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Lodging Leaders

298 Episodes

32 minutes | a day ago
302 | Value Judgment: Hotel asset pricing in COVID-19 age is different from previous recessions
{caption}Xenia Hotels & Resorts of Florida in December sold the Commonwealth Hotel in Boston’s Kenmore Square to Ohana Real Estate Investors for $113 million. That’s $23 million less than Xenia paid for the hotel four years ago. The month before, Xenia disposed another asset at a discount when it sold its Renaissance Austin Hotel to Axton Group for $70 million, which was $23 million less than its appraised value. Xenia is not the only investor to sell off assets at discounted prices. Many assets that traded in 2020 saw their market valuation decline amid the pandemic recession.{/caption} Investors’ pre-COVID strategies ‘should radically change’ as pandemic drags on, says analyst HVS, a hotel appraiser and broker, has assessed the market values of more than a thousand hotels since the start of the coronavirus pandemic a year ago. In that mix are 140 properties that HVS has tracked since 2017. The company reported in November the subset has lost 24 percent of its pre-COVID value, falling from $6.6 billion to $5 billion. All is not lost, however. HVS notes it re-assessed the hotels’ values at the low point of the COVID-19 cycle and it expects the assets will eventually regain their pre-pandemic values. Rod Clough, partner and president of the Americas at HVS, recalled that a year ago hotel businesses were charting years of strong performance with high occupancy levels and stable average rate. Investors viewed hotels as a good place to park their money. “At the beginning of 2020 there weren’t alarm bells going off, like this is about to end,” he said. The hotel transaction environment was “frothy.” “There were plenty of buyers and not enough sellers. So sellers who did bring their hotels to the market were really able to obtain a lot of good offers. They were able to pick not always the highest price [but] they picked the best price that would get them to closing.” READ: READ THE REPORT: Rod Clough, partner and president of the Americas at HVS, co-authored a Nov. 5 report, “COVID-19’s Impact on Values,” that looks at the variations in the value of hotels. Nearly a year into the coronavirus pandemic and the subsequent economic recession, hotel valuation is a mixed bag. Not every hotel has seen its market value eroded. “What we’ve seen is this incredible range,” Clough said. For example, some budget-priced extended-stay hotels have seen average daily rate decline by only 5 percent and occupancy hasn’t declined at all. “So those values, we haven’t really seen a decline because a buyer would anticipate having a recovery in that rate in the coming year,” Clough said. “And if they’re buying the asset off of the next five to 10 years’ worth of cash flow, and you have a fully recovered cash flow, then asset values in part of that sector, aren’t declining. “On the flip side, there are some assets where we’ve seen that the blow to NOI be so significant and the outlook for recovery might not be for another two to four years, in some cases maybe longer than that. For those assets, if the owner isn’t able to hold and keep their asset through the downturn, then that’s where you see the asset’s value declining pretty significantly.” {caption}VALUE CHANGE: HVS research reports: “By chain scale, all tiers have been affected when reviewing the data on a weighted average basis, but the weighted percentage decline has been less so in the lower three tiers versus the higher three tiers. This is to be expected, as these tiers rely less on group and convention demand and are also less reliant on high-volume, corporate-account travel.” Read the entire report, “COVID-19’s Impact on Values” here.{/caption} Any hotel’s market value depends on the asset type and its location. Clough pointed to Sunstone Hotel Investors’ sale of the Renaissance Los Angeles Airport Hotel in December for $91.5 million or $182,300 per room. Its capitalization rate of 6.8 percent was based on 2019 net operating income – 2020 performance is an aberration. “That’s a very strong cap rate,” Clough said, adding the buyer obviously viewed the deal as a smart move because it could not build a new 500-room full-service upscale asset at that price. “There are still buyers out there for those types of assets,” he said, noting buyers of airport hotels like the Renaissance LAX usually have a long-term investment view that even if it takes a hotel three years to recover to 2019 performance there is no competitive threat now nor in the future. “There are markets like LAX, markets around the country that are highly sought after and so those values may not have declined much at all,” Clough said. “Then there are other markets where maybe the buyers aren’t as frothy and there’s just not as much interest in the market. Maybe the risk profile is too high. And so for those hotels, we have seen some assets decline in value, pretty significantly.” {caption}GOOD DEAL: Sunstone Hotel Investors in December sold the 500-room Renaissance Los Angeles Airport Hotel for $91.5 million with a capitalization rate of 6.8 percent, a good return amid the pandemic recession, say analysts.{/caption} Hotel Values Static Early in the coronavirus pandemic, Long Live Lodging interviewed Daniel Lesser, president and CEO at LW Hospitality Advisors, who said it was too early to determine how significantly the crisis would affect hotel values. We got back with Lesser this month to find out what he thinks now. “You know, it’s interesting, many folks have asked about, well, how has valuation changed compared to pre-COVID? The reality is it hasn’t changed at all.” LISTEN: GET CAUGHT UP: Lodging Leaders’ previous podcasts reporting on the pandemic recession’s impact on hotel values and transactions include: Episode 261 – Let’s Make a Deal: Coronavirus crisis alters hotel transaction landscape Episode 268 – Peaks and Valleys: COVID-19 crisis cuts hotels values and creates opportunity Episode 281 – Rescue Capital: Hotel financiers seek opportunities to invest in distressed assets Hotels are income-producing real estate, Lesser said. And post-pandemic, lodging will recover with gusto. That outlook is the true value hotels bring to investors these days. “It always was; and still is today; probably always will be in the future [about] cash flow, cash flow and more cash flow,” Lesser said. “Obviously today there’s not a whole lot of cash flow. “Assets are being underwritten by very smart, sophisticated investors who know and understand the space is very akin to looking at a brand new hotel that’s opening up for the first time.” Whether a hotel has been open and operating at low occupancy or it has been closed, when the pandemic is past, business will return to January 2020 levels, Lesser said. Transient demand will revive and ADR will increase with it. Lesser advises owners against selling their hotels if they don’t have to. Still, he expects a significant number of hotels to come to market in the first half of this year. Looking at the pace and volume of the sale of hotels priced more than $10 million, Lesser sees the transaction market getting active. In the second quarter of 2020, just six hotels changed hands. The number of transactions increased in each subsequent quarter – 12 in the third quarter and 32 in the fourth quarter. “So the point is that as time is going on, we’re definitely seeing the transaction market heating up. And it’s only going to continue for each of the next couple of quarters,” Lesser said. “There is really little question about that.” LISTEN: VALUE JUDGMENT: Hotel appraisers and brokers expect distressed assets to come to market as the pandemic recession continues into 2021. But commercial asset pricing in COVID-19 age is different from previous recessions, say analysts featured in Episode 302 of Lodging Leaders podcast. Lesser said there will be some distressed sales taking place this year. But, for the most part, selling a distressed asset in a pandemic is not the same as a buying mortgage that’s in distress because of poor management. “One of the key decisions is maximizing proceeds,” he said. “Obviously, sellers want to maximize the amount that they can achieve for their assets. And so there are going to be a number of questions that are going to need to be dealt with.” Timing is key, Lesser said. “Is this really the right time to be selling an asset? I think in the not too distant future it will be a very compelling story for assets that have gotten beaten down because of the pandemic but are fundamentally good properties with very good locations that have good stories behind them. “There’s so much money on the sidelines looking for these kinds of opportunities that I trust that over time we will definitely see those shortages of distressed transactions. But because of all the money out there, the compelling opportunities will get bid up. And while a transaction may be distressed, it will not necessarily reflect distress pricing.” Cap Rates Stagnant John Chang is senior vice president and national director at Marcus & Millichap Research Services. The real estate broker and investment firm is very active in the hotel sector, selling more properties than any other real estate company. Chang said although the hotel industry’s business performance was healthy pre-pandemic, hotel capitalization rates were relatively stagnant. “Prior to the pandemic, hotels were selling at some of the highest prices on record. Good full-service hotels were trading in the $230,000 per door range and limited-service hotels were trading in the $90,000 per door range. The prices were high but this was really tied to the operational metrics. Occupancy levels, ADR and RevPAR were all at or near record levels, and that drove values. Cap rates really hadn’t moved that much. They were still in that 7 percent to 10 percent range, depending on the asset, the tier of service, their flag, their location, et cetera. So the values were really being driven by demand from tourism and business travel for hotel space. And that was supporting the underlying values.” {caption}UPS AND DOWNS: Marcus & Millichap charts the sales volumes over the past 16 years, including the Great Recession in 2008. The commercial real estate firm expects the hotel industry will begin to recover this year and the volume of sales will follow pace as it has in previous downturns.{/caption} Long Live Lodging asked Chang to explain why a capitalization rate behaves the way it does. “A cap rate is simply a matter of yield on a property. At a 7 percent cap rate, you’d get a 7 percent return on your money. So the returns that investors are looking for on the hotel properties really didn’t change that much. But because the underlying revenues changed so dramatically, it really affected the valuations of those hotel properties.” The higher the cap rate, the greater risk for investors. And Chang has seen cap rates increase since the onset of the coronavirus pandemic. The trend makes for interesting price negotiations. “The cap rate represents how much risk the buyer’s willing to take and how much the seller is willing to let it go for,” Chang said. “Some properties, of course, are trading at a much higher cap rate if they’re in distress; they have some problems. They need some work on them if they weren’t cared for; if the owner didn’t have enough capital to support that property. [But] some are still trading at relatively low cap rates because those properties have performed better than others during the downturn.” Many hotel owners have sought forbearance from banks on mortgage payments and most franchisers have deferred fee payments during the coronavirus crisis. But the temporary hold on payments cannot last forever and investors may be forced to unload properties to settle those accounts. “If they decide to sell the property then they’re going to need to cover those expenses, those deferrals,” Chang said. “Whether that deferral is from the franchise, whether that deferral is from the bank. They’re going to have to cover those expenses and bring it current in the process of selling their property. Of course, that’s always going to depend on the individual agreements that have been made, but just as a general rule of thumb they’re going to have to bring their accounts current when they sell the property. And so that’s going to take some of the income from the sale out of the deal.” Chang said many owners and investors are preparing to sell their properties. The reasons to go to market are varied. Some are selling in an effort to get out from under a distressed mortgage. Most hope to at least “break even against their debt,” he said. “They’re OK with that in certain situations. It just really depends on the situation. “The owners who are going to be selling are owners who were not able to get a deferment from their bank. Maybe they had a CMBS loan and they just really haven’t had any ability to work with the lender to set up some sort of a deferment. “There are also investors who simply need liquidity. Maybe they are selling one property in order to build up a cash reserve to support other investments that they have. “And then there are investors who are simply deciding to cut bait because they could take the loss on the sales price or they can try to carry the asset until the market revives, but they don’t know how long that will be. So they may do the math and say, ‘Well, you know, my burn rate is this and I can still get 50 to 80 percent of the original value of this property. So I’ll take my loss in the sale rather than in the burn rate for an unknown of length of time.” Question of Financing Clough of HVS expects the sales market to soon start churning as long as the financing is available and the two sides can negotiate a realistic outcome. “There are so many opportunistic buyers out there right now wanting to pick up assets,” he said. “I think more and more buyers that are able to come to the table with financing in place is going to be key. “There always needs to be that meeting of the minds where sellers are maybe able to come off of the price 15, 20 or 25 percent of what their market value was in 2019. And buyers are able to come in with enough financing to make that happen. That’s what we need to have assets start trading. “If sellers stay resistant and thinking that their assets are worth what they were worth in 2019, they’re going to need to wait until that NOI recovers,” Clough said. “We do think assets will again be worth what they were in 2019, for sure, but in the moment if trades are going to happen then sellers have to be willing to come off of that a little bit.” While there may be a lot of dry powder in some private equity kegs, prospective investors will have to seek debt financing to complete the deals. “Another big component of it is can you even get financing to pick up one of these hotels? So that’s the big limiting factor,” Clough said. Joseph Yi is chief financial officer at Real Hospitality Group, a third-party manager that also deals with acquisitions, development and the investment process. He watched as lenders closed their doors for the first few months of the coronavirus pandemic. “Somewhere about between March and let’s say June lenders were very far in between,” he said. As with the previous recession, lenders who were making loans were working with investors with whom they had relationships. “These were generally smaller regional banks or commercial banks that are lending to best-in-class clients just to preserve that relationship. “But off the street, you’re not getting good financing in the market. That market has opened up from July to October with just a handful of players. Primarily, debt funds are filling the void,” Yi said. Private equity or hedge fund groups that have a lot of capital and depth can buy into the hotel sector, but those loans are more expensive than conventional lenders. Yi estimates the interest on private money is around 6 percent to 8 percent above LIBOR, which is below one half of a percent at this time. Loans for new construction are hard to come by, said Yi, noting they’re usually the last part of any economic recovery. CMBS is another story. Yi said about a third of Real Hospitality Group’s portfolio is tied to CMBS debt. CMBS debt pricing relies heavily on trailing 12 month revenue to underwrite the loan. “The trailing 12 revenue is incredibly weak. It’s almost negligible. That part of our financing market has completely, of course, now disappeared,” Yi said. For this year, only about 70 percent of the lending market will be available. And many of those lenders have not yet returned. “They’re looking to get a little bit closer to the light at the end of the tunnel, before they will finance,” Yi said. “But the financing that are available happened on deals where the lenders have very good confidence that the collateral or the value of the property before COVID is well above what they’re lending to. So if the discount to the acquisition is 30 percent, if you will, lenders, while they’re not seeing cash flow to support the debt, with the proper insurance and interest reserve, they have been lending.” {caption}Hotel Investment Outlook: Joe Delli Santi of MCR Hotels was a panelist during a Dec. 11 webcast organized by Marcus & Millichap titled “2021 Hospitality Investment Outlook.” John Chang of Marcus & Millichap moderated the discussion. View the webcast via this link.{/caption} Rethink Investment Strategy Overall, any hotel owner or investment group considering whether to sell or buy in 2021 should consider several key elements, said Chang of Marcus & Millichap. “Owners of every commercial real property type should be taking this time to reevaluate their strategy – their investment strategies and their portfolio – and determine which assets are still going to represent value for them going forward and which ones are maybe not the best to hold.” The coronavirus pandemic has changed America, Chang said. “There have been a lot of structural changes to society as a by-product of the pandemic. So we’re advising investors to take this time – now that the dust is starting to settle; now that we have at least a limited ability to see forward into the future – to sit down and re-imagine your investment strategy for your real estate. Because your plans from two years ago should be radically changed. Those things that don’t make sense anymore? You should get rid of them. You can allocate those resources into something that has a stronger growth outlook.” Resources and Links Download the full transcript for episode 302 Rod Clough at HVS John Chang at Marcus & Millichap Daniel Lesser at LW Hospitality Advisors Joseph Yi at Real Hospitality Group
