Recovery Trends in the Urban Hotel Landscape

Episode Transcript

Annie Fitzgerald: It’s very important for people to remember that hotels are very special. How can you pick up your phone in an Airbnb in the middle of the night if you don’t feel well and there’s no one, and at a hotel, you are going to get our amazing night auditor who is probably going to bring you a glass of water, an Advil or a fan, whatever you need, and really envelop you in feeling like “I have somebody. I have something.”

Robin Trimingham: Welcome to the Innovative Hotelier podcast by HOTELS magazine, with weekly, thought-provoking discussions with the world’s leading hotel and hospitality innovators.

Robin Trimingham: Welcome to the Innovative Hotelier, brought to you by HOTELS magazine. I’m your host, Robin Trimingham. As we all know, understanding urban hotel industry trends is essential for a hotel owners, investors and operators to stay competitive in this fast-paced hospitality sector. While there’s no doubt that the urban hotel sector has been making the most rapid recovery in 2023, there’s definitely still work to be done to reach 2019 operating levels. My guest today, Annie Fitzgerald, is a career hotelier and current general manager of the Westgate Hotel in San Diego, and she’s here today to chat about navigating the current state of recovery of the urban hotel industry and trends that will likely dominate this busy sector as we head into 2024. Join me now for my conversation with Annie.

Robin Trimingham: FOH is a global food service and hospitality company that manufactures smart commercial-grade solutions. headquartered in Miami, the company designs and manufactures all their restaurant and hotel products. They have showrooms and distribution centers located throughout the globe, and their products are always in stock and ready to ship from any of their distribution centers worldwide.

Robin Trimingham: Welcome, Annie! It’s great to get a chance to chat with you today.

Annie Fitzgerald: Well, thank you, Robin. It’s my pleasure to be with you.

Robin Trimingham: I always love talking to career hoteliers because you always have such an interesting perspective. So I think this is going to be a great conversation. Let’s set the stage a little bit for this. As everybody knows, urban hotels were disproportionately affected by the pandemic. And I came across this statistic from June 2021, I think it was from the American Hotel and Lodging Association. They did a survey asking people about their travel plans, and a whopping 71% said “no way” were they going to go to a city or an urban center for travel. But you guys were having to operate during that situation in an urban center. What was that like?

Annie Fitzgerald: Yes, Robin, we were. And when you ask me that question, you take me back visually and some of the emotions that we were going through, I have to be grateful and approach that question with gratitude that at the Westgate Hotel in San Diego, our market had a very special positioning, especially with the drive market. Uh, we did realize some very good occupancy of people that wanted to come to fresh air and enjoy what San Diego had to offer. We are positioned in an urban area. We’re right downtown. But the benefits of the beach and the water and hikes nearby, and the availability of outdoor activities that made people feel safe, not to mention the spaciousness of especially our property. There’s a lot of spacious outdoor areas for people to enjoy, from our terrace to our aqua fitness and wellness center. And so when you ask that question, we worked hard from stripping rooms with our leadership team along with our employees, to bussing tables or following any regulatory guidelines. You take me through a time period of we were really stretching our muscles of what it was like to be a hotelier and come up through the business, really working through nearly every position.

Robin Trimingham: I love how you say that. It was all hands-on deck atmosphere and everybody doing just whatever needed doing. That is absolutely the best way to be as a hotelier. And there’s a couple of brands I could think of. I really wish that they understood management doesn’t stay in the glass tower and make everybody else deal with stuff. If you want to understand how your hotel lives and breathes, you have to be right there in the thick of it. So, what’s 2023 been like? How would you say traveler demographics have shifted since we went through all of this?

Annie Fitzgerald: In 2023, we were able to really temper our stride, and I think things leveled out a little bit where it feels a little bit more normal with travel. I will lead with group business returned and hotels really flourish on the group business, whether it be the citywide conventions that come back or the on-property groups. And part of that is the return of the more guild meeting planner, with longer lead times from contract signing to execution of the business. I think last year it was a very quick turn time, which puts a lot of stress on the planning and the convention service managers and banquet teams, and having that group business really helps us, you know, level what the business is. I’ll also add that, again, San Diego, I have to be really grateful. In July we were number one in the US for occupancy and of course the Westgate Hotel, we had the benefit of what that meant. So occupancy is back. The traveler is the return of the seasoned traveler. The group business is back. Leisure was strong as well. And our team is also a little bit more trained. There was high turnover during the pandemic time period. So, again, we hit our stride in 2023. Things leveled off a little bit. It was it’s been good business for us.

