Wyndham Adds 60 Hotels To New Extended-Stay Brand Pipeline

Wyndham Hotels & Resorts has signed a deal with a developer to add 60 new hotels to its fast-growing Echo Suites Extended Stay by Wyndham brand as the hotel giant looks to capitalize on the rising popularity of the extended-stay sector.

Wyndham is partnering with Canadian developer MasterBUILT Hotels to add the new locations, including the first Echo-branded hotels in Canada, which bring the brand’s global pipeline to 265 hotels and around 33,000 rooms. 

The expansion comes as extended-stay hotels outperform the broader industry and are poised to see further growth as the U.S. embarks on major infrastructure investments that are expected to generate demand from construction workers and others working on projects far from home.

Wyndham rolled out the Echo brand in November 2022 with 120 hotels in its development pipeline. By March, the pipeline had expanded to more than 200 properties before the announcement this week of another 60 hotels. 

"Since announcing ECHO Suites last year, we've seen unprecedented interest from among the industry's most-successful extended-stay developers, helping make ECHO the fastest-growing brand launch of 2022," Chip Ohlsson, chief development officer for Wyndham Hotels & Resorts, said in a statement. 

All of the Echo locations will be new construction, and the first are expected to open in 2024 with 100 locations planned to begin operations in the next five years, according to the release. Wyndham has broken ground on Echo locations in Virginia, Texas and South Carolina and plans more than a dozen groundbreakings in the coming months. 

The brand's name is an acronym for Economy Hotel Opportunity, and the hotel design is focused on efficiency and maximizing return on investment, according to the release. The 124-room prototype design requires a site of less than 2 acres for its 50K SF footprint with rooms averaging around 300 SF. Each room includes a kitchenette, and the hotel houses efficiently designed common areas and amenities to help limit labor needs. 

Average occupancy at extended-stay hotels has outperformed traditional hotels during the pandemic, with extended-stay hotels seeing 73% average occupancy in 2021 compared to just 56% for hotels in general, according to data from STR.

Extended-stay hotels have also seen better profit margins than their traditional peers. Gross operating profit margins at extended-stay hotels were 41% in 2022 and 38% for the total hotel industry, according to a JLL report. In 2020, at the peak of the pandemic, the gulf was even wider, with extended-stay profit margins at 31% while traditional hotels fell to 12%. 

Developers and operators expect extended-stay hotels to continue delivering strong returns and say recent legislation will further boost occupancy rates. 

The 2021 Infrastructure and Jobs Act provided $1.2T in funding for repairs to roads, bridges, airports and other infrastructure, and the $280B CHIPS and Science Act of 2022 created new incentives for the construction of chip manufacturing plants across the country. 

The legislation is expected to create new demand for extended-stay hotels from workers repairing infrastructure or building manufacturing facilities. Wyndham is looking to leverage that demand into long-term opportunities that could generate $3.3B in additional room revenue for franchisees and generate more than $150M in incremental royalties for the company in the coming years, according to a release. 

“The investments we’re seeing in infrastructure represent an incredible opportunity poised to pay dividends for select-service and extended-stay hoteliers for years to come,” Ohlsson said in a statement. “It’s truly one of the most exciting times to be a part of our industry, Wyndham and ECHO Suites.”

The potential for increased revenues has attracted investors. Extended-stay hotel investment grew 5.5% between 2021 and 2022 to $20.5B and accounted for 51.1% of total investment in the sector, the highest proportion of investment in U.S. history, according to the JLL report.

“Investors are increasingly attracted to select-service and extended-stay hotels as they not only appeal to a diverse group of travelers, but also achieve higher and less volatile profitability relative to the broader industry,” the report’s authors wrote.