Wyndham Hotels Sees Revenue Growth Near Data Centers, Driven by Construction Workers

A Boost in Business: Wyndham’s RevPAR Growth Near Data Centers

Wyndham Hotels & Resorts reported a 5% growth in Revenue Per Available Room (RevPAR) at its franchise properties located near data centers in 2024. This growth, highlighted by CEO Geoff Ballotti during the company’s fourth-quarter earnings call, underscores the increasing importance of data center construction projects to the hospitality industry. RevPAR, a key metric in the hotel industry, measures a hotel’s revenue based on its occupancy and average daily room rates. The uptick in RevPAR for Wyndham’s properties near data center development sites suggests a promising trend for the company, driven by the influx of construction workers and skilled laborers involved in these projects.

Ballotti revealed that dozens of Wyndham’s franchised hotels were strategically positioned within a 10-mile radius of the top 10 data center projects that began construction in the U.S. in 2024. These locations outperformed the rest of Wyndham’s U.S. portfolio, with a nearly 5% increase in RevPAR. Cities like Silicon Valley and Dallas, known as hubs for data center development, played a significant role in driving this growth. However, emerging markets such as Jackson, Mississippi, and Columbus, Ohio, also contributed notably to Wyndham’s success in this sector.

The Rise of Data Centers as a Growth Driver for Hospitality

The surge in demand for data centers has become a defining trend in the digital era, according to Ballotti. As Big Tech companies invest billions of dollars in data center development, the associated construction activities have created a ripple effect in the hospitality industry. Hotels located near these construction sites have become essential for accommodating out-of-town workers, engineers, and contractors involved in these projects.

For Wyndham, this trend has proven to be a lucrative opportunity. The company’s sales, marketing, and development teams have focused on these markets, ensuring that their properties are well-positioned to capitalize on the influx of workers. The ability to raise room prices without a backlash from guests further highlights the strong demand for accommodations in these areas.

From Workers to Revenue: The Role of Construction Labor

While data center development sites are not typical tourist destinations, they have become hotspots for a different kind of traveler: construction workers. John Boyd Jr., a principal at the Boyd Company, explains that the growth in RevPAR for Wyndham’s properties near data centers is likely attributed to these workers. Big Tech’s massive investments in data center construction require significant labor, much of which is sourced from out-of-town skilled workers.

The construction of data centers is a complex and time-intensive process, involving not only building the physical structures but also installing specialized infrastructure and engineering systems. These projects often take months to complete, necessitating temporary housing for the crew. As a result, hotels in the vicinity of these sites have seen an uptick in bookings, particularly from workers seeking convenient and affordable accommodations.

The Temporary Housing Boom: A Nationwide Phenomenon

The nationwide shortage of skilled labor has exacerbated the need for temporary housing near data center construction sites. As companies scramble to find workers to fill these roles, many employees are forced to travel significant distances to work on these projects. This has created a boom in demand for hotels, particularly those that offer extended stays and convenient access to the construction sites.

Wyndham, with its portfolio of roadside hotels and extended-stay chains such as Days Inn, La Quinta, Super 8, Ramada, and Howard Johnson, is well-positioned to meet this demand. The company’s 9,300 properties across more than 95 countries, with a strong presence in the U.S., provide a wide reach to cater to this growing market. As the data center construction boom continues, Wyndham stands to benefit from its strategic placement in key markets.

The Future of Hospitality and Data Centers

Looking ahead, the relationship between data center construction and the hospitality industry is likely to grow even stronger. As more companies invest in data centers to meet the increasing demand for cloud computing, storage, and other digital services, the need for temporary housing near these sites will only intensify. Hotels that can adapt to this trend by offering flexible, affordable, and convenient accommodations will be well-positioned to capitalize on this growing market.

For Wyndham, the focus on data center markets will likely remain a key part of its growth strategy. By continuing to target emerging markets and leveraging its extensive portfolio of properties, the company can further solidify its position as a leader in the hospitality industry. As the digital era continues to evolve, the interplay between data centers and hotels will undoubtedly play a significant role in shaping the future of both industries.