The 27th annual Lodging Conference at the JW Marriott Desert Ridge in Phoenix, Arizona, was a roaring success with some 2,540 attendees and pervasive optimism about near-term opportunities from the leaders on stage, at least publicly.
In private meetings and off-the-record comments, the tone was a bit more subdued due to lender hesitancy, rising interest rates, an ongoing bid-ask disparity, and worries about a potential global recession that could dampen the recovery.
But given where the industry has been over the past few years, the overall tone was very positive, if not relieved, as business for the foreseeable future is trending mostly upward.
In one-on-one meetings with multiple brands and developers with news and updates to share, the bullish tone continued, naturally, albeit with a bit of caution. Here is my Lodging Conference notebook:
The third-party management giant hosted the media before the conference got started with new leaders, Mark Tamis, president of Global Operations, and Allison Reid, chief global growth officer, talking about their roles and how the company is focusing on culture, development, innovation, and training to get to the next level of execution and to become an industry leader in talent development. Those two particularly will be driving initiatives to add value for owners across the full spectrum of hospitality verticals and identifying growth opportunities.
More specifically, they talked about how Aimbridge is using artificial intelligence to train and develop their GMs. They believe it will widen the prospects for first-time GMs and free them up from some of the administrative grunt work to focus more on their property-level teams.
They will manage progress by how quickly GMs come up to speed and grow internally. “We want to be the leader in talent development,” Tamis said.
An interesting data point from Aimbridge: With all GMs onboarded at the corporate office (gatherings about once a month with 25 to 40 new GMs) turnover in the role is reduced by 85%. The time spent together with fellow GMs also seems to cultivate internal peer networks.
Extended Stay America
Owned by PE giants Blackstone and Starwood Capital, Extended Stay America on Monday launched a lower tier, longer stay brand extension called Extended Stay America Select Suites. The brand will roll out by the end of this month with some 100-plus properties, taking well-preserved WoodSpring Suites assets acquired by its two owners and quickly rebranding them to the new ESA brand that will target value-conscious guests staying on average 30-plus nights.
The new brand, which will be offered as a franchise, offers more basic services and select amenities with the same apartment-like room design as the flagship Extended Stay America brand. For franchisees, the new brand delivers a value proposition of low costs and financial efficiency.
Rates are expected to run about 20% less than the Premier concept and will likely trade well straight out of the box due to its association with the core brand.
Growth is expected to come via conversions, including exterior corridor buildings, as well as through current owners with other ESA brands, according to Mark Williams, managing director, franchise development. “There is a lot of wide-open territory for franchising this concept,” he added.
Development costs for the new brand are not yet clear, but Williams did note that cost per key for the Premier concept has increased by nearly 30%.
Launched in September 2019, Sightline Hospitality has 25 hotels in its third-party management system, including six under development that will open between 2023 and 2025, according to President Kirk Pederson.
The goal is to reach 50-plus hotels within two years and the group’s sweet spot continues to be 200-room lifestyle properties and many of its recent deals have been done with first-time owners.
Pederson said the brand has been forward-thinking on developing its labor-light model and has had much of its success thereby reengineering its F&B operations.
CEO Sloan Dean told HOTELS the group continues to absorb its April acquisition of the 30-hotel Chesapeake Hospitality deal. There is a big push for cultural alignment to generate the smoothest possible integration.
At 121 hotels, Dean said Remington is on a pace to four to five new hotels per quarter. He added that Remington has some bigger “irons in the fire” for portfolio deals and expects the company to make one or two bigger deals in the next 12 months.
From a performance perspective, he said Remington RevPAR in September was running at +5-6% versus September 2019, accounting for the best results since the onset of the pandemic. He attributed the bounce to the return of group business, as well as much stronger midweek business.
Looking ahead, Dean said he expects another 8-9% rate bump in 2023.
To improve performance, Remington has made menus “more efficient” at more than 100 of its 150 restaurants, enabling one line cook versus three chefs to manage the kitchen. Menus are also more bar centric.
