any better advocate right now, in
terms of being an ambassador to this incoming administration, than
[U.S. Travel Association CEO] Roger Dow. I'm bullish on it all.
Wyndham is also seeing great growth overseas. It's where most of our
growth is occurring. We just acquired Fen Hotels in Argentina, with two
great brands, Esplendor and Dazzler. I'm really bullish on opportunities
in emerging markets in certain parts of Latin America. Argentina is
returning to international capital markets and integrating into the
world.
Overall, our international pipeline for new construction has never
been stronger, with China and India being our two largest markets.
In China, we recently opened our 1,200th hotel. We're in more than
200 cities and we have over 150 hotels 27,000 rooms in our pipeline.
We manage about 2,000 rooms of those rooms; it's primarily
franchises. There's such a thirst for Western brands. Days Inn, Howard
Johnson, Ramada, Wyndham and Wyndham Grand. Super 8 is a lucky number,
and it's growing like wildfire. We're introducing three brands in China:
Tryp by Wyndham, Microtel by Wyndham and Wyndham Garden.
We dominate Western brands in the economy and midscale space there,
but we're able to grow in the upscale space as well. The brand I'm most
proud of right now, that I'm most excited about, is Wyndham Grand, our
top upper-upscale brand. We just opened our 15th in China, in Xiamen.
And in Xi'an, where just about every luxury brand is represented, the
Wyndham Grand ranked No. 1 out of 2,200 hotels. It's my dream to be able
to recreate that same brand equity here in the U.S.
Although India's economy remains so much smaller than China's, the
growth opportunity is similarly compelling. We have about 3,000 rooms
now, up from about 1,000 two years ago. It's not the easiest place to
develop there's certainly more work to be done there but growth is
picking up, and when you look at gross domestic product forecasts, it's
stronger than any place else in the emerging world.
Our strongest brand there is Ramada; I think we have about 20 now
open. And we just opened our first Howard Johnson in India. Our partner
over there, Rahul Rai, wants to build 35 more.
In the U.S., we're seeing more rooms leave the Howard Johnson brand
than enter, but it's a strong brand. We have put a focus on quality, and
I think we have an opportunity to take it back to the level it enjoyed
when it was launched.
One thing that may be a game changer for a brand like Howard Johnson,
and is perhaps our biggest story going forward, is our new Wyndham
Rewards program.
We democratized loyalty with a single-tier award structure, and it
operates across all our brands. We have a flat free-night redemption
program, with just one redemption point value across all our hotels:
15,000 points for a free night. And you'll get a minimum of 1,000
points, no matter where you stay.
So if you're a truck driver and you're earning those points at a
Super 8 or Howard Johnson, you can stay in our top-tier Wyndham Grand in
Xi'an or the new Dolce Silverado at Silverado Wineries in Napa, Calif.,
which I think used to be 70,000, 80,000 or even 100,000 points. We've
also included 25,000 aspirational vacation opportunities from Wyndham
Vacation Rentals as well as our timeshare inventory, so the options
could also include a stay in the French countryside or Park City, Utah,
for those same 15,000 points per night. And no blackout dates.
We're so focused on loyalty at a time when I think loyalty has never
mattered more. We're the world's largest hotel company, with 8,000
hotels under our owned, managed or franchise umbrella. The
Marriott-Starwood merger doesn't change things for us very much, if at
all. I think they're at 5,700 hotels, combined.
I do think consolidation is going to continue. I think you'll see
more of the bolt-on type of acquisition, trying to fill in where there
is no product. We're going to continue to look for new markets and
opportunities to grow, like we did with Fen Hotels, which has properties
in Argentina, Uruguay, Paraguay, Colombia and Peru. And that ties into
loyalty. When it's wintertime up here and people are looking to use
their points, well, I was down in Argentina last week and came back with
a suntan.
Airbnb hasn't had much impact on us. It just hasn't. I think there's
an overreaction to it. I think next year, it'll be more of the same.
They do a great job marketing, and I think we could learn a lot from
their model. Would they list hotel rooms? I don't know. From a
distribution standpoint, there's certainly pressure if the cost of
distribution continues to fall and more and more distributors come into
the marketplace. Who knows?
What drives distribution? Certainly, technology is a big piece of
that and we are developing the best technology we can. We made the
strategic decision, a couple of years ago, to pivot from maintaining and
enhancing legacy systems, to moving everything to the cloud.
We've seen the cloud displacing traditional equipment and software
and the legacy systems that companies have built. We pivoted from
saying, "We need to build large-scale infrastructure ourselves and
large- scale data systems ourselves," and we partnered with
best-in-class technology providers, such as Sabre, and we're delivering
cloud-based applications now.
We've rolled out Sabre Property Manager for 3,200 hotels, and we're
moving all 18 of our brands onto the cloud-based Sabre SynXis system,
which is the No. 1 global CRS provider. They are more connected than
anyone. To be in the cloud and no longer have the technological
necessity to support servers at the hotel is huge for our owners. And it
really provides us a great deal more flexibility when it comes to
mobile and other digital environments, which is what we're going to be
focused on next. If you listen and you predict, you can serve up to the
right channel to the right consumer on the right device, based on their
digital profile, where they want to vacation, where they want to use
those Wyndham reward points. Loyalty is, again, just critical for us.
We're investing more in travel agent distribution in 2017. You're
going to see Wyndham sales teams out a lot more and at more
agency-facing events that we haven't attended in a few years. We want to
know what's going on, and we want agents to know that we're here and
we're committed to their community.