Wyndham Hotels & Resorts, lifestyle hotel maven Sam Nazarian and Grammy Award winner Marc Anthony doing anything together might sound like the beginning of a joke, and yet here we are with news that these unlikely bedfellows are launching a new lifestyle hotel brand.
Wyndham and lifestyle hospitality group SBE — founded by Nazarian and which recently partnered with Anthony as an equity partner — launched on Monday morning a new lifestyle hotel concept, dubbed Project HQ Hotels & Residences as a working title.
Project H3 is meant to offer guests a truly attainable lifestyle hotel experience at a time when the lifestyle hotel movement — properties that have a significant focus on destination dining and nightlife as well as design — is out of reach for many wallets.
Wyndham CEO Geoff Ballotti noted in a press roundtable prior to Monday’s announcement that rates for Project H3 would likely fall somewhere between $250 and $500 per night. The new brand, which will operate under the umbrella of Wyndham’s Registry Collection, also offers Wyndham Rewards loyalty members an entirely new concept for potential award night redemptions.
“This aspirational redemption opportunity we feel right now is exactly like nothing we have,” Ballotti said. “It’s completely, completely different.”
Project H3’s fast-growth model
The brand is expected to grow swiftly and capitalize on hotel owners looking to convert from an existing brand they work with to a new concept. Nazarian’s team sees an opportunity to provide a brand that embraces the type of residential stays that woo travelers to Airbnb while also building off the lifestyle hotel concept’s foundation of offering a strong on-site restaurant and bar lineup, as well as other amenities like branded residences and a health and wellness facility.
Nazarian pointed to existing hotels as well as underutilized office buildings as a way Project H3 can grow. Wyndham and SBE plan to have 50 Project H3 hotels open by 2023, with half that growth expected in the U.S. and half internationally.
A map provided to TPG points to cities like New York City, Washington, D.C., Philadelphia, Miami, Nashville, Chicago, Dallas, Las Vegas, Los Angeles and Denver as some of Project H3’s target U.S. markets. Markets like Saudi Arabia, the Caribbean, Latin America, Hong Kong, Seoul, Singapore, Doha, the U.K. and Asia were included as targets for international growth.
The companies noted Project H3 is likely to grow 80% of the time from converting existing buildings and 20% from ground-up construction. While conversions are cheaper than building a new hotel, even the lesser-expensive option won’t necessarily come cheap: Hotel owners should expect to spend somewhere between $30,000 and $50,000 per room converting into Project H3 brand standards.
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By comparison, converting into Wyndham’s latest Days Inn concept costs an owner around $2,500 per room.
Nobody said the Project H3 lifestyle was a construction bargain, after all.
The project might be a head-scratcher for some. While the company has pushed into all-inclusive resorts and higher-end segments in recent years, Wyndham is best known for its mix of affordable hotels with brands like La Quinta, Days Inn and Super 8.
Nazarian, on the other hand, is a longtime leader in the lifestyle space and best known for overseeing SBE’s hotel brand and management platform (which included brands like SLS, Delano, Mondrian and Hyde) and a variety of food and beverage brands.
The hotels and many of the dining concepts were partnered with Accor before being acquired by the French hotel giant and spun off into the Ennismore lifestyle arm, which includes non-SBE entities like The Hoxton, in 2020.
“I’ve been out of the game for a little over three years, and in that process, we’ve as a team here at SBE been thinking, for us to come back into the hotel world, what would make the biggest disruption and really what category would we want to focus on,” Nazarian said.
But Ballotti and Nazarian pointed to a more than 20-year relationship as bringing the two companies together on this project. While Wyndham may not be the first hotel company one looks to when it comes to lifestyle hotel products, there is certainly room for opportunity to make a major splash in the space of offering a genuine lifestyle hotel product in a more affordable lane than what’s out there today.
Many lifestyle hotel brands claim to want to foster community with the surrounding neighborhood, but it can be difficult to take these claims seriously when their restaurants book out months in advance and the nightly rates flirt with $1,000 a night.
Ian Schrager, one of the originators of the boutique hotel movement and who is winding down a partnership with Marriott on the Edition brand, is notably leaving Edition to focus on Public, a brand he’s described as “luxury for all” but that often has rates soaring above even the Edition brand.
One thing for Project H3 to be mindful of: Both Marriott’s Edition and Schrager’s Public, while popular and garnering plenty of celebrity spotlight, aren’t growing at the clip that leaders of either brand touted at their initial launch. Back in 2008, Marriott leaders anticipated around 100 Edition hotels would be open by today instead of the actual 18. Schrager is still at just one open Public property in New York City.
Offering a genuinely attainable product in this space with a compelling dining component, which Nazarian can make happen with his brands like Umami Burger and the Mediterranean Soom Soom and other SBE-backed offerings, can be a game-changer for the hotel orbit. Look at all the new affordably priced brands launched in the last year alone by companies like Marriott, Hilton and Hyatt.
It is clear the hotel industry sees it isn’t doing enough to court a more affordable end of the hotel food chain.
Why Project H3 can be a massive winner for Wyndham
While there might be some naysayers out there who expect Wyndham to operate largely under the guise of affordable and extended-stay brands, this is a huge boost to its potential appeal for younger travelers with disposable income. Just look to Marriott as to how a partnership like this can take off.
When Marriott first launched Edition, the company’s late CEO went on a talk show with Schrager to explain why Marriott needed the nightlife and hotel legend.
“One of the debates we have among our team, hypothetically, is [around how] we just opened this hotel in New York,” the late Arne Sorenson, Marriott’s former CEO, said during a 2015 interview with Charlie Rose. “If we opened exactly the same box without Ian … Would we have gotten the same reception from the market? I think the answer is no. Ian gives us permission to be in this space.”
When asked last week if Wyndham had a similar line of thinking about Nazarian, Ballotti agreed.
“We would never be able to create this on our own. That’s not our DNA,” Ballotti said. “We’re really focused on the economy and midscale space. We love that space. We’re not shying away from it. We’re not saying we want to get out of the lower-intensive and move to the higher-intensive. We’re going to continue in that space.”
But he also noted there’s a valuable loyalty play to be had here: Wyndham needs more options at the higher end of the chain scale to give its Wyndham Rewards members something aspirational worthy of their points redemptions.
“What our loyalty members are looking, what those blue-collar workers and those middle-income Americans are looking for is the experience that SBE will create,” Ballotti added.