Wyndham Sees Cracks in Economy Hotel Market as Pricing Power Erodes

Wyndham said its U.S. budget hotel business showed strain in September, as demand softened in several key markets. Its revised full-year forecast implied that fourth-quarter U.S. RevPAR would continue to slump, down 6.4%.

During its third-quarter earnings call Thursday, the company said revenue per available room fell 5% in the U.S. and 10% in China. The weakness was concentrated in the economy and midscale hotel segments where Wyndham does much of its business.

The divergence reflects broader economic anxiety hitting lower-income consumers. President and CEO Geoff Ballotti acknowledged that guests at the company's limited-service hotels are "more price sensitive" when they feel economic uncertainty.

That's a problem when room rates for economy hotels are up only about 10% since before the pandemic, while rates for luxury hotels have jumped 30%, according to Ballotti's figures.