Robin Trimingham: So, let me ask you a little more about your group RFPs. It seems to me that they go through cycles. One year it’s all about price and another year it’s all about natural light in the meeting space. What have you been finding is like the make-or-break kind of trend?

Annie Fitzgerald: Good question. I do think hoteliers realized that they could get price out of guest rooms through the pandemic and things. Right now, I feel like it is a price for those meeting planners, especially with the economy and the talk of what budgets look like for corporations. So there’s some pressure there trying to get that business at the price point that rates have climbed to through the pandemic and things.

Robin Trimingham: How are customer behaviors and expectations evolving? In the pandemic, we had this phase where if you wanted to be open at all, we had all that social distancing and hyper-cleaning of guest rooms and little PPE kits. What sort of adjustments are you making now? I’m not saying that you’re not doing all those good things, but what’s been the next step, if you will?

Annie Fitzgerald: Robin, as we had to make so many changes previously, you know, once 2020 hit and as a hotelier, you go through and you say, “Well, we always did this, but now we have to try this”. I think the traveler, they have expectations and a lot of hoteliers took away some of those luxuries and expectations that they have. And so the behavior of the traveler did change. There’s some frustration. Air travel can be really difficult. There were big delays for people. And when they arrive to your hotel, they’re arriving to your home. And we want them to be comfortable. We want them to have all of the amenities that make them feel like they’ve chosen the right place to be. And I would go back to services, really, the royal flush. People just want to be pampered and feel comfortable where they are that you have their very best interest in mind, and that comes from a genuine and gracious place of service, which starts in our heart. And I think at the Westgate, we’ve chosen to have daily housekeeping service. That’s a core value for us. That’s important people. We realize people want that service. People want room service. They order room service. They don’t want it in delivery boxes. They want it on beautiful China with silver and a glass. And so I think when you do provide those amenities and services that you’ve promised, or that the traveler that’s coming to a luxury boutique hotel like ours, and when they receive it, there’s that surprise and delight of what they can count on when they come to your property. And that creates loyalty and memorable experiences for them.

Robin Trimingham: I think, listening to you, what you’re really saying is it’s more important than ever to understand what your traveler, what your guests appreciates and what the what they need when they walk through your door. How has business travel been in your area?

Annie Fitzgerald: Really good question, Robin. I think when people think about San Diego, it’s a sunny, fresh air destination. And business travel, I think still has growth opportunities. Uh, especially in Downtown San Diego. And for our property, we’ve definitely seen more group business and leisure business. Part of that is what type of business is in San Diego. And part of that, I think, is being an independent hotelier, where we are non-affiliated, we’re independently owned and operated, and so we really have to work hard to get the attention of that business traveler. We love them, we want them to come back, and we want them to be walking through our corridors and working out at our beautiful aqua fitness center and having breakfast and coffee. It’s just a very vibrant, energetic feel when you have that road warrior business traveler in your property.

Robin Trimingham: Yeah, and as much as there are some who are absolutely die-hard, loyal to one brand, and it’s all about the loyalty points and the upgrades and the perks, I think you’re absolutely right. I think there is another kind of business traveler who’s like, you know what, I just want to stay in a really nice place and the conversation becomes more, how do we find that person and let them know, “Hey, we’re here”. What is your advice regarding competing for market share in an urban center at the moment? Because urban travel really hasn’t recovered to the extent that leisure and resort destinations have in some other areas.

Annie Fitzgerald: My advice is that you really have to know what makes your brand or your property stand out. Now, what are those experiences that make an impression on the traveler that, number one, makes them feel everything that they wanted to feel. And sometimes that’s not very tangible. You have to you have to recognize and understand the cues that the traveler is giving you. And number two, then they take it back and share it with many people and become loyal to what you provided to them. I think for our property and for our brand Grand America Hotels and Resorts, we really stand out in transformative spaces, beautiful, elegant, indulgent areas for people to feel like they belong. And when they walk in, they’ve arrived to the Westgate Hotel, to the Palace of Versailles. And, wow, there’s where else can I get this experience in the United States? And then we really take pride in the experiences that we offer, whether it’s afternoon tea in the lobby or our state-of-the-art fitness facility where you can go to sound baths, experiences at the end of the evening or yoga in the morning. And so I think it’s important to again, know what you provide to that traveler and then really make sure that you tell that story fully and appeal to those benefits of the person that is going to choose your brand and deliver. Once they do come to you, make sure you deliver and you listen and pay attention to what they need from you. And if you’re hitting the mark or you need to make a little tweak.