34 minutes | 8 days ago
301 | The Road Warrior Ahead: Business travel will come back ‘with a vengeance,’ say experts
{caption}The Global Business Travel Association, industry analysts and travel management companies see some green shoots of hope for corporate travel in 2021 as the COVID-19 vaccine rolls out and companies begin to put some of their people on the road again.{/caption} Industry analysts expect it to take about three years for corporate travel to get back to pre-pandemic levels Pre-pandemic, global business travel was a $1.4 trillion industry. Since the novel coronavirus began its sweep around the world in January 2020, $113 billion in business travel spend has been lost and more than 200 million jobs have disappeared. Though no one in the U.S. hospitality industry can accurately predict when business travel will return, those who keep an eye on corporate travel trends are seeing some green shoots of hope in 2021 as the COVID-19 vaccine rolls out and companies put some of their people on the road again. Chris Nassetta, president and CEO at Hilton, said during Yahoo Finance’s All Markets Summit in October he fully expects travel to begin a rebound this year, and he made a special point of including business travelers in the mix of pent-up demand. Business people like to travel, too, he said. Nassetta echoes the expectations of other industry leaders and analysts who have tracked the impact the coronavirus pandemic has had and is having on the U.S. economy and corporate travel. Included in that camp is Lisa Censullo, executive vice president at Global Business Travel Association. “We are seeing some optimism for business travel in 2021, especially toward the middle to the end of the year,” she said. {caption}The Global Business Travel Association’s Dec. 17 survey of 16,200 members across 760 companies shows most respondents believe the successful implementation of a COVID-19 vaccine program is key to restoring corporate travel programs.{/caption} “We think that as the vaccine rolls out and gains momentum, and if we see a corresponding drop in positive COVID test results, the survey that we have suggests that a return to personal connections and in-person meetings will happen sometime in 2021,” Censullo said. “Right now, we see a halt in business travel, but we know it will recover. The industry is resilient and it typically comes back with a vengeance. If we look at some of the past experiences and downturns, it typically takes about three years to fully recover. And that’s what C-suites are predicting at this point.” Black Swan Event Although the U.S. hotel industry in late 2019 was braced for lackluster business performance in 2020, most analysts expected corporate travel to continue at a healthy clip. In fact, the only thing that would dramatically curb the pace of business travel would be an unexpected catastrophe. Bram Gallagher, an economist and senior research analyst at CBRE Hotels, recalls discussing the outlook for the hotel industry with colleagues. “In 2019, we were agonizing in our forecasts over tenths of a percent of growth year over year.  We would have long meetings where we would argue seemingly the very small points,” recalled Gallagher. He said Jack Corgel, an adviser to CBRE and director of graduate studies at the Baker Program in Real Estate at the Cornell University School of Hotel Administration, said in fall 2019 that he did not foresee a huge downturn in the U.S. economy. “He said we didn’t have a seeming asset bubble. We didn’t have balance-sheet problems. We didn’t have sort of any kind of looming imbalances about to hit the economy,” Gallagher said. “Really, the only risk that he could see would be these black-swan events. And, well, he was right. “It was really going pretty swimmingly until COVID came along and had its dramatic unprecedented effect on the lodging industry. We’ve never seen anything like it. And Robert Mandelbaum (director of research information services at CBRE), he’s got data that goes back to the ’30s and, and we’ve never seen anything like this.” Gallagher said though he and his colleagues at CBRE anticipated some form of a downturn in performance in lodging and maybe even a bit of a crisis, never in a million years did they imagine something on the scale of what is happening with the coronavirus pandemic. “All types of travel were really cut down very, very sharply,” he said. In the second quarter of 2020, hotel occupancies fell as much as 80 percent to 90 percent lower than Q2 2019. The higher the price tier a hotel, the harder it was hit. Properties that depended on business and group travel have been devastated. “So, while we have seen some recovery in some of the segments, we haven’t seen really any recovery at all from the depths of that collapsed in quarter two. We haven’t really seen any of that come back in business or group travel in a meaningful way,” Gallagher said. {caption}CBRE Hotels Research in late December provided its forecast of U.S. hotel business performance in 2021 through 2024, when average RevPAR is expected to surpass 2019 levels.{/caption} Hotels Encourage Travel In gauging the state of corporate travel and separate it from leisure travel, CBRE looks at the various booking channels. Leisure bookings are typically made on Brand.com, OTAs or property direct while business and group reservations dominate global distribution service or GDS. Leisure bookings are 60 percent to 70 percent where they were in 2019, Gallagher said. But business travel has a steeper climb back. “That global distribution service, that group travel channel, those declined to less than 80 percent of their 2019 levels and are still down about 80 percent year over year from their 2019 levels. So what that suggests to us is that the recovery that we’ve seen as such as it is, it hasn’t been an incredibly fast recovery and we certainly aren’t anywhere near where we were in 2019.” One trend altering the outlook for business travel in the COVID-19 is growth in the number of people who are working from home and connecting with colleagues and clients on virtual platforms. Gallagher does not see an end to the practice anytime soon but he does share Nassetta’s prediction that the desire and the need to meet face-to-face will revive business travel this year. “Regardless of whether we are working from home or working from the office, that face-to-face collaboration is still going to be just as important as it ever was,” he said. “And if we do have less office capacity, where are we going to be doing those meetings? Hotels are really well-poised to provide those types of accommodations to meetings that we’re going to need. “I’m very bullish on travel regardless of where we’re working. If anything, the personal meetings, the group conferences, those are going to be even more important as we go forward. To share the ideas; to get that personal time. That is valuable. The future of hotels looks bright in my eyes.” {caption}In a recent report, The State of Corporate Travel and Expense 2021: The Path to Recovery, TripActions and Skift surveyed business travelers and corporate travel managers to gauge the sentiment around business travel for 2021. As the left chart shows, more than half of the several hundred people who responded to the survey are reluctant to travel during the coronavirus pandemic. Meanwhile, the right chart shows the majority of respondents believe business travel is essential to their business.{/caption} Who’s Traveling Today TripActions is an online travel manager with more than 4,000 businesses as clients, including large corporations such as Netflix. Meagen Eisenberg, chief marketing officer, said the company is seeing an interesting change in who is traveling for business these days. “We certainly in March saw a significant decrease in travel, a 95-percent drop in bookings. But since then, we’re at about 20 percent levels on average. We’re seeing, three to five percent week-over-week growth. “We’re seeing a large increase in health care, pharmaceuticals and biotech – which makes a lot of sense.” TripActions is also tracking a surge in travelers in manufacturing, business services and retail. “Just to give you an example, in the health care-pharmaceutical-biotech sector, it’s a dramatic increase, with a peak in May at a share of 21 percent of our overall bookings. With health care being at 15 percent last year, it’s a 13-percentage-point increase year over year just in that sector.” Most of these sectors are traveling out of necessity, Eisenberg said. That includes retail execs who need to check their stores and oversee local marketing efforts as well as shipping programs. As pharmaceutical companies work with public health agencies to roll out the COVID-19 vaccine, Eisenberg expects to see a parallel resurgence in business travel. TripActions is beginning to hear from travel managers looking ahead at domestic travel. “We think we’ll hit 50 percent levels in Q2 compared to 2020,” she said. “I think a mainstream vaccine will be out there to everyone that wants it by April. And we’ll see 75 percent levels by the end of the year.” Business travel might look different this year, Eisenberg said, but it will return because our economy depends on travel. She cites a 2009 Oxford Economics study done for the U.S. Travel Association that said for every dollar spent on business travel, companies realize $12.50 in incremental revenue. “From a business standpoint, it’s hard to sell a million-dollar deal over a phone,” she said. “We also think as as your competitors are out there traveling, if you start to lose business or a deal to a competitor that goes in person, you’re going to accelerate your in-person relationships and travel to maintain your customers and to capture new customers. So I think it’s going to be a competitive advantage if you’re back out on the road.” Three-Year Comeback Censullo of the Global Business Travel Association, said worldwide business travel is a $1.4 trillion industry. GBTA members are business-travel professionals who control more than $345 billion in business travel and meeting expenditures. To keep a handle on the state of business travel both now and in the near future, GBTA surveys its members about once a month. The latest poll taken in mid-December shows business travel around the world is at a standstill. “According to our members, 90 percent have suspended or canceled all business travel regardless of location,” Censullo said. “GBTA estimates that the potential monthly revenue loss is approximately $113 billion in business travel spend. So it’s having a very big impact on our economy. “With job losses for 2020 projected at nearly 200 million, the business travel industry has been devastated by the pandemic and is one of the hardest-hit areas.” {caption}A Dec. 17 survey of 760 companies by Global Business Travel Association shows how drastically respondents pulled back on trips in 2020. It also shows about a quarter of the companies expect to get employees back on the road in the next few months.{/caption} Though Censullo echoes others interviewed for this report on the comeback of business travel, GBTA expects it will take two to three years to return to pre-pandemic levels. “If we look at history, when 9-11 happened in 2001, the global business travel spend fell about 11 percent from the prior year, and it wasn’t until 2004 that business travel spend actually reached 2001 levels,” she said. “During the financial crisis or collapse in 2008, global business travel spend declined about seven and a half percent and didn’t return to previous levels until about 2011. “So three years seems to be the typical amount of time it takes for business travel to regain its previous levels. “Although we have seen some green shoots of recovery, especially in domestic travel, we have interviewed many GBTA members, industry CEOs, and from feedback from our polls, everyone is in agreement that leisure travel will recover first followed by business travel domestically and then internationally.” Resources and Links Download the full transcript for episode 301 Lisa Censullo of Global Business Travel Association Bram Gallagher of CBRE Hotels Meagen Eisenberg of TripActions What’s Your Story? Download the transcript for Stuck at the Moxy April Largent of Moxy Nashville Downtown Brendan Klemensic of Moxy Nashville Downtown
54 minutes | 15 days ago
300 | 2020 Hindsight: Lodging Leaders reviews hot topics, gives sneak peek of what’s ahead
