The news flow was slower than usual at this week’s 40th NYU hotel investment conference. In fact, not one new brand was launched, and that alone is unusual as of late for the major conferences. But, HOTELS did conduct multiple one-on-one interviews with brand leaders to discuss what is new and learned more about their forward-looking strategy. Here is a recap from those meetings and from comments made during the “coffee talk” session with the media.
Chris Nassetta, CEO, Hilton, McLean, Virginia, at the coffee talk:
Hilton has stated it has as many as five new brands in the pipeline and many thought Hilton would start launching them around last year’s NYU conference. But we are still waiting. Nassetta said this week that two new brands are ready and a third is close. “We are looking for the right moment to launch,” Nassetta added. “We want a cadre of deals to make the announcement matter more, and we are working on a host of transactions.” He said Hilton expects to launch two brands this year and the third no later than early next year.
Nassetta also offered an update on the Waldorf Astoria in New York City, which is now owned by the Chinese government after being wrested from 20xx buyer Anbang. He said work is continuing at the site and that the property is under heavy demolition. “The Chinese government says it will continue with the project as planned,” Nassetta said. “It is about three years out from re-opening.”
Nassetta also responded to a question about the #MeToo movement and said Hilton is very active with harassment training, as well as training to fight sex trafficking. It is also testing tech-related systems with housekeepers a way to make sure they have protection and are safe on the job. “The hotel industry should be held up as a beacon as to how it takes care of its people,” he said.
Alexandra Jaritz, global head, Tru by Hilton, McLean, Virginia
The facts: In her two years-plus leading the brand, Jaritz has opened 27 Tru properties; there will be 50 by end of 2018; more than 75 in 2019. Average key count is around 98; ballpark for cost per key is hovering around US$90,000. About 470 deals are in various stages; 320 are executed and signed.
The recently launched 2.0 prototype further value engineers the concept in the name of higher labor and construction costs. Among other things, they have simplified fits, lighting, architectural elements and flooring. Hilton is getting very aggressive on procurement savings, and Jaritz says those learns will likely filter to other select brands like Hampton.
The Tru team also has learned that hot breakfast appears to be a prerequisite in the segment and has added, eggs, sausage and waffles to the mix.
Jaritz said initial results show the brand is performing better and once Hilton publicizes performance she expects another wave of new deals to flood in.
Luca Franco, founder, Luxury Frontiers, Chicago
Luca has spent almost seven years perfecting his concept that focus on alternative building methodologies in the luxury space such as under canvas, treetop living and dining and timber cabins that sit adjacent to existing resort properties. The fruits of his labor are about to payoff in a big announcement connecting Luxury Frontiers to a ultra-luxury hotel brand.
He said the alternative concepts generally cost about one-third of a traditional hotel room, have a two-year ROI and enhance the brand story.
At the moment, he is working with a W and One&Only hotel in Mexico, a Four Seasons in Serengeti and a Belmond in Botswana. He already has outposts at two other Belmond resorts as well as two Wilderness Safari sites and the Nayara in Costa Rica.
Spire Hospitality CEO Chris Russell, AWH Partners Managing Partner Chad Cooley, Deerfield, Illinois, and New York City
AWH Partners, owner of Spire Hospitality, has named Chris Russell to the role of CEO, elevating long-standing CEO Bill DeForrest to vice chairman.
Leveraging his experience driving performance for top hotel management companies, Russell hopes to further position AWH as a preferred partner for institutional investors. As COO of Archon Hospitality (a Goldman Sachs company) and subsequently as CEO of Pillar Hotels and Resorts (the result of Archon’s spin off), Russell has managed assets for the largest existing private equity firms and REITs. With Russell as CEO of Spire, AWH will continue to grow its platform with an even greater focus on institutional-backed assets.
AWH has 6,500 keys spread over 20 hotels with an asset value of US$1.2 billion. Five additional properties are under contract and it is further developing projects in Brooklyn, New York, and Burbank, California. It also has a US$300 million Embassy Suites portfolio for sale.
Russell, who says among his strengths are F&B and repositioning assets, says he will focuse on assessing the current portfolio while helping AWH uncover new opportunities. Cooley added the AWH will be acquiring at a slower pace until it recognizes market disruption.
Jim Chu, global head of development and owner relations, Hyatt Hotels Corp., Chicago
On the heels of 29 consecutive quarters of market share growth, Hyatt Place has launched a new prototype that focuses on elevating experiences and interaction with guests. It focuses on three key areas: thoughtful design, driving value for World of Hyatt members and enhanced well-being experiences in guestrooms.
Chu is leading another brand seriously focused on finding cost savings for owners and has found 5% savings in development costs and a new prototype that is cost neutral from an FF&E perspective.
A new lobby experience is more flexible and takes into greater account the family perspective.
F&B continues to tie into well being with regional adaptations. Chu said there is just one piece of equipment to swap for the new F&B experience, but there is no change in prep and existing efficiencies remain.
Roughly 45% of Hyatt’s executed management and franchise agreements are for Hyatt Place and Hyatt House hotels, or roughly 170 Hyatt Place and Hyatt House hotels are in the pipeline.
The Hyatt Place brand has grown by 75% over the last five years, and there are currently 306 Hyatt Place hotels globally.
Jon and Alex Tisch, CEO and executive vice president of commercial, Loews Hotels & Co., New York City
Jon said Loews has course corrected to focus on traditional Loews hotels (400-500 rooms with 50-60 sq ft per room of meeting space) and immersive destination opportunities. Its competitive advantage remains the cash it can access from parent Loews Corp.
For example, an 800-room hotel with 65,000 sq ft of meeting space is under construction at the Kansas City, Missouri, convention center. At the same time it is developing with The Cordish Cos. mixed-use destinations in Arlington, Texas, and St. Louis, Missouri.
On top of that in Orlando with NBC Universal, Loews has three hotels under construction to add to five already open. Aventura will be the next to open in Orlando, adding 600 rooms and bringing the system up to 6,200 rooms. Between now and 2020, 2,800 rooms will be added to the Loews system, giving them 9,000 room in total.
For the six hotels currently under development it has about half the equity for US$2 billion in asset values. Both Jon and Alex added that the group is actively looking for more deals.
Jeff Wagoner, president and CEO, Outrigger Enterprises Group, Honolulu
Another newly named CEO is taking stock and making sure performance of the 37-property, resort-focused portfolio purchased in 2016 by KSL is where it needs to be.
Growth, Wagoner said, will come organically and by identifying “the right properties in right locations.” He said the group is focused on beachfront opportunities in Hawaii, the Caribbean and Mexico.
Wagoner didn’t say no to a brand extension but said they first need to better understand the portfolio. Acquisition is always a possibility, he added, but evaluation is a prerequisite.
“We are in this for the long haul and the strategy will take care of itself based on growth and performance,” he added. “My goals are to make sure associates proud; make KSL proud of its big investment; and do the right things.”