Operationally, guests have become savvier, which yields daunting expectations. The “boutique” concept has infiltrated even the most conservative of brands, each implementing their own “lifestyle” design and service components. The hotel F&B space has been redefined with chef-driven restaurants becoming a key driver for negotiating leases.
In the transaction environment, everyone is cautious — EVERYONE. For every deal the newly formed REITs closed this year, they passed on 10. Even the largest private equity vehicles, unable to hit serviceable return thresholds, are saying an emphatic “no” to the sexy luxury deals they once thrived on. Cap rates have had virtually no relevance in the last two years. More than ever, the sell is less in the pitch and much more firmly in the numbers.
From a development standpoint, need I say more? Never has there been such a sentiment of “the land is worth as much as the hotel that sits on it,” even on irreplaceable and oceanfront properties.
Is it reasonable to expect the cycle will reset itself and we will revert to old habits? It may be more realistic to understand we have become more aligned with modern consumer-based business: spend less, receive more.
Much of the aforementioned issues are what I hope to tackle in my forthcoming blog posts. As one of the young brokers and consultants in the hotel space, I am by no means the most knowledgeable or the most experienced in this business. However, I thrive on questioning historical actions and stimulating change. My arguments are sometimes bold, yet laden with truth.
I am very excited to join the HOTELS family, where a foundation of industry acumen has already been set. I look forward to sharing my findings in efforts of capturing yours.