{caption}Co-founders of Long Live Lodging, an online multimedia news organization that covers the hospitality industry, gathered in March 2019 in Atlanta, Georgia, for a group shot a few months after agreeing to develop the new venture. They are, from left, Anand Patel, director of operations; Jon Albano, founder and co-host of Lodging Leaders podcast and director of production; Judy Maxwell, director of editorial and co-host of Lodging Leaders; and Neha Patel, director of marketing. The Patels also own and operate Myriann.com, which develops and manages Long Live Lodging’s website.{/caption} Long Live Lodging, multimedia storytelling for the new age of hospitality, carves a niche with innovative programming Jon Albano founded Lodging Leaders podcast more than five years ago to spotlight hospitality industry experts and influencers. Today, the podcast marks its 300th episode. It’s apropos that the news organization reaches the milestone at the dawn of 2021, given the historic newsworthiness of 2020. Lodging Leaders podcast is part of Long Live Lodging, an online multimedia news organization that covers the hospitality industry. The company officially launched in September 2019. Its main focus in 2020 was how the coronavirus crisis impacted the hospitality industry. And it continues to cover how the course of the pandemic has altered hotel businesses. Access our complete coronavirus coverage here. COVID-19 emerged as a health and economic doubleheader in March and the impact on lodging was swift and devastating. Beginning, March 16, the team has produced nearly 40 reports that explored myriad trends and issues brought about by the pandemic and the ensuing downturn in business at most of the nation’s 57,000 hotels. The World Health Organization declared the novel coronavirus a global health pandemic on March 11. On Friday, March 13, the Trump Administration declared the viral outbreak a national emergency. “That Monday is when we went to three episodes a week,” Albano said. The first report was Episode 254 “High Cancellations and Low Demand: Hotel pricing in a steep downturn. “The one that really sticks with me aired just two weeks later, Episode 260.” said Judy Maxwell, co-founder, editorial director and podcast co-host. “That’s when industry analysts, including Jan Freitag with a STR expressed shock over the deep downturn in business.” Here’s an excerpt from Freitag’s recorded presentation via STR’s platform and featured in the episode titled Startling Statistics: Industry analysts stunned at depth of downturn. Freitag: “So the week ending March 21st, RevPAR declined 69.5 percent. It’s the steepest weekly RevPAR decline we have ever recorded ever in our 30-year history.” He went on to say analysts at STR expected business performance to get worse. “This has been the third week of consecutive, double-digit RevPAR decline, but the data accelerated and got worse over time. We have never reported 15 percent occupancy for the week. We fully expect the data next week to be actually worse than the minus 70 percent RevPAR decline that we reported today.” Included in Episode 260 was Jamie Lane, who at the time was an economist with CBRE Hotels Research. Here is what he said: “As an economist, we look to the past to inform the future. This event, this pandemic, really breaks all our models, and the expectation for the year ahead is significantly worse than both 9-11 and the great financial crisis combined in terms of how it’s going to hit the hospitality sector both in the U.S. and around the world.” Racism Revealed As hotels, bars and restaurants and the travel industry as a whole watched business disappear and millions of people were laid off, the pandemic was the backdrop to the May 25th death of George Floyd, a Black man killed by police in Minneapolis. “You think something like that, ‘What does that have to do with the hospitality industry?” Maxwell said. “Well, of course it rattled America from coast to coast. It brought a reckoning of systemic racism and it shocked the whole country as well as the hospitality industry out of this complacency that we all had. We thought we were dealing with racism. From my point of view, a white middle-aged woman, ‘Oh, I thought we’re getting better at this.’ And this showed me personally that we are so not getting better at it. We weren’t making any progress whatsoever. “The one thing that really hit me was at the hotel companies and anybody associated with hotels as far as business, whether it was vendors or suppliers or whatever, they were scrambling with messaging that supported their ongoing as well as their renewed efforts to make diversity inclusion and equality part of their best practices. “But so many folks in the industry said they were just platitudes and they’re not enough, especially when you look at the company’s track records.” A little more than a month later, a report by Castell Project revealed how hotel companies lack progress in promoting Black men and women to leadership roles. Episode 276, titled “Measured Response: Hotel industry hires for diversity but fails with inclusion” aired on July 1. Peggy Berg, founder and president of Castell Project is featured. {caption}MEASURED RESPONSE: Shortly after the police killing of George Floyd on May 25, Peggy Berg of Castell Project published a report, “Black Representation in Hospitality Industry Leadership 2020” that showed how hospitality companies’ efforts at diversity and inclusion are failing to move the needle in promoting Black men and women to leadership roles. The report can be found along with other Castell Project research on women in hospitality leadership on this link.{/caption} Albano narrates this episode. In introducing Berg’s study, titled Black Representation in Hospitality Industry Leadership 2020, he says this: “Of 630 hotel companies’ websites, 84 percent or 529 companies have no Blacks in executive positions; 102 company websites show Black employees as directors and above; and Black executives represent just 1.5 percent of hospitality industry executives at the director level or above. That is 12.5 times below Blacks’ proportionate share of hospitality industry employment. “Berg writes these statistics could ‘only occur in an industry that is structurally biased against them.’ We ask Berg to elaborate what she means by that statement.” Peggy Berg: “I think all of us in the industry walk through our properties and go to our meetings and know that there’s an issue here, that we’re not permitting black people to move up in our industry. But until you actually count it, you don’t know, you don’t really know. “And I was honestly shocked when I saw these numbers. Because it’s one of those things that you know in the back of your mind, but when you actually see the numbers, it’s suddenly real. And the numbers are dramatic enough that it can’t be just them, and it can’t be just the school system. It has to be us, too.” The report can be found along with other Castell Project research on women in hospitality leadership via this link. This episode featuring Berg and the report garnered more downloads than usual. But the podcast report that resulted in the second-highest number of downloads in 2020 is Episode 279, Inclusion is a Unicorn Part 2: ‘We are actually doing badly.’ {caption}BIG RESPONSE: Next Generation in Lodging’s panel discussion Episode 279, Inclusion is a Unicorn Part 2: ‘We are actually doing badly,” generated Lodging Leaders podcast’s second-highest number of downloads in 2020.{/caption} This podcast was organized by Next Generation in Lodging, a newly formed group of mid-career hospitality professionals. Co-founders of NGIL, participated in a Lodging Leaders’ podcast that launched on June 24: Episode 275, ‘Inclusion is a Myth’: Next Generation in Lodging challenges industry’s status quo on race and diversity. The podcast reported on NGIL’s live Zoom webcast about diversity and inclusion being hacked on June 12 by suspected white supremacists. It was the second webcast NGIL held to address diversity, inclusion and equality in the hospitality industry. Its first program took place on June 5. You can view it here. Five weeks after the disrupted program, NGIL repeated the webcast on Long Live Lodging’s platform. “They were really quite dismayed and very fearful to try and do it again,” Maxwell said about the Zoom-bombing of the webcast. “So we reached out to them and said, ‘Hey, how would you guys like to come on to our platform and have this panel discussion again, but not live recorded so it’s more secure, and then we’ll air it?’ And so that’s what they did. Everybody came back on and started all over again with the conversation and a little bit more aware of the state of things.” Ashli Johnson, who was then assistant dean at University of Houston’s Conrad N. Hilton College of Hotel & Restaurant Management in San Antonio, Texas, is the panel moderator. Here is what she had to say about the lack of progress in inclusion in the hospitality industry: “I think at the end of the day, change is much easier to talk about than actually implement. And this concept of inclusion being a unicorn, I really think speaks to this fairy tale, utopian environment that we think we’re living and working in and playing in. But more times than not for lots of marginalized groups of individuals, that’s just not our reality. In hospitality, we’ve been talking about inclusion for a long time, right? And somehow we’re still not there.” Franchising at the Fore Although the coronavirus crisis and racism were among the topics that dominated national news streams, including ours, Lodging Leaders podcast made its own history with a report about fair franchising. Lodging Leaders’ most-downloaded program in 2020 is Episode 265, “Franchising in Deconstruction: COVID-19 crisis amplifies problems in brand licensing.” The report launched on April 15 covered the impact of the coronavirus crisis on the franchiser-franchisee relationship. The episode’s downloads exceeded Lodging Leader’s average by 160 percent and clearly demonstrated the company’s mission to produce programs that inspire success through timely, responsible, fair and balanced reporting. The associated multimedia report can be found here. {caption}FAIR FRANCHISING: Long Live Lodging and Lodging Leaders podcast reported on the state of franchising in the beginning of 2020 and in the early days of the coronavirus pandemic. Launched on April 15, Episode 265, “Franchising in Deconstruction: COVID-19 crisis amplifies problems in brand licensing,” resulted in an all-time high in the number of downloads for Lodging Leaders.{/caption} “If you’re a franchiser and you’re hearing this for the first time, if you’re planning your recovery this year and the years ahead, you should have listened or you should listen to this episode,” Maxwell said. “Industry professionals talk a lot about a good customer experience, and they usually are talking about the hotel guests. But we all know that the franchiser’s customer is the franchisee. And we do know based on our reporting that many of these customers are incredibly dissatisfied.” Among the several interview subjects in the report is Mike Leven, co-founder of AAHOA, a former hotel franchiser and an industry icon. Here’s a bit of what he had to say about the current state of hotel franchising, in particular new-brand proliferation that encroaches on established hotels’ areas of protection, a practice Leven expects will create problems for both hotel franchising companies and owners as the industry tries to recover from the economic crisis. “Every time I read a trade publication, there’s more brands out and the brands have allowed buildings next door …. I think there’s going to be a revolution here …. I think it’s going to come to that. I think you’re going to see lawsuits. The brands are going to have to make some concessions. You just can’t keep throwing hotels up and say, ‘Well, it’s a different market when, in fact, we live in a world in hospitality now where rate transparency is obvious to everybody all the time …. So it’s a whole different world. And I think the owners are going to get dramatically hurt. The brands are going to get hurt because the occupancy is not going to be there. And then you’ve got a confluence of product improvement plans that are going to have to be delayed in order to help these people. I think these things are egregious, very egregious.” This report launched in July, but Lodging Leaders had originally planned, pre-pandemic, to produce a series of reports about the state of fair franchising that would air during March. Its kick-off report focused on Fair Franchising Initiative, a newly formed organization that held its launch conference on March 5 in New Jersey. Maxwell covered the event and it was the topic of Episode 253, which launched on March 11. Of course that was the day WHO declared the global pandemic and Long Live Lodging shifted its news-coverage strategy to focus on the health crisis and subsequent impact on the hospitality industry. Lodging Leaders this year plans to continue to cover issues related to franchising. {caption}UNDER DEVELOPMENT: Next Generation in Lodging is expected to join Long Live Lodging’s multimedia platform in 2021 with a podcast of its own. Co-founders of the organization are Davonne Reaves of The Vonne Group, a hotel consulting company in Atlanta; Omari Head, a hotel broker and director at Paramount Lodging Advisors in Washington, D.C.; and Chris Henry, co-founder and CEO of Majestic Hospitality Group in Los Angeles. They’ll bring their perspectives as millennials facing the biggest crisis of their careers.{/caption} Near-Future Plans Looking ahead, Long Live Lodging plans to expand its offerings by adding a new podcast by Next Generation in Lodging. Co-founders of the organization are Davonne Reaves of The Vonne Group, a hotel consulting company in Atlanta; Omari Head, a hotel broker and director at Paramount Lodging Advisors in Washington, D.C.; and Chris Henry, co-founder and CEO of Majestic Hospitality Group in Los Angeles. They’ll bring their perspectives as millennials facing the biggest crisis of their careers. “Some reports have called millennials the most unlucky demographic and members of the lost generation because this age group has experienced two major economic crisis, the Great Recession of 2008 and now the COVID-19 pandemic,” Maxwell said. “Co-founders of Next Generation in Lodging are in the middle of their hospitality careers. These are the 30 somethings. “They’ve tackled some controversial topics already with us, and we want to continue to dig deep into the trends and issues impacting this particular hospitality professional.” {caption}LODGINGSTREAM: A screenshot of “The Big Comeback,” one of 12 panels in Long Live Lodging’s April 30 digital conference called LodgingStream: A Brave New World. It’s believed to be the hotel industry’s first all-digital conference. The live event featured 60 panelists. The panelists pictured are from top left, Chris Henry of Majestic Hospitality; panel moderator Judy King of Quality Management Services; Chad Sorensen of CHMWarnick; Kate Burda of Kate Burda & Co.; Kale Patel of Crestpoint Cos.; Emmy Hise of STR; and Brian Waldman of Peachtree Hotel Group.{/caption} Other noteworthy events in 2020 for Long Live Lodging and Lodging Leaders podcast include the April 30 digital conference called LodgingStream: A Brave New World. It’s believed to be the hotel industry’s first all-digital conference. The four-hour event featured 12 sessions and 60 panelists. It also included a segment called “What’s Your Story?” in which hospitality folks shared their experiences of working in the trenches during the early days of the pandemic. Seven pre-recorded stories were aired at the beginning of the live conference and received high praise from virtual attendees. Their stories can be found on Long Live Lodging’s Humans of Lodging page. {caption}STORY TIME: LodgingStream digital conference featured a pre-recorded sessions called What’s Your Story? in which hospitality folks shared their experiences of working in the trenches during the early days of the pandemic. Seven pre-recorded stories were aired at the beginning of the live conference and received high praise from virtual attendees. Their stories can be found on Long Live Lodging’s Humans of Lodging page.{/caption} Award-Winning Content Long Live Lodging / Lodging Leaders podcast in 2020 garnered international recognition when Judy Maxwell, co-founder, principal and editorial director of Long Live Lodging, was recognized by Stevie Awards for Women in Business for contributing to the growth of the news organization since its official launch in September 2019. As a result, Long Live Lodging won a Bronze Stevie® Award in the Media Hero of the Year for our COVID-29 coverage and Lodging Leaders won a Bronze Stevie® Award for Podcast of the Year in the 17th annual Stevie Awards for Women in Business. Our organization placed third in both categories but it was the only U.S. company to win the awards. Contact Us In closing, Long Live Lodging / Lodging Leaders podcast has created its 2021 Media Kit, where people can learn more about us, our mission and the emerging trend of multimedia news, including podcasts. Also available in the kit is information on how to become a sponsor. Long Live Lodging has had a few paid sponsorships since it officially launched in fall 2019, but during the pandemic our team decided to cease seeking sponsors. This year, it’s back on and we’re excited to help hospitality businesses share their messaging with our followers. If you have a story you’d like to tell for What’s Your Story? or if there’s an industry trend or issue you feel we need to know about, contact us here. We really do want to hear from you. We make it a priority to respond to folks who reach out to us. Thank you to all our followers and previous sponsors for supporting our startup. We are excited for what lies ahead. Until next time, Long Live Lodging. Resources and Links Download the full transcript for episode 300 260 | Startling Statistics: Industry analysts stunned at depth of downturn 243 | Don’t Leave Me Now: How to reduce employee turnover 278 | CMBS Distress: Thousands of hotel owners seek relief from billions of dollars in debt 279 | Inclusion is a Unicorn Part 2: ‘We are actually doing badly’ 276 | A Measured Response: Hotel industry hires for diversity but fails with inclusion 265 | Franchising In Deconstruction: COVID-19 crisis amplifies problems in brand licensing LodgingStream: A Brave New World
