Owner Opportunity: How Infrastructure Investment Is Changing the Hotel Market

A ~$3.3 billion opportunity awaits Wyndham hotel owners and developers.

Thanks to the $1.2 trillion Infrastructure Investment and Jobs Act and the $280 billion CHIPS and Science Act, thousands of infrastructure projects have already begun or have been allocated funding. Thousands more are expected over the next decade.

With many of these projects taking months or years to complete, there’s a massive market opportunity for hotel owners and investors: Traveling workers need both midweek and long-term options that balance cost-effectiveness and comfort.

In total, the two Acts will fund more than 37,000 projects across all 50 states — some are well underway, others in their beginning stages, and more are slated to begin in the next few years.

To support the scope and scale of these infrastructure efforts, the construction companies will need to hire more than 500,000 new workers in 2023 alone. According to research firm McKinsey, the volume of announced infrastructure investment could create more than three million new jobs in commercial and industrial construction sectors.

These projects, which include everything from wastewater service upgrades to bridge construction and semiconductor chip plant development, can take anywhere from six months to two years (or more) to complete. Given that many project sites are outside of large urban areas, these new infrastructure efforts are driving a ‘travel surge’ as organizations send staff to job sites either week-to-week or for extended stays.

While cost-effective lodgings are a priority for construction companies, market compression can create opportunities for all chainscales. Consider a small town with three economy hotels and two midmarket properties. If new investment leads to multiple local projects, the economy hotels are likely to fill up first — and may remain full for years. As a result, demand can roll over to midmarket properties.

Infrastructure project workers want different amenities than leisure travel guests.

These workers are looking for amenities that help them feel at home when they’re away from home. These include regular housekeeping, access to laundry facilities, free Wi-Fi, and in-room conveniences such as refrigerators and microwaves. Secure, well-lit parking for work vehicles and outdoor communal grill areas are also in demand.

In addition, workers may have different preferences based on their work schedules. Consider an infrastructure project site running both day and night shifts to meet upcoming milestones. Workers on the night shift can benefit from flexible cleaning staff hours that ensure they’re not disturbed during the day, and they may prefer rooms that are as far as possible from noisy amenities such as pools, gyms, or outdoor playgrounds.

It’s also worth noting that different types of workers come in waves. First are white-collar workers, such as designers and architects, and gray-collar workers, like team leads and highly skilled field staff tasked with getting projects off the ground. These white- and gray-collar workers may stay for a few weeks or a month. Once designs are done and plans are in place, there’s a large influx of blue-collar staff who may stay for months or years.

When companies are awarded bids for infrastructure projects, lodging becomes one of their top priorities. Wherever possible, companies prefer to deal with trusted partners who have a reputation for delivering high-quality lodgings at an affordable price.

This is because companies need to find a balance of cost and comfort. Many organizations have a set per diem amount they prefer to spend on lodging, but they also need to consider the worker experience when staying in hotels. With the market booming and skilled talent in demand, businesses must ensure that staff have the amenities they need when needed.

This creates the opportunity for owners to capture multiple guest segments. For example, ECHO hotels are designed with long-term stays in mind and feature amenities that make guests feel like they’re at a home away from home. “What drew me to the ECHO Suites brand was Wyndham and what Wyndham has to offer,” says owner and developer Ian McClure. “They are the dominant leader in the midscale and economy segment. Partnership with them has been fantastic from the start.”

Owners must also consider what happens when infrastructure projects end. Take, for example, the construction of a semiconductor chip-making plant. After the initial build, other adjacent industries like battery manufacturing may follow. Likewise, highway or bridge projects may increase tourism or community investment thanks to improved local access.

Wyndham can help new owners win the infrastructure market. The Wyndham global sales organization (GSO) has existing partnerships with large companies bidding on big infrastructure projects. The sales team can help you secure this business and ensure owners that their properties have what workers need. Transparency and communication happen at each step of the process. Once the GSO team has identified the rate parameters for a specific customer, they take this data to hotel ownership groups. Owners provide a rate they’re comfortable with, and Wyndham takes this to the client. Once finalized, Wyndham helps owners get the new room rate into their revenue management system.

To help navigate the growing infrastructure market, Wyndham increased GSO team staffing by 25% to help identify where and when allocated funds may be released. Some of the top markets for infrastructure development include California ($16.2 billion), Texas ($13.9 billion), and Florida ($8.8 billion).

Bottom line? New infrastructure represents long-term opportunities for developers and owners to develop new relationships, deliver outstanding guest experiences, and drive consistent revenue.