ToStandFirmOnA Moving Ground

Wyndham Hotels & Resorts remains firm during the unstable period with an asset-light strategy and a firm position in the mid-scale sector

The current pandemic-led crisis appears to emphasize the benefit of an asset-light strategy and a firm foothold in the mid-scale sector. Is this an indication of the way forward?

The hospitality industry is slowly but surely making headway on the road to recovery, observes Joon Aun Ooi, President, Asia Pacific, Wyndham Hotels and Resorts. He cites domestic travel in drive-to leisure and resort destinations as leading the recovery in the immediate to medium term. “A majority of our hotels have already reopened; in fact, we are seeing very robust demand for travel with people looking for getaways near home. This demand will be sustained as more regional travel bubbles are created, which will further stimulate the hospitality industry.”

Among the hardest hit when cross-border travel was suspended at the height of the COVID-19 pandemic, the hospitality industry put the shutdown to good use, engaging guests with a variety of virtual programs from tours to leisure activities, updates on the easing of travel restrictions and, finally, new requirements for guests. “Overall, the industry has been quick to demonstrate how they have been able to create safe and clean environments, whether it is within the hotel and on domestic flights, which goes a long way in re-instilling confidence with travelers.”

Ooi believes opportunities still abound within the industry, adding that the approach’s creativity and nimbleness will be key. “The desire to travel is stronger than before, and the question is, how can we help to recreate such experiences for guests? From creating new room packages that cater to different demographics and social settings to partnering with local attractions and relevant authorities to provide one-stop packages, there’s definitely a huge gap to be filled.”

The industry continues to be optimistic in the long-term future and potential of the sector, which is an important component of many economies, Ooi emphasizes. “However, we are bracing ourselves for a gradual recovery which will be largely dependent on the reopening of regional and international borders as well as the availability of vaccines which will aid in further accelerating this recovery.”

Portfolio sat down with Joon Aun Ooi to obtain insights into the industry’s current state and where it will be headed in the short term.

Portfolio: What is the current position of the Wyndham Group? How will it be sustained in the coming months?

Joon Aun Ooi:

Despite how difficult these last few months have been for everyone, we have every reason to believe in the long-term viability of our business.

We have made several changes and adjustments to the business, including the consolidation of the Greater China region with the South East Asia and Pacific Rim region to form the Asia Pacific (APAC) division that covers a portfolio of over 1,500 hotels across 16 countries and territories. This will enable us to leverage a broader pool of resources, strengthening our strategic positioning to support existing operations, drive further expansion, and create additional opportunities for cross-border collaborations.

China is also providing us with a blueprint for recovery and a glimpse into travel in a post-COVID-19 world. The Chinese market has since reached some level of stability, and in terms of the economic climate, it is about 80-85 per cent compared to normal levels. For the Dragon Boat Festival in China, we recently experienced an above 90 percent occupancy rate at our Sanya hotels, and bookings are quickly streaming in for the upcoming long holidays.

Finally, our business model is low risk with an asset-light strategy supported by our strong presence in the mid-scale sector. If anything, this crisis has reinforced the importance of the mid to upper midscale and select-service segment. Hotel owners have continued to express interest in this segment as they offer greater control over operational costs without the high overheads that may come with a full-service hotel. This enables hotels to maximize their profitability – in both good times and downturns. We also see our mid-scale hotels performing ten percentage points higher than the industry average in destinations like Australia in terms of occupancy rates.

As a result of these adjustments, along with the strong foundation that we’ve laid for our business, we have built a robust business model that will enable us to sustain our position in the months ahead. Globally, we have reported positive adjusted EBITDA in the second quarter. As travel returns, we are confident that Wyndham Hotels & Resorts is well-positioned to tackle the headwinds presented by the pandemic.

Where is the confidence in the APAC region coming from? Why is it justified, and how can this confidence be sustained?

This confidence is, in fact, coming from our hotel owners and partners.

Hotels are a long-term investment, and as a franchise or hotel management partner, we offer our hotel owners a strong global partnership. The association with the world’s largest hotel franchise system, driven by a strong brand and value proposition, will continue to be essential in a highly competitive environment.

They are seeing the value and power of a trusted and global brand to help them navigate these unprecedented times that we are in, and as such, we’ve clinched 59 hotel signings across APAC in the first six months of the year, more than the same period in 2019.

The expansion across Japan, China, Thailand, New Zealand, and Australia is part of our long-term development strategy to introduce new brands into the region, providing a range of hotel development options for owners/developers and hotel experiences for guests when they are ready to travel.

Moreover, we are seeing pent-up demand for international travel and can expect a robust outbound travel market when restrictions start to lift, and travelers feel confident about traveling again. Already, demand for domestic travel in most of the countries that Wyndham is present has been growing every week. When borders reopen, we will be ready to welcome back guests once again.

What are the biggest takeaways from this period that has seen the lowest occupancies during one of the busiest months of the year?

While 2020 has presented one of the most challenging crises we’ve faced, our actions in response to the pandemic will allow us to emerge as a stronger company, financially, and operationally. We will continue to be intensely committed to the survival and the success of our most engaged franchisees and owners. Of course, we could not have accomplished any of these efforts without our incredibly talented team members. They have been working harder and more efficiently than ever in bringing Wyndham’s Count on Me culture to life every single day.

One of the key takeaways through this pandemic, which has always been in the Wyndham DNA, is how vital the element of humanity and empathy is. We’ve always made people a priority – not just the guests that chose Wyndham as their accommodation choice when they travel - but also our team members, owners, and partners who take care of our business. They are the ones that are instrumental in making every single guest experience unique and unforgettable. Guests who choose to stay in hotels more often than not are looking for such experiences and personalization when they stay with us. Even as the pandemic has forced us to change how we operate, we are unwavering in making people our priority.

Finally, who will emerge steady and ready for the future? What traits will such organizations possess, and why?

The past six months have showcased how important being flexible and agile are to adapt to an ever-changing situation on the business end of things. Every day poses a different challenge. Being able to toss aside the tried and proven playbooks and thinking out of the box is the difference between swimming and sinking.