27 minutes | 22 days ago
299 | Conserve Cash, Save the Hotel: What asset managers are doing to survive the long COVID winter
{caption}Since March 20, the early days of the coronavirus crisis, more than 1,700 hotels in the U.S. reportedly have closed, most of them temporarily. For the other 55,000 properties that have remained open, owners, operators and advisers have been decisive in implementing strategies that have cut costs and conserved cash. Long Live Lodging interviewed two asset managers who share what they’re doing to keep the industry alive as a vaccine offers hope for recovery in 2021.{/caption} With vaccine rollout amid virus surge, lodging industry positions for recovery ‘The mandate from the ownership is: “If I can lose a half a million a month being closed, I better not lose more than that by being open.” And so that sort of became a true benchmark…’ – Larry Trabulsi, CHMWarnick By mid-March Robert Cole knew the U.S. hotel industry was in for a year so “ugly” it would defy all other downturns he had witnessed in his storied career. However, at the end of the third quarter, Hospitality Ventures Management Group, the company Cole founded in 2001, announced its portfolio of 50 owned and managed hotels had outperformed the overall industry amid the coronavirus crisis. It cut operating costs by $16 a room compared to the industry average and generated a gross operating profit of nearly $10 a room over the industry norm. Cole, chief executive at HVMG, credited his company’s decisive actions in the early stages of the pandemic. He also acknowledges the crisis is far from over, especially as the rate of COVID-19 infections has surged over the past few weeks. The coronavirus crisis has tested the mettle of Cole and his cohorts, veterans of a hospitality industry that looks nothing like it did at the beginning of this year. As 2021 emerges with a vaccine and more federal relief, Long Live Lodging interviewed Cole and Larry Trabulsi, vice president of asset management at CHMWarnick, about the strategies they deployed to keep hotels open and operating over the past nine months. {caption}CONSERVE CASH, SAVE THE HOTEL: Episode 299 of Lodging Leaders podcast explores what owners, operators and asset managers are doing to survive the long COVID winter.{/caption} In the beginning “I still remember to this day, it was a Sunday night and the second week of March where we had a team meeting with my executive team and we unfortunately saw a lot of the writing on the wall,” Cole said. The HVMG team knew “this was going to be very ugly; business was going to contract in an unprecedented fashion,” he said. HVMG’s headquarters is in Atlanta, Georgia. As it strategized how to save its business, Larry Trabulsi and others at CHMWarnick, an asset manager in Beverly, Massachusetts, mobilized to advise its clients on how to navigate through the COVID-19 storm. Today, Trabulsi and his cohorts are grappling with the reality that recovery is a distant port. “I think the duration (of the crisis) is the big wild card here,” he said. Trabulsi recalls attending the Americas Lodging Investment Summit in Los Angeles in late January and hearing a little about a new viral outbreak in China. “No one really knew what it was and a few people in the airports were wearing masks, but that was about it,” he said. Some people wondered if the illness would mimic the SARS outbreak in 2010. Whatever it was, most people figured it would impact a few markets for about two months. “Fast forward to mid-March – absolute devastation,” Trabulsi said. “And even from mid-March, it was, ‘This could be a one quarter, two quarters type of downturn, but by the second half of the year, we should be trending back. And obviously that’s not where we are.” While CHMWarnick quickly created a 90-day business plan to guide its clients at the start of the crisis, HVMG leadership instituted what Cole acknowledges as draconian cost-cutting measures at the hotels it owns and manages. The first order of business? “Conserve cash,” Cole said. HVMG looked immediately to its payroll. Salaried positions at hotels were converted to hourly to give the company flexibility with labor costs as employees’ worked according to the pace of business at each hotel. Corporate executives saw their salaries reduced and the company ceased matching 401(k) contributions and stopped other benefits. HVMG is co-invested in some of the hotels in its portfolio, but for the most part it is a third-party manager of others’ assets. Cole’s team ended or renegotiated contracts with suppliers and service providers. The overall goal, he said, was to avoid bleeding out by a thousand cuts. The strategic action was decisive, swift and all-encompassing. “We felt it was in everybody’s best interest to get out in front of the curve and to get all the changes implemented in one swoop. “We focused on things that we could control,” Cole said. The first phase of survival was to do what it took to “save the patient,” he said. {caption}OCEANFRONT STRATEGY: Hospitality Ventures Management Group manages the Embassy Suites by Hilton Resort St. Augustine Beach, which opened in 2018 in St. Augustine, Florida. Pre-pandemic, the property catered to leisure guests as well as meetings and large social gatherings such as weddings. To generate revenue during the coronavirus crisis, HVMG has repositioned some of its full-service hotels to attract guests who book longer lengths of stay for staycations or to blend leisure with remote work. {/caption} Long-Term Crisis The next phase was to do what was necessary to “stabilize the patient” followed by a recovery plan. “In some cases, we’re still in phase two,” Cole said. The coronavirus continues to rage throughout the U.S. and the world, even as the release of vaccines have provided a glimpse of recovery. “I don’t think anybody anticipated that we’d be sitting here still to this day with industry occupancies almost half or in some cases more than half of what they were this time a year ago,” Cole said. {caption}PERSISTENT DOWNTURN: STR reported in early December that average hotel occupancy has decreased as the COVID-19 infection rate surged throughout the U.S.{/caption} HVMG’s first phase of business preservation lasted from mid-March to June. The next step was stabilization as the markets where its hotels are located began to see some business traction. “When I say traction, I use that on a relative term,” Cole said. “In April or May, we were running low, double-digit occupancy levels of 9, 10, 12 percent. We started seeing a pickup, especially in the leisure destinations where we were gaining occupancy and we would top 50 percent to 60 percent in the summer months.” Meanwhile, HVMG’s large, full-service properties were seeing occupancies stuck in the 20 percent to 30 percent range. “But it was certainly better than the 9 or 10 percent back in April and May.” In its second phase, HVMG remained in its cash-preservation mode. It could not compare revenue or even budget according to the previous year, but it could focus on its RevPAR index or the level of business it was doing compared to its market competitors. Group business was out. Corporate travel was practically non-existent. So HVMG shifted its marketing to attract leisure travelers and essential workers who needed long-term stay options. It invested time and energy in marketing via online travel agencies or OTAs, channels where these guests typically shop. HVMG’s portfolio is a mix of premium-branded full-service and select-service hotels, including extended-stay and all-suites. But it also has Courtyard by Marriott hotels that target business travelers. And Fairfield Inn & Suites by Marriott hotels that cater to transient guests. To attract guests who were booking longer lengths of stay, HVMG repositioned its hotels to cater to folks booking staycations or blending work and leisure time. Through digital marketing that used search engine optimization or SEO to tell a new story to prospective guests, HVMG let it be known its hotels could serve the pandemic-era guest. “From June through September, based on the latest results we have from (STR), our company ran a rolled-up 26.9 percent house profit margin versus the industry for those four months. Our expenses were about $38 per available room versus the industry of $54. We also had a gross operating profit per available room of just over $14 versus the industry average of $3.77.” Cole credited his entire team from corporate to the properties for doing what it takes to keep the hotels open and operating at higher-than-normal levels. The company has reinstituted paid time off and will soon revive its matching 401(k) benefit. In January, salaried employees who shifted to hourly pay schedules will return to their previous compensation status. The next step is to ease back into business as the nation’s pharmaceutical and health care industry rolls out the COVID-19 vaccine, which Cole and Trabulsi believe is the key to lodging’s recovery. To Close Or Not To Close At the start of the pandemic CHMWarnick created a 90-day action plan, part of which included guidance on whether to close a hotel or keep it open. “Unfortunately, as we’re seeing the number of cases rise, in some cases we’re going back and revisiting actions we did back in March April,” Trabulsi said. While HVMG worked to keep its hotels open, CHMWarnick oversaw the closure of hotels under its purview. It was not alone. Of the approximately 57,000 hotels in the U.S., a little more than 1,700 or 5 percent across the entire chain scale have closed since March 20, according to a recent report by Kalibri Labs. {caption}CLOSED HOTELS: Kalibri Labs, an analytics company that serves the hospitality industry, reports regularly on various performance metrics, including the number of hotels that have closed since March 20. Its last update was Dec. 21, when Kalibri, working with Hotel Compete, reported nearly 5 percent or 1,750 of the nation’s 57,000 hotels are closed.{/caption} CHMWarnick is an asset management company with oversight of about 70 hotels. Most of those are big-box, full-service properties in the luxury, upper-upscale and upscale segments. It has 15 convention-center hotels. CHMWarnick’s ultimate responsibility is to maximize the value of an asset for its owners or investors, who include family office, institutional investors, corporations and pension funds. As hotel management teams laid off employees because of low occupancy, Trabulsi said, the big decision that awaited owners was whether to keep the property open. “Underlying all of that was an open-close analysis of understanding, do we want to keep these hotels open? Yes or no? And that analysis involves multiple facets. Financial was certainly one part of it. We certainly had some clients who were adamant and said, ‘I don’t want to be open; I just don’t want the risk,’” he said. For the most part, decisions to shutter the assets “skewed primarily toward the financial side of understanding: ‘If we skim back the operations as much as we can, are we better off being open at say 4, 5 or 6 percent occupancy or totally closed?’ “And the results of that varied by hotel and by market, but in general, the decision skewed toward the bigger the hotel. And if it was urban, it was a tougher decision financially to stay open. And so we closed a fair amount of our convention hotels.” At one point, Trabulsi said, about a third of its 70-hotel portfolio was closed. Many of them have since reopened and those that remain closed are exploring reopening in the second quarter of next year. “But that’s fluid at this point in time,” he said. {caption}TEMPORARY HOLD: CHMWarnick, a hotel asset manager and business adviser in Beverly, Massachusetts, features on its website as case study involving the Hotel Commonwealth in Boston. The full-service hotel, owned by Boston University, is closed because of the coronavirus pandemic. The messaging on the hotel’s website indicates it plans to reopen in late March.{/caption} When it comes to deciding whether to close a hotel, there are several factors to consider. Trabulsi advises owners and operators identify the business’s fixed costs such as minimal payroll, taxes, insurance and debt payments. Then determine how much revenue the property can generate to keep operating – know your break-even costs. “For one hotel, which would be closed and then reopened, we know our rock bottom is minus $500,000 a month. And so the mandate from the ownership is: ‘If I can lose a half a million a month being closed, I better not lose more than that by being open.’ And so that sort of became a true benchmark, something we monitor on a weekly and monthly basis.” On its website CHMWarnick notes it can help hotel owners with several issues related to the coronavirus crisis. Those include navigating new brand standards, negotiating with franchisers over fees and fee deferments and helping owners work through debt payment deferrals with lenders. After helping owners and managers execute on cash-savings strategies, the company discussed fee reductions or deferrals with third-party managers and the brands. Of particular concern was identifying shared services provided by the brands and the costs associated with those. Hotel franchisers provide a menu of services to franchisees, including sales, marketing, property management, customer relationship management and revenue management programs. But most of the franchisers cut their own workforces at the start of pandemic. Therefore their support for owners was significantly reduced. “We’ve seen probably pretty meaningful reductions in above-property, shared-service expenses for a lot of our hotels, particularly the brand managed side,” he said. Dealing with lenders is the third prong in CHMWarnick’s crisis management program. Though most lenders were willing to defer mortgage payments for two to three months, the pandemic’s longevity has challenged that decision. “When everyone thought this would be much further behind us that was a good decision,” Trabulsi said. “It bought you time, it minimized your cash burn for six or seven months. But, unfortunately, the money is running out in a couple of cases for hotels. Now they’ve got to go back and renegotiate with the lenders.” Many franchisors waived the required FF&E reserves, which freed up cash for owners to pay lenders. From its unique perch as an asset manager, CHMWarnick can chart the impact the coronavirus pandemic and the subsequent business downturn has had on hotel values. “We’ve seen a significant loss of value for clients who get their assets of value appraised every year,” Trabulsi said. “For other clients who are long-term owners, it’s just about riding out the storm, and trying to put together a plan in place to make sure we’ve got enough cash to get through, say 2022 or for as long a period as possible.” As the year comes to a close, the pandemic is far from over, but there is hope on the horizon in the form of a vaccine. And recently passed federal government relief might buoy the lodging business and hopefully prevent more closures. Trabulsi advises on what hotel owners and managers should be doing right now. “As we’re coming through 2021 budget season, who knows what’s going to happen, but let’s at least have a plan. No one really knows where the revenues are going to be. So the focus of our discussions for the budget was let’s make sure our operating model is aligned and that we’re not bringing expenses back before revenues come back.” Resources and Links Download the full transcript for episode 299 Robert Cole of Hospitality Ventures Management Group Larry Trabulsi of CHMWarnick.
