Aligning government policy with the needs of the hotel sector is something which varies, flaming-pendulum like, depending on who you have filling the seats at the top. Some countries recognise the value of travel. Some are starting to. Some will only do so when their top donors own hotels.
The savvy hotelier looks at what government is doing and works out how to benefit. After all, the government’s cash is more reliable than a lot being waved around out there.
The Wyndham full-year results saw Geoffrey Ballotti, president, CEO, getting all excited about eyeing a cut of the government’s $1.5 trillion in infrastructure and CHIPS Act spending. Infrastructure-related revenues make up about 20% of the group’s US royalties, so it’s worth tuning into C-Span from time to time.
Ballotti said: “We’ve been making further investments here to grow our share. Those investments have already begun paying off with domestic weekday occupancy in our economy hotels at their highest absolute levels on record. Our general infrastructure related revenues increased double digits in the fourth quarter versus 2019, a trend that began back in the second quarter of 2021.
“And we’re confident that it will continue to strengthen throughout 2023, as projects for new roads, bridges, rail, water systems, airports, broadband and public transfer begin. Funnelling the hundreds of billions of dollars to the states is a heavy lift that will take time and require coordination from agencies on both the federal and the state levels as these projects commence over the next several years in the markets where our economy and mid-scale small business owners will benefit.
“We estimate that this new level of spend represents an opportunity for us to generate over $3.3bn of incremental revenue for our franchisees and over $150m of incremental royalties for Wyndham over the spend period.”
So start to build it, and Wyndham will come.
The company is, of course, also doing what the rest of the sector is doing and waving its ankles at the leisure traveller, but, much like fellow franchise traveller Choice, it is not proud about how it fills its rooms. It is there to bring guests to owners, and that’s what it does.
Ballotti added: “The one thing that COVID has demonstrated to our economy owner base is that they wish they own more Wyndham product given just how well our brands performed throughout COVID and how well they performed after 9/11 and the great financial crisis.
“These everyday essential construction and infrastructure workers never stopped traveling and they were staying in our economy brands in record numbers, which was what allowed our franchisees to never have to close down. So we’ll continue to provide the most flexible and the most competitively priced economy brands with a focus on what we know is important to our guests and what we also know is important to our owners.”
Money emanating from the government can take many forms. As we mentioned last week, it can be even more direct than gathering around infrastructure spend: the UK government is planning on spending £2.7bn on lodging asylum seekers this year, but that comes with its own issues.
But follow the money means more than checking out which locations are warming the giblets of How to Spend It. If you want a full hotel you need to go for a smorgasbord of sources. If the pandemic has illustrated anything, it’s that relying on one guest doesn’t work. Look out for those hard hats.