Robin Trimingham: I think that’s really good advice that a boutique hotelier listening anywhere in the world could really take advantage of. And that’s what this podcast is all about. It’s about sharing ideas and helping each other grow stronger together. In your opinion, how viable is it for urban hotels to attract leisure travelers to make up for missing business travel? Is that a strategy that really works?

Annie Fitzgerald: The business travel will always be that cream of the crop. It’s so important as a layer of your business in the hotel. With that being said, never underestimate the power of the leisure traveler, especially as the generations are growing and I really embrace Gen Z and their appetite and desire to travel and experience and know what the world looks like. And so I, I do believe that leisure is really important layer of the cake. I can’t say it’s a replacement for business necessarily, business travel or corporate travel. Business and corporate travel, when the company is sending someone out to conduct business, it just adds such an important layer to hotels, from the amenities throughout the property to the guestroom, and we would like to see it come back stronger. We’d like to see people traveling.

Robin Trimingham: I think you’re making a good point when you bring up Gen Z, because my understanding is they live differently than previous generations. A lot of them are choosing to live in smaller dwellings or condos. A lot of them are choosing to rent long term, as opposed to buying into the idea that, “oh, you have to buy a house right away”. And I think their idea of what to do with their free time is quite different, because they’re more mobile, they’re less tied down in the ways that the traditional old school family with the two car garage and the three-bedroom house. They’re really tied to that. It’s much easier for these younger people, I think, to just pick up and say, “hey, let’s go work a day in the city” and “hey, we’ll spend the weekend”.

Annie Fitzgerald: Absolutely true. I have a beautiful bonus daughter that’s 25, and she just came to visit us last weekend. Voracious appetite to travel Asia, Central America, across the United States. And everywhere she goes, she has these amazing experiences she shares with me, and she’s planning the next trip. She’s going to make it happen. And I have to be so excited and reflective that this is a time in her life to take that opportunity and really embrace that Gen Z traveler when they’re also choosing our property. We can offer so much to them, especially again, I’ll go back to our European-style hotel. This idea of a dupe vacation. They don’t have to get on a plane and travel to France to go to the Palace of Versailles. They can come to San Diego and walk in our lobby and experience it, and then they may plan to go to France from there. But they got their first taste of what that might feel like and look like.

Robin Trimingham: Established in 2002, FOH is a woman-owned global food service and hospitality company that manufactures smart, savvy commercial-grade products including plateware, drinkware, flatware, hotel amenities and more. Driven by innovation, FOH is dedicated to delivering that wow experience that restaurants and hotels crave, all while maintaining a competitive price. All products are fully customizable, and many are also created using sustainable, eco-friendly materials such as straws and plates made from biodegradable paper and wood, and PVA-free drinkware. FOH has two established brands: Front of the House, focused on tabletop and buffet solutions, and Room 360, which offers hotel products. Check out their collections today at fohworldwide.com.

Robin Trimingham: Let’s change the subject a little bit here. Once upon a time, urban centers or hotels in urban centers could literally tie their forecasts to convention bookings two, three, four years out if you were in a big city. To what extent would you still say that’s the case?

Annie Fitzgerald: In the San Diego market, there’s a very strong case for that. And I think throughout the various urban centers, I think it’s important to work closely as a community to really convert those strong citywide convention bookings, because what’s good for one really is good for all when they come to your market. Um, for hoteliers, for transportation, for restaurant and nightlife. And so I think you can make a really strong case. I think it’s important to touch on that attrition and or lack thereof factor, because we do really tie that economic forecast. But it’s important that those companies really do come through and attendance is high, and air travel works out so that the attendees can come and learn and enjoy what you’re offering as the city. I think it’s an incredible opportunity for those travelers that are part of those conventions to experience different urban centers and highlight what your city does well and the hospitality that you want people to go home with. And sometimes they bring their families with them, which is important, or their partner. And so it’s incredibly important. We saw very good, a very good 2023 with convention bookings in San Diego. And 2024 will be really strong for us as well. We’re excited to see how that business comes through.

Robin Trimingham: Well, you’re making me think of another question I’d love to ask. When you’re an independent hotelier in an urban center, how important do you feel it is to get involved in working with other hoteliers to attract and secure these convention bookings? Is it important to be part be present in business organizations or the convention center working committee that’s being part being part of all of this?