24 minutes | a month ago
298 | Ready to Order: Ghost kitchen concepts may save the restaurant industry
{caption}VIRTUAL RESTAURANT: DoorDash Kitchens in February opened a ‘ghost kitchen’ in Redwood City, California. At least five chain restaurants are sharing the space to cater to customers who order online. DoorDash is an online third-party food-delivery service and is among the mobile-ordering operations experiencing exponential growth during the coronavirus pandemic. (Photo: Shutterstock){/caption} ‘The world is changing’ as COVID-19 pandemic accelerates adoption of food-delivery apps by restaurants and customers Last year, DoorDash opened a ghost kitchen in Redwood City, California, part of Silicon Valley. DoorDash Kitchens invites restaurants to operate out of a shared kitchen. Chick-fil-A is among the five tenants. Ghost kitchens are real commercial-grade kitchens wholly dependent on internet ordering and third-party delivery services, such as DoorDash and Uber Eats. In March 2018, Pentallect Inc., a food industry strategy firm, valued the third-party food delivery sector at $13 billion and predicted it would grow by 13.5 percent a year. This includes deliveries from restaurants and grocery stores. It is an emerging concept in the food-and-beverage industry that is experiencing an acceleration in adoption as owners and operators of restaurants, including those in hotels, are looking for ways to stay in business during the coronavirus pandemic. The National Restaurant Association reported, because of the coronavirus pandemic, restaurants will lose $240 billion in sales and 8 million jobs this year. {caption}LOST BUSINESS: The coronavirus pandemic has taken a dramatic toll on restaurants, as this infographic by Statista shows.{/caption} Adding a tech-driven delivery model to any restaurant, whether it’s stand-alone or inside a hotel, could generate new streams of revenue and save businesses and jobs. Capitalizing on this trend in a big way is Alp Franko, a native of Turkey and founder of The Local Culinary, a ghost kitchen franchise of 50 restaurant brands that are delivery only. Ghost kitchens are also known as virtual kitchens or cloud kitchens. They’re real commercial-grade kitchens wholly dependent on internet ordering and third-party delivery services. Franko said the term “ghost kitchen” is a “little bit exaggerated.” “A ghost kitchen is a simple commissary kitchen dedicated to producing food items just for delivery. At the end, it’s not such a big deal; it’s just a regular [restaurant] kitchen.” Franko said he has a background in restaurant operations, running 25 different brands in Europe. “When I came to the U.S., I wanted to invest in something new.” He came up with the ghost kitchen concept in May 2019 and shifted to a franchise model this past July. The Local Culinary franchisee can be a new restaurateur or an established eatery that wants to expand its operation to include delivery-only menus. “I believe the virtual restaurant is a very important component in the future of hospitality. Other restaurant owners, unfortunately today, are suffering in the crisis that we’re in. The Local Culinary is more of a solution than a product. It’s a very nice solution for an independent chef owner or a chain to add extra revenue, which means getting extra profit as well.” The Local Culinary’s initial franchise fee is $50,000. Baked in the agreement is training so the establishment can consistently deliver along the many brand standards. The Local Culinary provides tablets that manage the online ordering and delivery schedules. And it connects the restaurant operator with suppliers in their markets who can provide products that meet the franchise’s brand standards. Franko said it takes about a month for an existing restaurant kitchen to on-board The Local Culinary operation. During the pandemic and the ensuing economic crisis, franchisees have been eager to generate more cash flow. The Local Culinary has setups in Florida, Louisiana and California with kitchens pending in New York City and Chicago. “Crisis or no crisis, at the end you are always happy to get more orders,” Franko said. The restaurant operator can literally turn the service on and off as needed. For example, if the established restaurant runs a successful Sunday brunch and has no time to run another business, the operator can turn off The Local Culinary tablet and re-activate when the Sunday surge has eased. “You are free to do what you want at the end,” he said. {caption}MOBILE MENUS: Uber Eats mobile app is among the fastest-growing trends in the restaurant industry as more and more consumers are using meal-delivery apps to order from their favorite restaurants during the coronavirus pandemic. Many full-service restaurants are adding to-go options to their regular menus.{/caption} Two years ago, UBS, a global investment bank, reported online food ordering and delivery could rise more than 20 percent to $365 billion by 2030. DoorDash recently raised $2.5 billion from investors in advance of its impressive initial public offering on Dec. 9  when it raised $3.4 billion. The food delivery scene has been frothy with other activity. Just Eat Takeaway, a European delivery company, recently bought Grubhub for $7.3 billion. Uber Technologies on Dec. 1 acquired Postmates for $2.65 billion in an all-stock deal. In May, Uber lost nearly $3 billion in its ride-share business but saw Uber Eats revenue increase more than 50 percent. And in the third quarter of 2020, Uber Eats revenue increased by 135 percent over the year-ago quarter. In a third-quarter earnings call, Uber CEO Dara Khosrowshahi said the growth in Uber Eats represents a fundamental behavioral shift in consumer food buying. He expects online ordering of food and delivery will continue post-pandemic. {caption}GROWTH MARKETS: Pentallect Inc., a food industry strategy firm, predicted two years ago that food-delivery business would increase 13.5 percent a year.{/caption} UBS researchers said the trend would be driven by millennials who depend on mobile apps to provide services that make their lives easier. But Franko said while millennials are driving the food delivery trend, the customer demographic has widened during the pandemic as people of all ages and socio-economic brackets turn to online ordering and at-home delivery. Though many people will go back to in-person dining post-pandemic, the new customer habit is here to stay. That’s why Steve Palmer, founder and chief executive of The Indigo Road Hospitality Group, has made room in his restaurants for delivery. {caption}FULL SERVICE AT HOME: The Macintosh in Charleston, South Carolina, is among The Indigo Road Hospitality Group’s stand-alone full-service restaurants. The photo is from pre-pandemic days when the business thrived on indoor dining. These days, The Macintosh and other restaurants in The Indigo Road’s portfolio include online ordering and delivery as the business shifts to catering to consumers who want to enjoy a chef-created meal at home.{/caption} Most of The Indigo Road’s 20-plus restaurants have remained open during the pandemic and Palmer says top line revenue is half of what it was last year. “I think ghost kitchens is a great conversation,” he said, noting the operation can be in industrial parts of town where rent is cheaper. “Most customers aren’t even aware of where their to-go food has been prepared. “I think it’s going to come down to cuisine. At a high-end steakhouse, it’s hard for somebody to wrap their head around a $75 to-go box,” he said. “But what we’ve learned seven months into the pandemic is that sushi is a good candidate, because it’s not what someone is going to make at home.” Palmer’s full-service restaurants have come up with ways to cater to customers who desire high-quality food delivery, including creating butcher boxes of uncooked steak that can be prepared at home. Most of The Indigo Road restaurants are in the southeast U.S. and have been able to offer outdoor dining. But the delivery business is expanding to the point that Palmer has changed its operations model to some extent. “We have redirected team resources,” he said, noting there are employees dedicated to managing the to-go operations. He has not had to invest in new technology because the restaurants depend on food-delivery apps to generate orders. But the restaurants have changed their messaging on advertising and promotions. And he and his crew have adjusted what they think good customer service looks like. “We had to pivot and learn to be in a whole different business,” Palmer said. “Pre-COVID, there wasn’t a lot of energy in to-go packaging, not only making sure food stays hot, but the way it’s presented. So we’re investing a whole lot more energy in presenting what comes to your door, what food looks like when it gets there, and what food items do and don’t travel well. “We’ve had to be a lot more thoughtful and a lot more engaged in the to-go space.” Though Palmer expects dining-out to return post-pandemic, he also believes online ordering and delivery are here to stay. Franko agrees and notes he founded The Local Culinary long before the pandemic altered reality. No matter what is driving the trend now, “I think it’s time for a new solution, for a new revolution in hospitality,” Franko said. “The world is changing; the hospitality sector is changing as well; and virtual restaurants are a very important part of it.” Resources and Links Steve Palmer of The Indigo Road Hospitality Group Alp Franko of The Local Culinary
25 minutes | a month ago
297 | Reply All: How hotels can use email to build back business
{caption}READ ME: Hotels can use email to connect with both loyal and prospective guests as the lodging industry prepares to emerge from its COVID-19 quarantine, say experts.{/caption} Travel marketers should target inboxes to attract bookings from the coming pent-up demand, say experts When the coronavirus pandemic first hit the U.S. lodging industry, Mike Schmitt, owner and chief executive at Clairvoyix, a digital marketing company in Las Vegas, advised in a blog that hoteliers communicate with past and prospective guests to shore up business ahead of the upcoming recovery. Owners and operators may wonder what form should that messaging take; whom should they target; and how often should they reach out? The most tried-and-true method of communication has proven to be email. Clairvoyix has “always believe the trusted source gets the best response,” Schmitt said. He advises hotel marketers who want to reach out to guests: “If they’ve done business with you before and they recognize the name in the email there’s a very good chance they’ll respond or open it or file it away for next week to look at, much more so than banner ads or mobile. “It’s just something people are comfortable with, as long as they know the domain; as long as they say, ‘Yes, I’ve stayed at this property. Yes, I know this person. I feel very comfortable with that.’ “Just understanding that has served us very well. So, we’ve always been high on repeat guests and building loyalty through this constant communication.” {caption}CLICK RATES: Researching retailers’ email marketing campaigns from January through April 2020, Omnisend reports charting “substantial email marketing click rate decreases due to COVID-19.” Email open rates increased, but there was more browsing than buying during that time. “Click rates eventually rebounded and improved to where they started the year,” reports Ominsend, noting that trend was not seen in 2019. “If our assumptions are correct, we should expect to see conversion rates increase.”{/caption} Capturing Demand The whole point of email marketing is to drive revenue. Though many people are not traveling during the coronavirus pandemic and the hotel industry is reportedly averaging 50 percent occupancy, Schmitt believes communicating with past and prospective guests is important as the lodging sector prepares for a comeback. The more targeted the campaign, the better. “We found over the years as social media came on strong that, for example, we’d send an email and then we’d back it up with a Facebook custom-audience campaign, using the exact same creative, using the exact same audience,” Schmitt said. “We found that to be incredibly effective.” Most of the nation’s 57,000 hotels have remained open since the pandemic struck in mid-March, but are operating with skeleton crews. “I think now, more than ever, with dwindling resources and money, email is the most cost-effective channel,” Schmitt said. Revinate, a software developer for hotel customer relationship management, recently released results of a survey that gauges traveler intent. The company surveyed more than 10,000 people. The biggest reason for the extreme slowdown in travel are government mandates that force businesses to close, restrict public gatherings and encourage citizens to shelter in place. As such, consumers with money to spend plan to travel post-pandemic to make up for what they’ve missed during the crisis. Revinate’s survey found 68 percent of travelers who intend to stay at a hotel feel most comfortable booking one they’ve stayed at before. Domestic travel will rebound the fastest as 70 percent of survey respondents plan to travel within the U.S. And one-third or more than 30,000 respondents will book within the next six months. Competition to capture that pent-up demand will be at an all-time high. “It’s the hotels prepared to appeal to the unique needs of the COVID-19 travelers that will win those bookings and succeed in rebounding,” Revinate’s report says. {caption}REPLY ALL: Hotels can use email to capture the anticipated pent-up traveler demand that some industry marketers expect to see as the coronavirus pandemic eases. Episode 297 of Lodging Leaders podcast explores how hoteliers can effectively use email to market their properties and inspire loyal and prospective guests to book a stay.{/caption} New Buyer Habits The coronavirus pandemic has changed consumer habits and travel buyers are no different, said Clairvoyix’s Schmitt. Previous guests who book the same time each year or frequently use certain services might be open to try something new. So it’s smart to know your guests while crafting a targeted offer via email, but don’t get too granular as targeted emails can get ignored if they’re too specific. “Be sensitive to their particular preferences. If a family likes the chef’s dinner at Thanksgiving, I see no problem including them in a monthly or quarterly newsletter and say this is what else is happening,” Schmitt said. Making people feel like you know them is difficult to pull off at scale. “The reality is, you’re probably going to send three to five different offers. But to say, ‘This person likes cabernet; this other person likes a beer; this one likes Prosecco,’ is great. And you can actually do that, but the cost benefit is not going to show up, especially now,” Schmitt said. Schmitt anticipates pent-up travel demand will unleash as the pandemic eases in the coming months. But it is still important that hotel marketing teams remain sensitive to today’s reality and check the tone of the email before hitting send. Now is not the time for flash sales. He advises hotels lead with their COVID-age hygiene protocols. Most of all, let prospective customers you will be there when they’re ready to visit. What’s important in email marketing is not how many emails you send, but how many are opened and how many click-throughs and conversions are generated. “The science side of email marketing is just as important as the picture that’s going to make you open it in the first place,” he said. Ominsend reported email open rates from January through April increased by nearly 14 percent. Most of the increase took place in April, when much of the nation was in lockdown mode. Before the pandemic, email open rates increased year over year by an average of nearly 2.5 percent. Once the pandemic struck, open rates jumped year over year by nearly 32 percent. Schmitt said Clairvoyix is not sending as many emails for hotel clients as it did pre-pandemic, but he’s seeing open rates returning to early first-quarter levels. U.S. Travel Association this past summer launched its Let’s Go There campaign, which is big on email. Long Live Lodging previously reported on the campaign that’s built for the long haul with crafted messages and imagery that tells prospective travelers that destinations, hotels, airlines and others in hospitality will be there for them whenever they decide to venture out. {caption}LET’S GO EMAIL: A map pin is part of the marketing collateral of ‘Let’s Go There,’ a social media campaign by U.S. Travel Association designed to encourage Americans to start thinking about vacationing and planning excursions in the COVID-19 age. Email marketing is one of the campaign’s tools. The messages include compelling imagery meant to entice people to begin thinking about travel as the industry maneuvers for a comeback. For more on U.S. Travel Association’s Let’s Go There campaign, check out Lodging Leader podcast’s Episode 292.