Wyndham Case Study

Opening to Wyndham’s home page, the very first sentence in their opening statement shows just what this company is all about. “There is no one else like us” (wyndham.com) This is a company boasting more than 8100 hotels, with almost 760,000 rooms, operating in 79 countries. Founded in 1981, by Trammel Crowe, the company was originally known as the Wyndham Hotel Corporation. In 1998, the company merged with Patriot American Hospitality Inc. and became known as Wyndham International Inc. In 2005 the Cendant Corporation bought the Wyndham hotel brand. Unfortunately, for the Wyndham brand, Cendant was later named in one of the largest accounting frauds of its time. Cendant was accused of a topside adjustment had been made to the quarterly financial

CEO Stephen Holmes broke the focus of the company into three distinct sectors; Wyndham Hotel Group, Wyndham Vacation Ownership, and Wyndham Exchange & Rentals. The most notable, being the Wyndham Hotel Group, consists of multiple franchises at multiple price points. From the high end, TRYP and Wyndham Grand, to the mid-level Wyndham Garden and Wingate, to the “budget level” Super8, Ramada, and Days Inn, Wyndham offered something for everyone. On the other hand, the vast differences in the offerings created a reputation of inconsistency, which CEO Holmes determined was mainly due to ineffective marketing. During the downturn of 2008, with the decrease in the hotel industry overall, Holmes remained true to his vision. Staying the course, through the massive financial losses of the late 2000’s, Holmes and his team were able to create a consistent brand image with a local feel in every sector. Utilizing the consumer-centric approach to determine what changes would be instituted, renovated the atmosphere and reputation of Wyndham. It was during this time that the company began acquiring hotel brands in cities around the globe. From Xiamen, China, to the South Pacific, India, and all points between have seen the expansion of the Wyndham brand. Albeit the strategy of leaving the Wyndham name off the budget hotel chains has paid off. Wyndham can target wide ranges of travelers and budgets, while keeping the Wyndham name reserved for the upper tiers

“While a recession affects firms in almost all economic sectors, the hospitality firms appear to be more susceptible to economic downturns because they derive revenues mostly from people’s discretionary consumptions.” (Youn/Gu) The dividend yield dropped to an all time low during that time, paying .04 which was only .89%. Since the downturn, Wyndham has been steadily trending upward, paying 2.0 in 2016 which equates to 2.62%. Multiple acquisitions of hotel chains, such as, Dolce, Wimdu, Northcott, LaQuinta, and most recently AmericaInn, is illustrated in the increase in long term fixed assets. In 2007 Wyndham only held 1.604B in long term fixed assets, whereas that figure increases to 2.651B in 2016. The acquisition of multiple “affordable” chains, allowed Wyndham to continue its growth, while maintaining it’s luxury end options. As Youn and Gu stated, the lodging industry derives revenue from discretionary funds, during the recession of 2008, discretionary funds were low and those that traveled, needed the low cost options to fit travels into their financial situation. The decision to revamp the affordable facilities, all the while keeping the Wyndham name completely separate, appears to have been a wise decision by CEO Holmes and his