Raul Ortiz, vice president of Global Brand Management for the Holiday Inn and EVEN Hotels brands said its refreshed EVEN brand has 22 hotels open and a pipeline of 28 properties (12 in China).
He said enhancements have been in the works for a few years and are more health and wellness-focused to go with the brand’s fitness profile.
Changes include wall-based training equipment in certain rooms; Peloton bikes in a small percentage of rooms and a refreshed restaurant concept that more even splits wellness with more traditional menu items as Ortiz says not everyone is looking to eat only healthy food.
The prototype has moved from five to four stories, generating a 10% savings in development costs (around US$135,000-145,000, excluding land). It also cuts down on build time, Ortiz said.
IHG is also trying to drive business to the brand by putting a big focus on the relaunch of its rewards program.
Denver and to the West is the strategy for this owner-operator who plays in the upscale select-service space up to lifestyle hotels with some 25 hotels with 3,200 rooms. The goal is to reach 50-60 hotels.
Four new-builds are coming, according to EVP of Operations Amanda Hawkins-Vogel.
Being nimble with its home-grown revenue management system is the key to success, she says.
Meyer Jabara Hotels
President Justin Jabara said the big focus is on the acquisition and repositioning of boutique assets. They’ve recently acquired three properties and he expects another three to come.
The other big focus is on talent acquisition and revenue management improvements via a revised suite of services that offers more support to properties.
With COVID increasingly on the wane, Jabara said the other big shift is “reinstalling” the company culture.
BWH Hotel Group
Conversions are propelling growth and will continue to do so into next year, according to President and CEO Larry Cuculic.
Growth with BWH Collections and soft branding seems to be the sweet spot for growth, added Senior Vice President and Chief Development Officer Brad LeBlanc.
Best Western’s boutique Aiden brand has three properties up for approval, usually mid-market hotels being repositioned more upscale and most often in dense suburban areas surrounding cities like Tempe, Arizona, Austin, Texas, or Orlando, Florida.
They, too, have a new revenue management tool set to be introduced next year. Best Western is also refining its home-grown property management system.
Bringing more key money to the table combined with lower fees is creating value and generating momentum, Cuculic added.
With only three in its system, the group is also preparing a new, midscale extended-stay prototype for 2023. They expect to have six at the rollout.
Attrition levels are at historically low levels, LeBlanc added, while the company is adding 130-plus properties a year.
Outrigger Hotels & Resorts
CEO Jeff Wagoner was particularly proud of the efforts made by the newly created Hawaii Hotel Alliance, an advocacy group that includes many of the region’s big brand players. It’s an initial success: a bill that further restricts short-term rental players.
The Alliance was created after a property tax increase and now represents about 75% of hotel rooms on the islands.
Wagoner called the US$80 million renovation of the Outrigger Reef Waikiki Beach Resort “spectacular” with the penthouse getting US$3,000-5,000 per night.
In fact, all but one hotel in the system is being refreshed to make sure it hits the 4.5-5-star level. The group is also refreshing its website with better tracking capabilities and a better consumer experience.
As it is on the cusp of celebrating its 75th anniversary on September 29, Outrigger is also refreshing its brand with new colors, including coral, tropical green and purple.
The growth story is “complicated,” according to Wagoner, because of little if any modification in asset pricing. As a result, they are working harder on price and creative deal structures. That said, the group has three LOIs (one a jv) on large properties in the Caribbean, Mexico and “somewhere else.”
Mission Hill Hospitality
This KSL Capital Partners portfolio company that invests in select-service and extended-stay properties has reached the 24-hotel mark.
However, the speed of growth will likely slow down as CEO Greg Kennealey told HOTELS he is seeing about 25% of potentially good opportunities compared to last year.
While still a net buyer, Denver-based Mission Hill could sell some assets in 2023 if sentiment approves, Kennealey said.