{/caption} ‘Fundamental Shift’ Photos of people hiking, at the beach, in a hotel pool or flying over a tropical landscape send a clear message of the value of getting away from it all. The content also includes an online map pin that hotels can use on their own photos. The messaging content is rolled out in phases and a campaign tool kit is available for hotels to use in their marketing programs. Mike Medsker, co-founder and president of Focal Revenue Solutions in Denver, Colorado, especially likes the message that the campaign images send. “It shows people that travel is still possible. It’s a really good way to communicate that message,” Medsker said. But not every hotel is a candidate for Let’s Go There messaging. “I think it depends on the hotel and I think it depends on the market,” Medsker said. An area such as Jackson Hole, Wyoming, where hotels are nearly full have a different story tell travel consumers. While hotels in a hot market would benefit from some form of cooperative promotional campaign, individual properties might do better on their own as they try to stand out from the competition. Hotels need to know themselves, their markets and their loyal and prospective guests well enough to craft an email marketing campaign that’s the right fit for everyone. Now is a good time to reflect on what it means to be a hospitality marketer. “When we talk about digital marketing, it really requires a fundamental shift in the way we think about marketing as hoteliers,” Medsker said. Part of that is knowing the response rates and other analytics from your hotel’s promotions, whether they’re done by your hotel sales and marketing team or by a third-party marketer. Medsker said when his company works with a hotel to bring more marketing strategies in-house, he’s “consistently shocked” to find operators don’t have access to Google analytics or ad counts. “If you’re not paying attention to the campaigns’ digital cues, you probably don’t have an in-depth view as to what’s actually impacting your business,” he said. “At its essence, I think digital marketing can be boiled down into touching base with perspective customers on all the channels on which they’re shopping for a hotel. “Customers are buying a lot differently now,” Medsker said. “They do 90 percent of their research about the property before coming to you. So it’s important to be on the channels where they’re researching.” And placing your hotel in customers’ inboxes is a smart move. “Email marketing is still 100 percent a very important part of every hotelier’s digital marketing strategy,” Medsker said. “When you look at email marketing, you see low open rates and even lower response rates. That will always be the case with email marketing. However, there’s still success to be found. “I encourage hoteliers to look beyond how we’ve traditionally approached email. It used to mean we send a mass email blast with a 25-percent-off offer. But people don’t really buy that way. People want to be inspired. People want to be able to place themselves at your property before making a reservation. “The more you approach email marketing from the standpoint of creating inspiration for travelers as well as continuing to maintain relationships through non-promotional content, the more successful you will be in your email-marketing effort.” A common mistake hotel marketing teams make is to deluge prospective guests with emails that repeat the obvious or carry messages that are not relevant. In other words, don’t send an email just because. Omnisend noted that while email open rates were up in the early days of the pandemic, click rates were low, meaning consumers opened the email but failed to act on it. Click rates eventually rebounded, however, as more consumers acted on their intent to buy. Omnisend expects conversion rates to continue to grow as consumers better identify their needs and merchants build trust with online shoppers. Hotels can plan their email campaigns accordingly. Medsker advises hotels to take a look at their post-stay follow-ups. “Oftentimes it’s a survey request or a request for a review online. Those things are great from the viewpoint of the hotel, but if we have guests check out with us and they feel immediately we’re asking for next favor or we’re trying to reach into their wallet, they’re not necessarily going to feel a reciprocal value in the relationship. “Take the beyond-stay experience and convert that into a post-stay experience,” he said. If a guest went to the spa or dined at the restaurant, the hotel can follow up with an email that provides wellness content or includes its chef’s top three seasonal recipes. “By helping guests continue to get value out of the relationship with the hotel, they’ll be more eager to return the next time they’re in the planning phase for vacation.” Business Travel Though the holiday season might make hoteliers think of family and leisure travel, Schmitt with Clairvoyix says this time of year is also best for hotels to start building awareness with corporate guests. Business travel may not be the same for quite a long time, but Schmitt sees email as “an incredibly cost-effective way to reach corporations and their travel managers and stay top of mind.” Monthly or quarterly newsletters are smart tools to stay connected and remind businesses that your property can accommodate small meetings and safely provide other business services. Smaller staff means there are not as many people to make phone calls. “You need to communicate, and email is the best channel to do that.” Resources and Links Mike Medsker of Focal Revenue Solutions Mike Schmitt of Clairvoyix
36 minutes | 2 months ago
296 | Flexible Business Model: Apartment-hotels are an emerging trend in an industry in crisis
[This post contains video, click to play] {caption}SERVICED APARTMENTS: WaterWalk Dallas – Richardson, an apartment-hotel development in Richardson, Texas, is among nine franchised properties under WaterWalk International of Wichita, Kansas. The serviced apartment brand is the brainchild of Jack DeBoer, considered the founder of the extended-stay hotel concept. WaterWalk is a hybrid of furnished extended-stay units and unfurnished leased apartments in which renters can enjoy hotel amenities. The apartment-hotel trend is gaining in popularity among travelers seeking safety amid the coronavirus pandemic and among commercial real estate investors in search of asset diversity and pricing flexibility in the subsequent economic downturn.{/caption} Combined lodging assets are recession resistant, say developers Jack DeBoer, the legendary creator of the extended-stay hotel concept, in 2014 opened his first WaterWalk serviced apartment building in Wichita, Kansas. Today, his granddaughter, Mimi Oliver, runs the company that has nine properties open and five in the pipeline. It is exploring more franchising opportunities in 25 markets. Before the coronavirus pandemic struck the hotel industry, lodging developers had a heightened interest in serviced apartments as well as apartment-hotel concepts that offer flexibility in different lengths of stay, operating expenses and revenue streams. The commercial real estate asset has shown its strength during economic crisis caused by the COVID-19 outbreak. Longer stays have buoyed the short-term rental sector, which experienced an average 5 percent decline in demand from April 2019 to April 2020 while transient hotel demand dropped by an average 29 percent in the same time period, according to a joint report by The Highland Group and All The Rooms. Such demand is also supporting apartment-hotels. {caption}Flexible Business Model: A common area at WaterWalk International’s recently opened apartment-hotel development in Plymouth, Minnesota. Episode 296 of Lodging Leaders podcast explores the emerging trend of apartment-hotels and the sector’s impact on the lodging industry during the coronavirus crisis.{/caption} Mixed Category The category includes serviced apartments; lodging accommodations with a mix of hotel rooms and serviced apartments; and privately owned condominiums that are part of a hotel complex’s short-term rental inventory. Some accommodations can be classified as short-term rentals in the home-sharing category while others are labeled as extended-stay in the hotel segment. In the extended-stay sector, The Highland Group recently reported that in the third quarter of this year, U.S. extended-stay hotels’ occupancy was nearly 18 percent above the overall lodging industry. In the short-term rental silo, AirDNA and STR recently reported that from January 2019 through June 2020 hotel RevPAR in 27 markets around the world was down nearly 65 percent from the previous period, while short-term-rental RevPAR declined 4.5 percent. {caption}SHORT-TERM RENTALS: A recent study by AirDNA and STR charts fluctuations in occupancy in the global lodging sectors – hotels; “hotel comparable” units or those with studio or one-bedroom accommodations; and rentals with two or more bedrooms – in the first six months of 2020.{/caption} AirDNA and STR also found several changes in travelers’ behavior as a result of the coronavirus pandemic. The decline in business and group demand severely impacted transient hotels while leisure guests buoyed demand in both short-term-rental and transient categories. But between the two, short-term rentals have maintained higher absolute occupancy levels. Though the hotel industry is seeing week-over-week growth since its low point in the spring, the short-term rental sector is much closer to reaching previous year levels in RevPAR. Regional destinations are preferred as travelers stay closer to home. And travelers have shifted away from urban areas in favor of suburban markets. ‘Unique and competitive’ Oliver, CEO at WaterWalk International, is seeing some of these trends play out first hand. The new-build serviced-apartment brand is designed for suburban markets. It has two upscale business models within the same development – a standard prototype of two buildings, one with furnished extended-stay suites and the other with unfurnished serviced apartments for longer-term leases. The company is finalizing a single-building prototype that has both extended-stay hotel rooms and serviced apartments under one roof. A smaller land footprint would attract more business, Oliver said. “The concept lends itself to customers, franchisees and investors. There are not many dual products available with true apartment-style living with hotel amenities and services. It’s a unique and competitive choice.” Apartment-hotels offer owners managers product diversity and flexibility in different economies. Stable apartment revenue combined with hotel rates allows owners to shape the business model according to market demand. “If you have more demand on extended-stay hotel side you can furnish more units as an owner and boost the top line a little more,” Oliver said. “What we’ve seen through COVID and the downturn is that you can remove furniture and focus on apartment-style living with more leases. This can help you get through a tough time. The model has proven our recession-resistant theory.” The WaterWalk brand promise teeters between extended-stay lodging and multifamily housing. It primarily targets traditional apartment dwellers looking for an all-inclusive experience, Oliver said. Amenities and services such as housekeeping and prepared meals and utilities are paid for in one monthly amount. During the coronavirus pandemic, WaterWalk has cut back on housekeeping and meal service. Residents in both the hotel and apartment sectors receive supplies delivered to their door upon request. Oliver says while the coronavirus crisis has driven an increase in business, she saw a shift in consumer preferences before the pandemic that she believes are here to stay. For example, customers prefer longer stays in units larger than a traditional hotel room. And the full kitchen and in-unit laundry area as well as a bedroom separate from the living area were attractive options for guests pre-pandemic that continue during the crisis. The pandemic has influenced the brand’s design and FF&E. Oliver said the units have more hard surfaces, including flooring, that are easier to keep clean. In the common areas, sitting and working spaces are farther apart. And technology is more widely adopted by managers and used by guests as they try to avoid face-to-face contact and unwittingly discover the convenience of contactless check-in and other customer-focused applications. {caption}VALUE PROPOSITION: A lodging unit under Domio, a new technology-centric brand that partners with owners of hotels and apartments to license its amenities and services to travelers seeking longer stays in accommodations in which they can live, work and play.{/caption} Technology Shift The pandemic and public-health guidance on social distancing has forced hospitality businesses to ramp up the adoption of guest-facing technology. Domio, an apartment-hotel brand, is tech-heavy as its guests use its mobile app to shop, book, check in and check out, order services and operate the unit’s amenities such as the smart TV. The company licenses its services to owners and managers of multi-family apartments or condominiums as well as extended-stay hotels. Domio launched in 2016 and is undergoing a restructuring of its leadership with Jim Mhra, as interim CEO. He was previously vice president of finance at Hilton, the Americas. In September, Domio co-founders Jay Roberts and Adrian Lam reportedly resigned as chief executive and chief security officer, respectively, as the company struggled to recover from being delisted by Airbnb in August for alleged deceptive business practices it discovered when reviewing the company since its founding four years ago. After the co-founder resignations, Airbnb re-instated the company and its 500 listings, which depend on Airbnb and other OTAs to market its offerings. Brian Quinn joined six months ago as chief development officer and is dedicated to expanding the brand’s footprint in the U.S. and around the world. Quinn, who has led franchise development at Choice Hotels International, Red Lion Hotels Corp. and InterContinental Hotels Group, explains why he joined the company in the midst of a global pandemic that has devastated the travel industry. Domio was just getting its legs when the coronavirus crisis struck, but the brand was far along enough in development to continue an upward momentum, especially as travelers searched for stay options that gave them more room and amenities than a traditional hotel room. “It has both things that powerful brands have,” Quinn said. “It has a great consumer proposition around rooms-only with amenities and on the developers’ side it creates a lot of potential for margin.” Light housekeeping, fewer staff and not having to provide common areas such as F&B, meeting rooms and a fitness center drive the rooms-only value proposition, Quinn said. Technology is an important piece of Domio’s growth plans because it’s where owners and operators can truly realize cost savings. “For the consumer proposition and the developer proposition to both work you have to have adoption of technology,” Quinn said. “COVID-19 has forced the acceleration of technology adoption.” Though it uses Airbnb as a distribution platform, Domio keeps its eye on the performance of the extended-stay hotel sector as its business model mimics the sector’s length-of-stay patterns. Domio is an upscale to upper-upscale apartment-hotel hybrid that sits on an “extended-stay chassis,” Quinn said. It will consider teaming up with studio, one-bedroom and two-bedroom apartments as well as inventory from extended-stay projects and hotels with suites. Its brand offers a hosting station and guest-facing technology that allows it to provide upscale services with minimum staff. It’s keen on finding walkable communities with restaurants and entertainment and fitness venues.  “We’re working to stay very strict around rooms-only,” Quinn said. “We’re looking for those travelers who need extra space and want their room to serve many different uses. “On the hospitality side we’re getting demand from owners of suites and extended-stay hotels looking to optimize the asset and think about it differently.” LISTEN: THE LONG HAUL: Episode 287 of Lodging Leaders podcast examines the state of the extended-stay industry during the coronavirus crisis. While the serviced-apartment concept might be new to hotel and multi-family developers and investors in the U.S., it’s common throughout the rest of the developed world. “It’s a full segment in the global hospitality world,” Quinn said. He attributes the slow adoption of the programming in the U.S. to strong legacy brand franchisers. “These brands that have been around for 30, 40, 50 years and have been taking care of the market,” he said. Just prior to the coronavirus crisis, the serviced-apartment concept was gaining a foothold in the U.S. “The pandemic has just blown the doors open around the opportunity,” Quinn said. “We’re just scratching the surface.” {caption}GATEWAY PROJECT: The Indigo Road Hospitality Group is assisting with program development and branding for an as yet unnamed condominium-hotel development in a community gateway in Naples, Florida. The property will have 125 hotel rooms and 24 private residential units that may be placed in the hotel’s inventory when not in use by owners.{/caption} Mixing Interests In creating a lodging hybrid, the big challenge is managing the property to squeeze out as much revenue as possible from co-existing business models and give owners a return on their investment. Larry Spelts, president of lodging at The Indigo Road Hospitality Group in Charleston, South Carolina, recently wrote an article that’s posted on the company’s website about how a residential-hotel mix can make money and share revenue across the board. His idea comes from experience. When working for another company some years ago, Spelts helped turn around a troubled hotel-condominium asset in Orlando, Florida, by replacing its traditional revenue-sharing practice with a hotel-management model. Spelts said the existing method was fractured because the owners association had contracted with one management company to operate the complex’s common areas while another management company had an operating agreement with each unit owner. When the residential units would change hands, the management company would ink a fresh agreement with the new owner. By controlling the common areas, the owners association and developer began to leverage out the manager of the privately owned units who waged war from an office off-site. In a traditional condo management agreement, the third-party manager splits the unit’s rental revenue with owners. For the sake of illustration, let’s say it’s a 50-50 split. Owners keep their full 50 percent but the manager has to pay operating expenses from its half of the draw. In the case of an economic downturn, such as the one the hospitality industry is experiencing now, the management company begins to cut staff and services which negatively impacts on the guest experience and the property’s culture. “So now there’s no alignment of interests between the management and unit owners,” Spelts said. Unit owners eventually see a decline in revenue. In Orlando, Spelts convinced the owners association to accept a hotel-management model in which owners of the condos share in a percentage of the revenue after expenses and offer an incentive fee to the property manager in the form of a percent of the gross and a percent of the net as long as it hits the net income numbers. He points to the Carlyle in New York City, a landmark condominium hotel that Spelts once helped manage. Owners of the condos stay only part time and rent out their units when they’re not residing there. Spelts cautions that every condo association’s bylaws are different and need to be read and understood by all parties involved. Some privately owned units are nicer than others and can command a higher rate and, therefore, a higher percentage of gross rental revenues. In that case, the unit owner receives a percentage equal to what it contributed to the gross. The revenue-sharing strategy turned around the Orlando property. “It was truly transformational,” said Spelts, adding he hopes to do it again one day. Spelts might get such an opportunity when a condo-hotel project The Indigo Road is involved in comes to fruition. The company has been selected to assist with program development and branding for an as yet unnamed 125-key independent, luxury hotel with 24 private residences in Naples, Florida. Spelts contacted the retired business manager at The Carlyle to get his guidance on how to structure a similar revenue-sharing model for the hybrid condo-hotel in Naples. Owners of the condos will most likely use the residences a few times a year. To keep from carrying the entire cost of their investments, owners can turn over their units to the hotel’s inventory. Spelts doesn’t believe the apartment-hotel or condo-hotel model will significantly impact the traditional transient hotel sector, but the coronavirus pandemic has introduced changes to the overall lodging industry that will probably be here to stay. “I think it’s going to be for hotels to do what they’re already been under pressure to do from Airbnb and VRBO – to create a value proposition by providing things that are difficult for Airbnb and VRBO to provide,” he said. Hotels can craft unique guest experiences. Employing a staff that understands the brand promise and carries it out gives hotels an advantage over home-sharing platforms. And a dedicated concierge can help guests make the most of their visit through discovery of the property as well as the surrounding community. Resources and Links Mimi Oliver of WaterWalk International Brian Quinn of Domio Larry Spelts of The Indigo Road Hospitality Group
35 minutes | 2 months ago
295 | Doing Well: Coronavirus pandemic advances wellness design and programs in hotels
{caption}OUTSIDE IN: Hotel of Tomorrow, a forum of more than 300 collaborators gathered by The Gettys Group of Chicago, identified biophilia as an emerging design trend in hospitality that integrates nature into buildings and shifts more activities outdoors. Hotel of Tomorrow participants believe the concept is going to exponentially grow because the coronavirus pandemic has caused pent-up people the world over to crave and appreciate the wide outdoors.{/caption} COVID-19 sharpens hospitality’s focus on mind, body and spirit In a worldwide survey of travel consumers, the Wellness Tourism Association in July reported it found most respondents crave more “nature-based” experiences. The association based in Denver, Colorado, surveyed 4,000 consumers from 48 countries from May through June. It found people’s top motivation in wellness travel is “to return to everyday life rejuvenated.” A close runner-up is “to experience activities outdoors.” The sharper focus on overall wellness in travel during the global coronavirus pandemic is causing hotel owners and operators to think beyond the now-normal COVID-19 clean-and-safe protocols. Hotels will start to deploy technology, programming and materials that build anti-COVID spaces where guests can live, work and sleep and come home feeling better than when they left, experts say. Given that the coronavirus pandemic has driven many people toward outdoor activities, it’s no surprise that people want to breathe free and create their own safe spaces within a natural environment. One company that’s leading thought on how to deliver what travel consumers crave these days is The Gettys Group. The Chicago-based hospitality design company revived its Hotel of Tomorrow think tank in July to explore how to create solutions to challenges wrought by the pandemic. The Gettys Group first established the forum in 2003 with about a hundred hospitality-related developers, designers, manufacturers, owners and operators from all over the world who put their minds together to imagine the future of hospitality and travel and how to respond. It held workshops for a few years before the program went on hiatus in 2006, but out of that came Botlr, Savioke’s robotic butler first used by Aloft Hotels to deliver on guests’ requests for such things as towels, toiletries and items from the hotel retail center. This year, Ron Swidler, chief innovation officer at The Gettys Group, said the forum drew ideas from 325 collaborators and came up with five top concepts, which it announced in September in its Trendline report. At the top of the stack is the bed. But not just any bed. Bed XYZ is designed to deliver a night’s sleep so fulfilling it meets the traveler’s number-one desire to be rejuvenated during their stay. {caption}SLEEPING WELL: Bed XYZ is the top idea to emerge from Hotel of Tomorrow, a global think tank The Gettys Group design firm formed to tackle challenges and capitalize on emerging trends in the hospitality industry. Episode 295 of Lodging Leaders podcast explores how the coronavirus pandemic is advancing wellness design and programs in hotels.{/caption} Simply sleeping is, of course, important but Bed XYZ offers so much more. It is a technology-enhanced system that controls the room’s environment and monitors guest’s sleeping patterns, much like an Apple Watch. The bedding materials are antimicrobial and antibacterial, meaning they absorb and repel bad things, including viruses. Fabric technology also helps clear the air as particles are absorbed by materials that scrub out airborne toxins. Even before guests hit the hay, technology can help them prepare to rest by providing low-impact exercise and meditation programs. The hotel can also provide in-room food and beverage items that enhance sleep. “How do you know if you’ve had a good night’s sleep? We really don’t and yet there are new ways of measuring the quality of our sleep and they are becoming more available to us in products like the Apple Watch as one example,” Swidler said. “We know that historically that the worst night’s sleep you’ll ever get will be the first night’s sleep at a new location.” By their very nature, hotels are part of that problem. “If we could instead flip the script a little bit and try to reverse that tendency and allow for perhaps an even better sleep experience in hotels than we are getting at home it’s an interesting and an aspirational goal,” he said. So aspirational that knowing a restful night and a stress-relieving experience awaits at a hotel would go a long way in incentivizing people to travel during the coronavirus pandemic. Also highlighted in the Trendline report is biophilic design that includes live greenery in lobbies, rooms and meeting spaces. The next-best thing could be outdoor simulation through technology. Swidler points to the waterfall simulation in Salesforce’s office lobby at its headquarters in San Francisco as an example. It also changes the perception of the lobby space and makes people feel a certain way, Swidler said. Other ideas are robots that deliver on F&B; wearable technology that programs guest preferences; and a self-driving recreational vehicle or “rover” that carries guests on daytime excursions or overnight stays in the great outdoors. {caption}AFFORDABLE & COVID SAFE: A page from an e-book published by Kieffer Design Group shows elements hoteliers can add to rooms to improve guests’ sense of wellbeing and generate more revenue during and after the coronavirus pandemic.{/caption} ‘Fanatic of Nature’ Judi Kieffer, owner of Kieffer Design Group in Boise, Idaho, is a lover of the outdoors and tries to include biophilic concepts in her projects. Biophilia is a word used by Harvard naturalist Dr. Edward O. Wilson in the 1980s to describe people’s desire to be close to nature or life rather than inanimate objects. In his book, “Biophilia,” Wilson writes we are instinctively drawn to lifelike processes. “To the degree that we come to understand other organisms, we will place a greater value on them, and on ourselves.” Though some wellness concepts might seem practicably unrealistic and financially unfeasible in such a time as the coronavirus pandemic, Kieffer encourages hotels to integrate products and programs that promote health and wellness because that’s what travelers seek now and in the future. Kieffer works with developers and owners of limited-service properties so she understands the fiscal constraints in going beyond brand standards. But if the hotel is facing a PIP or is otherwise in need of refreshing, it’s a good time to think about what can be done to take the guest experience beyond face masks and hand sanitizer. To that end, Kieffer published an e-book that advises on design as well as FF&E that can improve a property’s health and safety. The 14-page monograph suggests 30 affordable COVID-safe changes hoteliers can make to their property’s guest rooms that ultimately increase revenue. {caption}OUTDOOR SPACE: The Hilton Garden Inn in Bellevue, Washington, is part of Kieffer Design Group’s portfolio. Judi Kieffer said adding outdoor elements and options in hotel design today will enable owners and operators to drive more revenue.{/caption} “I’m a real fanatic of nature and I realized how much nature and being out in the fresh air and all-natural environments has brought itself into my profession,” Kieffer said. “We’ve incorporated those elements and how to create best for a really healthy building and help people feel really good in them.” The coronavirus pandemic can be a blessing, Kieffer said, if it leads hoteliers and other building owners to develop structures that are better for the world and for the people who inhabit those spaces. Biophilia is not a concept to fear, Kieffer said. Hoteliers who “follow and understand it fully will understand where people are, their innate desire to connect with nature.” Designing outdoor spaces is important today, but hoteliers can also bring inside plants and other natural elements that improve the wellbeing of everyone. One critical component besides the bed is a guest room’s air filtration system. In her e-book, Kieffer outlines the types of filters and technology that can be used in PTACs or whole-building HVAC systems that clean the atmosphere and enable guests to feel and do well while staying at the hotel. Biophilia practices that create a multisensory experience can be subtle. “The guest says, ‘I feel so good in here and I want to know why.’ It’s the air, lighting and greenery. The atmosphere feels fresh and safe.” {caption}GREEN LEVEL: Blanche Garcia of B. Garcia Designs includes the Elita Hotel in Fort Lauderdale, Florida, in her portfolio. The boutique hotel opened in July 2016. Garcia is a Green Design LEED professional and a WELL accredited professional who notes biophilic design is more meaningful than it’s ever been as travelers seek hotels that offer a promise of fresh air and open spaces amid the coronavirus pandemic.