NEW YORK— In mid-2004, what was then Wyndham International achieved a breakthrough. It acquired the rights to use the Wyndham name and trademark in the key New York City market. Fast-forward four years, Wyndham has been transformed into Wyndham Hotels & Resorts, a unit of the Wyndham Hotel Group, and New York City is about to get over the next two years not one Wyndham-branded hotel, but five. Four of the quintet will be Wyndham Garden Hotels. Starting with a 124-room property in Chelsea, Wyndham Garden hotels are under construction on Nassau St. in the Financial District (115 rooms), near the Javits Convention Center on West 36th St. (228 rooms), and in Chinatown on the Bowery (108 rooms). The fifth hotel will be a core brand Wyndham Hotel, also in Chelsea on West 26th St (280 rooms). Three of the five are scheduled to open this year. Wyndham’s grand entrance into the New York market is the realization of a long-held dream on the part of brand president Peter Strebel. “When we purchased the brand from The Blackstone Group in 2005, we made sure before we closed on the deal that they were able to get out of the situation restricting the use of the name in New York,” Strebel told HOTEL BUSINESS® last month. Leading market Why was having a flag in this particular market so important? “New York is probably the number one market in the country, so every brand wants to be represented there,” he said. “We have a targeted list of cities or locations that the Wyndham brand needs to be in and we rank those by where we have customers, where customers are coming and going,” he explained. Wyndham’s strength in other markets makes this one market even more critical. “New York is really a hub for us,” Strebel explained. “Because we have a large portfolio in the Caribbean, a lot of our customers live in the Northeast corridor. So having hotels that they can use when they visit Manhattan, either as business or leisure travelers, becomes an advantage for us.” Of the five new hotels, two—the Convention Center and Chinatown properties—will be managed by Wyndham Hotels & Resorts. The remaining three will be franchised by various owner groups. The Wyndham Garden Hotel in the Financial District, for example, is owned by the McSam Group, headed by Sam Chang, while the Convention Center property is owned by Flintlock Construction. All adhere to a similar prototype, a relatively narrow high-rise tower, which reflects the scarcity of available land on which to build. It’s also markedly different from the more horizontal prototype typically used on highway and in suburban locations. Wyndham is far from alone in pursuing a multi-hotel strategy in New York. Brands like Hilton’s Hampton Inn, Courtyard by Marriott, and Four Points by Sheraton, among others, have all opened—or are under construction with—hotels in various sub-markets. Unlike earlier waves of development when midtown or even Times Square would have been the logical choice for new construction—developers today are more likely to look to Chelsea, the Far West Side, and the Financial District. Strebel explained why. “Sure, we’d love to be in midtown as well as the heart of Times Square, but the barriers to entry are much higher there, plus there’s not as much available land,” he said. “In addition, financing is an issue today.” Meanwhile, a neighborhood like Chelsea has really come into its own as a Manhattan sub-market. “It’s become a good place to live, convenient to midtown, and has a thriving nightlife, restaurant, and art gallery scene,” Strebel noted. With development costs lower, hotels in these areas can also sell rooms at lower ADRs and still be profitable. “In cities like New York, room rates are so high, there really is a need for more upper mid-scale lodging,” Strebel said. “Now you can stay at one of our Wyndham Garden hotels and get a rate under $400. Building in midtown or Times Square, it would have been hard to come in at that rate structure.” Within the Wyndham Hotel Group, Wingate Inn (now rebranded Wingate by Wyndham) was the pioneer brand in spearheading recent development in these neighborhoods. “It opened on West 36th St. two years ago and has been quite successful,” he noted. Strebel spelled out the relative positioning of the Wingate, Wyndham Garden, and core Wyndham products. “Wingate by Wyndham is definitely mid-scale without F&B. Its primary competitive set is Hampton Inn and Fairfield by Marriott,” he said. “Wyndham Garden is more upscale, full-service and competes with Courtyard by Marriott, Hilton Garden Inn, and Four Points by Sheraton. The core Wyndham has F&B outlets, meeting space, more amenities, and is designed to compete with Marriott, Hilton, and Sheraton.” Taken together, the five hotels account for more than 850 rooms, are there synergies that the respective owners can take advantage of? Unfortunately, not as many as Strebel would like. “Since they’re all being operated by different management companies, they’re not going to be as synergistic on the operations side as we probably would like,” he said. Brand benefits “However, we do offer some centralized back office services like revenue management. Owners may not have signed up for that service, but if they did, there could be some coordination of rates and demand, so they can start referring business to each other,” Strebel noted. Owners may have other properties in the market, so in situations where their Wyndham hotel is sold-out, they might be tempted to refer inquiries to their other owned-hotels. Fortunately for Wyndham, they’re obligated to refer to other Wyndhams. “According to the franchise agreement, through all distribution channels, they have to refer to Wyndham first. We need to fill all the Wyndham hotels in New York before they sell their other hotels.” Each of the New York hotels incorporates elements of the interior design package Wyndham commissioned from noted architect Michael Graves, soon after acquiring the brand in 2006. While owners of some of the properties opted to install select items from the mock-up, Flintlock Construction chose to include the entire design concept in the Convention Center hotel. “It’s entirely Michael Graves, including his signature Smart Chair,” Strebel reported. “We’ve now opened several hotels that are conversions that incorporate elements of the Graves design. This is the first new build.”
