Peter Strebel said the pandemic has taught him a lot about himself and he points to three specific takeaways that have made him a better businessperson. Perhaps more than anything, the president and CEO of Omni Hotels & Resorts, Dallas, says reflectively and with personal awareness that he has learned to better manage challenges as they come.
“I realized that in life you can’t control everything, and that some things are out of your control,” he told HOTELS in mid-February. “So, you have to let go at some point and say, ‘this will be what it will be, and we’ll do the best that we can.”
The 62-year-old leader of a brand with more than 50 primarily owned and operated properties also says that he started to value people more “because we did survive.” In fact, Strebel said, Omni performed quite well through the pandemic, and it remains the case today. “But we only did that because of people.”
And the third realization Strebel cited, like so many others have over the past two years, is that he learned how to run the businesses with less. “I picked up some really, really good skills.”
The survival game
What truly helped Omni thrive during the pandemic was a decision first taken in 2018 to consolidate back-office functions and move them to a service center in Dallas. For example, a property-level accounting department was trimmed from 16 to six people. Recruitment was centralized and the sales process was streamlined. In total, Strebel said the company added a couple of points to margin very quickly and is still in the process of generating more efficiencies.
“We were still profitable during COVID, believe it or not,” Strebel said. “In 2020, we came in at about only 10% of what our profits were in 2019, and then in 2021 we were back to more than 60% of where we were in 2019.”
What drove profitability for a company known for its big conference hotels is the fact that one-third of the Omni portfolio is resorts, which performed so well that in 2020 they actually outperformed 2019, according to Strebel. In fact, even the convention hotels did well because Omni over-programs them with amenities that drive weekend staycation business. “Where we were hurt most was in cities like New York, Boston, Chicago, San Francisco, Montreal and Toronto.
“But all in all, we did pretty well,” Strebel continued, adding that January 2022 came in only less than 10% below budget and that business was quickly rebounding in February.
Strebel said he expected business to rebound further into March and April, but in the next breath states business travel will be damaged for a long time. “But I also think companies need to promote culture and need face-to-face communication,” he added. “Maybe they won’t be doing that in offices anymore. But that may lead to more small meetings in our hotels.”
As for bigger group business, Omni is seeing an improvement in city-wide event and when mask mandates were being removed in late February, Strebel was starting to feel even more bullish.
New hiring model
Omni has also addressed every hotelier’s biggest challenge today: staffing. It engineered a new approach to hiring people right away called “One and Done.” For any hourly positions or supervisory roles at the property level, Omni vets applicants from the corporate office and then has one manager at the property level do an interview and hire on the spot. Even if there is not a perfect fit for a good candidate, Omni will hire them anyway just to get them into the family.
“We have been able to open up all of our outlets,” Strebel said. “We don’t have enough bartenders. We don’t have enough cooks. We have a beautiful rooftop bar in Mount Washington and we really haven’t opened it yet because we haven’t had the right staff… We saw our spa business grow during COVID, interestingly enough. But it would be growing a lot faster if we had enough therapists.”
So, “One and Done” is likely to become a new way of life at Omni, which had about 22,000 employees pre-COVID, dropped to 1,800 and now sits at almost 15,000 with about 2,000 jobs open, Strebel said.
When it comes to growth, privately held Omni has always been more opportunistic and right now Strebel said he doesn’t see a lot of really good acquisition opportunities at acceptable price points. What he does see tends not to fit the brand parameters. “Buying existing hotels is going to be somewhat limited for us,” he added.
That said, Omni has an active development pipeline, having just topped off a property in Frisco, Texas. Tempe, Arizona, is under construction and Omni will also start construction next year on a mixed-use development in Punta de Mita, Mexico, which will include an Omni and a soon-to-be named luxury brand property, as well as residential unit all within a gated complex that should open in 2025.
Strebel also said Omni is in conversation with municipalities for public-private partnerships, a development road Omni has traveled before with success.
In addition, while Omni tends to acquire and develop on its own, it has been working on relationships with REIT to consider different investment partners.
With development and construction costs “going through the roof” in some cases, Strebel added some projects that were borderline in terms of potential are more than likely not going to happen in the near term. “We’re seeing anywhere from 7% to 25% cost increases for developments,” he added. “So, we are really reinvesting in our own portfolio, making those hotels better.”
On the disposition front, Omni sold five hotels during the past two COVID years, especially in markets where there was no room to drive rates and with properties in need of major capital investments. But Strebel doesn’t foresee anything else being sold for the foreseeable future.
To further drive revenue and GOP, the plan is to do a better job at what Omni has been doing for more than 10 years – blend a lot of local color and flavor into their F&B-driven properties. “We are driving RevPAR growth so dramatically over our competitive set because we really work on experiences,” Strebel added. “The upgrades that we continue to put into our hotels – they’re all experiential.”
Bottom line, Strebel remains very bullish about business because travel is now being perceived as a necessity versus a luxury. “And then the second most valuable thing about our business, which I think is good for investors, is that our rates are fluid – they’re dynamic and change every day… When times are good, we have the ability to make them really good.”