Annie Fitzgerald: Robin, I think being involved is maybe a linchpin. It’s really important. It’s that cornerstone of people knowing that you are aware of what’s happening, that you can call your GM friend down the street and talk about how you can support each other with this piece of business. I really strongly believe that travelers and meeting planners, especially those savvy industry professionals, they know when they’re being welcomed with genuine and gracious hospitality and when you are working with the community and aware of what’s happening at the properties, they feel comfortable and confident to know that you’re ready to take care of their business and they’ll receive a professional experience. I think having several different opportunities of being involved, especially in San Diego, I have so much gratitude for my fellow colleagues that are the properties that they’re running, what type of business they’re taking in, and I’m consistently reminded that there’s enough piece of the pie for everyone. Everyone has an opportunity to be able to take some of that business, and it’s just it will just encourage more people to continue to come back to our beautiful city and beautiful West Gate Hotel.

Robin Trimingham: I think that’s a great way to look at the opportunity. Let’s talk about one of the challenges in some urban centers, at least with the economy being so rocky, uh, there’s been an increase in crime. How would you say things are in your area? And do you feel that hoteliers can do anything to help keep their guests safe in an urban area?

Annie Fitzgerald: I do. I will go back to when you’re welcoming your guests to your city or your hotel, you’re welcoming them into your home, and you want it to be clean and safe, and for them to leave with nothing but the highest regard for where they visited with wonderful memories. And so we do that through our people. We have a very strong people presence on our property, surrounding block, and lighting and vibrancy through how we create a sense of place. And I think our travelers are always pleasantly surprised about how easy it is to navigate, how knowledgeable. Our team members are as how to travel once they leave our property, where are they going? What’s the best streets to go on? What’s the best avenue of making sure that you do stay safe? And I think San Diego has done a very nice job working together through different coalitions or the associations to ensure that we are maintaining a safe urban center for people to come visit, and that it’s welcoming for people when they do come. It’s one of our highest priorities. I consistently say there’s no service without safety, and so we focus on that every single day to ensure that our travelers can come and leave with wonderful memories.

Robin Trimingham: Yeah, because that’s the name of the game. Speaking of creating memories, the younger travelers, the millennials, Gen Z, it’s all about experience travel, as we were alluding to earlier. How is that impacting operations at your hotel?

Annie Fitzgerald: We recognize that, and we’re excited because that is one of our core values and something that we pride ourselves on. We have such a beautiful environment that the experience comes together naturally, whether it’s we put a list together for our Gen Z traveler or any traveler of the most Instagrammable places on property, so that when they’re researching those influencers and see, “oh my goodness, this person was at the West Gate Hotel or Aqua Fitness and Wellness, I want to go there”. And then they check in and they can go there, they can post, tag, and now they’re part of that experience. As I mentioned, things like afternoon tea, where that is not an experience that’s easily obtainable in many urban centers. Or you may think you need to go experience that traditionally in Europe. And then you’re transformed in our lobby to this beautiful experience with indulgent service. And the takeaway from that Gen Z traveler is, “wow, I’ve arrived. I did afternoon tea at the West Gate Hotel”, so we love creating those experiences. Also, we do that personalized, whether it be that traveler that wants to make that memory for a special partner or a best friend, and will tailor that to them so that they take away that they felt like the most important person in the entire hotel that day.

Robin Trimingham: I love that you focus on making your experiences accessible and authentic, because one of the mistakes I think that some people make in the age of Insta moment is that they stage things that you either can’t do or can’t do, how they’re staged in the images, and then you get there looking for the blue drink with the pink hibiscus, and it’s nowhere to be found?

Annie Fitzgerald: Absolutely. And when you walk into our property, what you see is right there in front of you. You may see our first generation Steinway piano that was the fifth ever built. And it’s right there in the lobby. No stanchions, nobody telling you that you can’t look at it or take your picture by it. And that really, truly makes you feel special. And remembering that human connection of “we trust you, we want you here and we want you to indulge yourself while you’re here” is very powerful with people.

Robin Trimingham: Let’s talk about revenue, because obviously the listening audience, they’re hoteliers. So, in the age of seemingly spiraling cost, some hoteliers are simply closing force to maintain ADR. Okay. That’s one strategy. Why don’t we think of that? Is this something that you’d recommend or would you recommend focusing on RevPAR or something else? What’s the way to go here?

