Wyndham Hotel Group, part of Wyndham Worldwide Corporation (WYN) has entered into agreements to open and manage Wyndham hotels in Sanya, China, as well as Khao Lak, Thailand. These new properties affirm Wyndham’s strategy to expedite its expansion in the Asia Pacific region.
Owned by South Sea Prakarang Resort Co. Ltd, Wyndham Khao Lak Resort is under construction and slated to open by late 2011. The hotel will feature 134 resort rooms and 66 villas along other amenities.
The 26-storied Wyndham Sanya Resort will be built by Sanya Hengsen Industrial Investment Co., Ltd., and is expected to open in January 2014. In terms of size, this property is much bigger with around 403 guest rooms.
The Asia Pacific countries continue to be a key area of expansion for all hoteliers. Among these, China remains the bright spot. China is all set to bring about a recovery in global tourism and by 2020, it is expected to become the world’s largest travel destination. Accordingly, all western as well as domestic companies are keen on tapping the secular growth potential in that market.
In China, the company franchises 301 hotels representing more than 46,000 rooms under the Wyndham, Ramada, Howard Johnson, Days Inn and Super 8 brands. With this new opening, there will be 14 new Wyndham hotels or under development in China.
In the fourth quarter 2010, Wyndham witnessed 18% growth in revenue per available room in China. It remained one of the three countries representing 84% of Wyndham’s total revenues in its recently concluded quarter.
Wyndham’s two major competitors, Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR), are also splurging on growth in that country. Over the next five years, Marriott plans to double its portfolio in China, which remains its second largest market after North America.
Other than the Chinese market, the hoteliers are also expecting India to offer significant possibilities for growth as the country is under-hoteled relative to its future demand.
Wyndham Worldwide currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock.
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