Wyndham Swaps Budget Hotels for Higher-Fee Midscale Brands

Wyndham Hotels & Resorts is undergoing a significant portfolio overhaul in the United States, focusing on replacing its lower-fee economy hotels with higher-fee midscale brands. This strategic shift, detailed in a Skift report, aims to enhance the company's overall revenue and profitability by prioritizing brands that generate higher royalty fees per room.

While the total number of U.S. rooms under the Wyndham umbrella may appear stable, the underlying composition is changing. The company is actively working to transition out of its economy segment, which includes brands like Super 8 and Days Inn, and into its midscale offerings such as La Quinta by Wyndham and Wyndham Garden. This move is driven by the fact that midscale brands typically command higher fees from franchisees, directly benefiting Wyndham's bottom line.

The strategy involves a systematic swap rather than outright closures or significant new construction. Wyndham is encouraging franchisees to convert or upgrade properties to meet the standards of its midscale brands or to exit the system if they cannot meet these criteria. This approach allows Wyndham to maintain its market presence while improving the financial performance of its portfolio.

This initiative is part of a broader trend in the hospitality industry where major hotel companies are increasingly focusing on asset-light models and maximizing revenue from their existing brands through strategic portfolio management. By concentrating on higher-margin segments, Wyndham seeks to strengthen its competitive position and deliver greater value to its shareholders.