Annie Fitzgerald: Closing floors feels like a low-hanging fruit for some hoteliers. Let’s focus on efficiency and productivity. And if we only have to travel this much, I would go back to when you restrict something, it sometimes it can fail to thrive. So focusing on that RevPar and how to grow your RevPar and using the creativity of what is that balance of our occupancy with our ADR really look like is how you will grow what that revenue stream looks like. There’s a really loud message that you sound, that you send to your team members when they know, “Oh half the hotel is closed off now, and we’re not using that path. Well, it’s important to be smart about how you’re renting your hotel and how you’re placing guests. But again, you don’t want to restrict to hard. Things really fail to thrive when restriction comes through. You need to help things grow and focus on what that growth looks like.

Robin Trimingham: Yeah, I agree it’s very important to be really forward-thinking. How can we incorporate something new that has perceived value, but not necessarily sticker price cost.

Annie Fitzgerald: Absolutely.

Robin Trimingham: On an equal level. So Airbnb say they just bought an app that’s going to change everything. Well, more power to them. What would you say about Airbnb and short-term rentals? Are they really negatively impacting urban hoteliers? Is there a place for everybody? What’s your take on all of this?

Annie Fitzgerald: I think Camby has changed the traditional hotel, how it’s perceived. I think there’s a place for certain travelers. Honestly, when I think about Airbnb in an urban center, my number one concern comes to employees and housing more than anything. Where do employees live in the city to be able to come and work for properties easily? I also think it’s very important for people to remember that hotels are very special. How can you pick up your phone and an Airbnb in the middle of the night if you don’t feel well and there’s no one. And, at a hotel, you are going to get our amazing night auditor who is probably going to bring you a glass of water, an Advil or a fan, whatever you need, and really envelop you in feeling like “I have somebody. I have something”. Or someone to park your car. When you’re taking that Airbnb, where are you going to park your vehicle? It sounds small.

Robin Trimingham: Oh no, in a city. That’s a good question.

Annie Fitzgerald: It is. And valet parking is such a luxury where someone’s going to take care of your car. It’s in covered parking. You’re in a well-lit area. Walking to and from whatever you picked up for the day is probably going to be delivered to your room on a bell cart, and it’s just seamless. It is such an indulgent experience to be able to have the team members of a hotel welcome you and take care of you.

Robin Trimingham: It’s a luxury experience that I think everybody deserves at least once in a while, to really treat yourself and see what life can be like.

Annie Fitzgerald: Absolutely.

Robin Trimingham: So, we have a couple minutes left here. What would you say are a few of the key trends that are going to dominate the urban hotel landscape as we head into 2024?

Annie Fitzgerald: I consistently think about people are focused on wellness, Robin. I think they want to live long and be well and be healthy, especially from all that we’ve recovered from. And I see that as a very large wellness trend, whether it be what your menu looks like or, you know, sober trips, whether it’s mocktails in the bar and you’re still enjoying yourself or staying at a beautiful urban resort like ours that has Aqua Fitness and Wellness, 40,000ft² of fitness, yoga or sound baths. I think that’s a big trend that will continue forward, and I see hoteliers consistently trying to make that part of their messaging and packaging. I think that’s very important. I also think we will see that Gen Z traveler continue to create different trends, whether it be the Duke tripping or whether it be the gig tripping, going to see their favorite concert. We saw a lot of business in San Diego when Bad Bunny came to Petco or Morgan Wallen, and so I think that will continue. Of course, there’s the messaging about Taylor Swift and how she’s impacting economies or Beyoncé, and I think that’s really powerful. People want to get out and feel alive through the art or the performances that those professionals are providing to them. We may see a little bit of AI that may be more on the in my personal opinion, that may be more on the side of how hoteliers respond to guests, whether it be in reviews or how they are communicating via social media. We ask AI what we should do one day in San Diego, and then all of a sudden people are like, “oh, I want to go see the West Gate Hotel in afternoon tea. And then I’m going to go out and see downtown Little Italy”, things like that in San Diego. I think that will continue to push forward as we move into 2024.

Robin Trimingham: Well, Annie, I have to say I wish you every success as we head into the New Year, and it’s been an absolute pleasure to meet you.

Robin Trimingham: You’ve been listening to The Innovative Hotelier. Join us again soon for more up-to-the-minute insights and information specifically for the hotel and hospitality industry. You’ve been listening to the Innovative Hotelier podcast by HOTELS magazine. Join us again soon for more conversations with hospitality industry thought leaders.