{/caption} The Missing Piece Blanche Garcia rose to fame as the lead designer on Hotel Impossible, a reality show on the Travel Channel that ran from 2012 through 2017 and featured Anthony Melchiorri who revived under-performing hotels throughout the country. Garcia owns B. Garcia Designs in Montclair, New Jersey, and is a Green Design LEED professional and a WELL accredited professional. She loves the building and design industry and saw early in her 25-year career how important it is that commercial construction in particular incorporates environmentally friendly techniques and products in projects, including hotels. The International WELL Building Institute oversees the WELL program with a mission to improve human health and well-being in buildings. Garcia calls WELL the missing piece in many building designs. “WELL design, Green design and wellness are more important now than ever,” she said. People who live, visit or work in buildings designed with wellness in mind are happier people. There are things hotel developers, designers, owners and operators can do that go beyond just building a sustainable building, Garcia said. They can create structures that improve people in mind, body and spirit. “And now, with the pandemic, people are honestly looking at not just safety, security and cleanliness but they’re thinking, ‘What does all this mean and how do I feel safer and more comfortable?’” Garcia said. “So this has just thrown everything on a loop and people are trying to catch up and figure it out. It’s a whole new world out there.” “Being a WELL AP has really been very strategic. I think it’s something that hotels and designers and people in the industry can utilize to their benefit to be a little bit more ahead of the curve because it don’t think it’s caught up fully yet. It hasn’t hit its tipping point.” While working on Hotel Impossible, Garcia would lead the redesign of a hotel or parts of a hotel in 72 hours. She realizes that timing is extreme but she advises owners to think about taking steps rather than tackling whole projects to make their properties safe for guests and employees. “You don’t have to do everything,” she said. “You don’t have to go for a WELL designation or a LEED designation to create a change within your own culture or whatever your brand is. You can pick your moments.” Hoteliers should take some time to “review of what’s working for you and what you think people will pay for and what people will respond to,” Garcia advised. “You can integrate small things and carry it through in your messaging.” Small things such as adding to guest room toiletries essential oils that calm and revive, installing vitamin C shower heads; connecting guests to mobile apps that offer music or guided meditation; and adding different levels of lighting that help guests maintain their circadian rhythms. Adding small exercise equipment to rooms such as a balancing ball, hand weights and exercise bands. Garcia advises hotels to partner with other businesses to provide health and wellness amenities and programming for guests. Let prospective guests know what you have going on in terms of health and wellness and how your hotel cares for the guest holistically will set your hotel apart from the competition and attract new business. Despite the problems caused by the coronavirus pandemic, Garcia sees this time as “a really big opportunity for the hotel industry. As much as it’s stressful and as much as it’s painful, if you play your cards right it’s going to make you better.” The awakening to health, safety and wellness is “a shift in a good direction if hotels can utilize it,” she said. {caption}PRIVATE SPACE: A bungalow at The Breakers, the resort in Palm Beach, Florida, where the Global Wellness Institute held its 2020 Global Wellness Summit from Nov. 8 through 11. Adam Glickman, co-founder and principal of Parallax Hospitality and Wellness, was a panelist at the event that addressed trends and issues facing the $4.5 trillion global wellness industry amid the coronavirus pandemic. Glickman is vice chair of GWI’s Wellness Tourism Initiative.{/caption} Wellness and Brands Another hospitality veteran who got out ahead in the wellness travel industry is Adam Glickman. He co-founded Parallax Wellness and Hospitality in 2017 after leading InterContinental Hotels Group’s launch of EVEN Hotels, its wellness brand. Parallax is a consulting company that helps brands focus on health and wellness through design, amenities and programming. Glickman also is vice chair of the Wellness Tourism Initiative by the Global Wellness Institute and an adviser to Three Sages, a technology company that creates virtual wellness programs for the travel industry. Wellness travel was an emerging trend before the coronavirus pandemic and would probably had always been an afterthought for most of the lodging industry. But because of the coronavirus pandemic, Glickman believes wellness has become the essence of the travel business today and in the years ahead. “It has elevated the discussion around safety and wellbeing,” he said. “All brands will become wellness brands in that we can’t ignore it.” Factors or attributes of wellness will be integrated into hotel brands though each will differ on how they deliver on the offer of health and safety to guests and employees, he said. “How owners view the bottom line and the ROI of development will come back in one way, shape or form to the wellbeing of that business,” Glickman said. “And that touches all the constituents of that business, how healthy and safe they feel. “At an overarching level, it’s not just about making sure something is clean or making sure we have a good gym. It’s how healthy is my business, and my business starts by thinking of the wellbeing of all the constituents who engage with my business.” Travelers want safety and security. That goes for their physical and emotional wellbeing as well as their financial security. “What developers and stake holders should be thinking about as they develop positioning and messaging is how they talk about their projects, whether it’s a hotel property or a destination or if it’s someone trying to sell travel to a destination or a hotel.” Guests’ mental wellbeing is a serious consideration for hoteliers. People have been affected by having to be in quarantine or sheltering in place for a long time. We’re just beginning to learn how it’s impacted our day-to-day and hoteliers need to think about they can address and support the emotional needs of guests as they emerge from lockdown mindset. The marketing message should be “how a stay experience can make me a better me,” Glickman said. “How it can make me feel healthier and be healthier so when I go home, I’m the best I can be and I’m more productive. “So that aspect of mental wellbeing in travel is something I expect brands to talk more about,” he said. Resources and Links Blanche Garcia of B. Garcia Designs Adam Glickman of Parallax Wellness and Hospitality Judi Kieffer of Kieffer Design Group Ron Swidler of The Gettys Group Related Episodes Blanche Garcia of B. Garcia Designs Adam Glickman of Parallax Wellness and Hospitality Judi Kieffer of Kieffer Design Group Ron Swidler of The Gettys Group
34 minutes | 2 months ago
294 | She is a Hotel Investor: What She Has a Deal can teach every hotel investor
{caption}SHaD SQUAD: Members of She Has a Deal competing teams, team coaches and program founder Tracy Prigmore, front, center, celebrate the success of the program’s inaugural pitch competition on Oct. 24 at the Hilton McLean Tyson’s Corner Hotel in McLean, Virginia.{/caption} Investment fund to include winning project and two other developments pitched in the inaugural competition The three women who make up the team called Datcher will soon become vested hotel owners thanks to the $50,000 in equity they won on Oct. 24 in She Has a Deal’s inaugural pitch competition held in McLean, Virginia. Besides owning equity in a fund that will help finance their $27.4 million proposed project in downtown Detroit, the women will also be vested in projects that were pitched in the competition. Tracy Prigmore, creator of She Has a Deal and founder and CEO of TLTSolutions, a hotel investment company, said the winning equity will be put toward a fundraising project for The Strait, which is Datcher’s project, plus two other projects – LodgingGo’s proposal to acquire and reposition a luxury property in New Orleans into a 90-room upscale hotel called The Brick House, and Fernweh Project’s ground-up development of a 135-room Hyatt Place in San Jose, California. “We hope that particular fund will acquire at least the three projects,” Prigmore said. While She Has a Deal pitch competition brought forth proposals for very real projects, Prigmore explained the contest was a didactic exercise in hotel investment with the goal of teaching contestants what goes into developing and financing a hotel. As most hotel owners know, a deal is not done until an agreement is inked. And, as most hotel developers also know, anything can happen to derail a prospective deal. No matter what happens to Datcher’s idea, the team members will have ownership in hotel projects financed by the fund, Prigmore said. Currently, only The Brick House in New Orleans has advanced beyond the idea stage. TLTSolutions has initiated a letter of intent to acquire the building, Prigmore said. The next step, she said, is to recruit more investors for the fund, including big money such as institutional capital that can move the needle on getting these deals done. In this article, Long Live Lodging reports on Datcher’s project as well as the other two hotels earmarked for the investment fund. {caption}MONEY MAKERS: The Strait is an 80-room boutique hotel in Detroit proposed by members of Datcher, the winning team in She Has a Deal’s Oct. 24 inaugural pitch competition. Datcher presented the $27.4 million proposal that included various profit centers besides rooms as shown in this slide.{/caption} The Strait Lera Covington is captain of Datcher, which won the competition. Her teammates are Kristen Collins and Joanne Angbazo. Covington will graduate in December from Cornell Baker Program in Real Estate. Collins and Angbazo are graduates of the program. And all three women are members of Cornell Real Estate Women, which is where they learned about She Has a Deal. Their team is named for Jane Eleanor Datcher, who in 1890 was the first African American woman to earn an advanced degree from Cornell University. Their 80-room proposed project, called The Strait, is a $27.4 million adaptive re-use in downtown Detroit. The building is the 105-year-old Historic First Independence Bank on West Michigan Avenue. In the 1950s, the top six floors were removed, reducing the structure to two above-ground floors and two basements. The owner is Basco, which listed it for sale at $11 million, Curbed Detroit reported in April. To transform the long-vacant landmark into a local destination and generate revenue beyond rooms, Datcher’s project includes adding six stories of rooms to the base structure. They would add F&B and entertainment programming to the bottom two floors (where the bank vault remains intact) and the basement and sub-basement. “We really went into the competition wanting to do something fresh,” Covington said. Detroit’s “rich cultural history gave us the ability to do some unique things with our programming and curate the experience that will draw guests but also be a community fixture for residents.” She Has a Deal judges praised Datcher’s presentation, especially its capital stack that showed the team left no stone unturned in finding sources of equity that would require less investor equity and therefore generate a stronger return. In addition, the property sits in an Opportunity Zone, a federal program aimed at reviving moribund local economies by allowing commercial real estate investors to forestall paying tax on capital gains rolled into a development or redevelopment project. {caption}CAPITAL SOURCES: The varied sources of equity and financing comprise Datcher’s capital stack, which judges say propelled the proposal to the winning category during She Has a Deal’s inaugural pitch competition on Oct. 24 in McLean, Virginia.{/caption} Besides a conventional bank loan and an SBA 504 loan, that would provide nearly $19 million, the team found nearly $5 million in equity through historic tax credits and two sources of financing from the state of Michigan – a community development revitalization grant of $1.5 million and a Commercial Property Assessed Clean Energy or CPACE loan of $1.2 million. Investors would be asked to commit $4 million. Covington said the capital sources would generate at least a 44 percent internal rate of return on investment. Included in the proposed capital stack was the $50,000 in equity from She Has a Deal. Prigmore said every team included the equity prize as a funding source in their proposals. The whole amount is not going directly to any one project but rather into a fund that will build equity for at least three developments. WATCH: FIRST PITCH COMPETITION: Watch She Has a Deal’s inaugural pitch competition held on Oct. 24 at the Hilton McLean Tysons Corner Hotel in McLean, Virginia, where five teams detailed their proposed projects to a panel of judges in a live and virtual event. San Jose Hyatt Place Datcher was not the only winner in She Has a Deal’s pitch competition. Fernweh Partners was the runner-up, winning $5,000 in cash. The team also won the Viewer’s Choice Award. The event was held at the innovation center in the Hilton McLean Tysons Corner Hotel where a live audience gathered and a media team streamed the event online for a virtual audience. Prigmore said members of Hilton’s media team were laid off because of the coronavirus pandemic, but a few volunteered their time to help She Has a Deal go off without a hitch. {caption}BUSINESS PROPOSITION: Fernweh Partners, a runner-up in She Has a Deal pitch competition on Oct. 24 in McLean, Virginia, proposed a ground-up build of a Hyatt Place hotel in San Jose, California, also known as Silicon Valley. The hotel will cater to business travelers. This slide is from the team’s presentation.{/caption} Fernweh is a German word that’s pronounced fern-vee. It means farsickness or the longing to visit far-off places. The members that make up Fernweh Project are recent graduates of San Diego State University’s School of Hospitality and Tourism Management. Team captain is Viviana Wilkins, 27, a master’s graduate. Her cohorts are Meaghan Carfrey, 35, a graduate of the master’s program, and Nikki Gonzales, 22, who has a bachelor’s degree. The women began to scout prospective development opportunities throughout California and landed in San Jose, otherwise known as Silicon Valley, which is 500 miles north of San Diego. They found a vacant site primed for ground-up development of a $41.4 million Hyatt Place. The project is a joint venture with NorthStar Hotel Development Group, which owns the land. What makes the JV apropos is that NorthStar Hotel Development is women-owned and led. Shannon Shackerley-Bennett is CEO. Elsa Nguyen is CFO and founder of Sunrise Development, a sister company of NorthStar Hotel Development Group. Kelly Smith is director of entitlements. Prigmore said the 135-room project is one of three in She Has a Deal’s first development fund. {caption}PROPOSED REPOSITIONING: The team of LodgingGo proposed the repositioning of a luxury hotel in New Orleans into an upscale property befitting Hilton’s Tapestry Collection of upscale hotels. Team members Regina Yoo and Eng Sou Ea plan to change the hotel’s name to The Brick House. The acquisition and rebranding is expected to cost $14 million. The project is part of She Has a Deal’s new investment fund. Tracy Prigmore, creator of She Has a Deal and founder and CEO of TLTSolutions, a hotel investment company, said TLTSolutions will soon sign a letter of intent to acquire the property.{/caption} The Brick House The coronavirus pandemic and subsequent downturn in the U.S. lodging industry forced every team to redo their proposals numerous times as events unfolded and uncertainty persists. While both Datcher and Fernweh Partners stuck to their original plans for the most part, the team of LodgingGo made a wholesale change of its plans. The women who comprise LodgingGo are Regina Yoo, a 21-year-old senior in the hotel development program at NYU, and Eng Sou Ea, 22 and a recent graduate of the program who works for Urbanland Asia Investment Co. in Phnom Penh, Cambodia. Yoo appeared in person at the competition while Ea participated remotely. Originally, months before the pandemic emerged, Yoo and Ea had planned on pitching a boutique hotel in Brooklyn. But, because of the coronavirus’s devastating impact on New York City and its hotels, the teammates decided to regroup and come up with another project to pitch at the She Has a Deal final. What they came up with put them on the map. The Brick House would be the new name of an existing 90-room hotel that would undergo upgrades and a repositioning as a boutique hotel in Hilton’s Tapestry Collection, a soft brand. The project would cost $14 million. Currently, the property is called The Mercantile Hotel. It is an adaptive reuse of a 128-year-old sugar refinery building in New Orleans’ Warehouse District. It was fully renovated last year as a luxury hotel. Yoo and Ea said the business is underperforming and they believe because Tapestry is an upscale brand its lower rates would increase business. While the Brooklyn hotel would have catered to both local “staycationers” and international visitors, the New Orleans project is geared toward domestic travelers – a demographic that has buoyed many leisure destination markets during the pandemic. Resources and Links Lera Covington Davonne Reaves of The Vonne Group Tracy Prigmore of She Has a Deal and TLTSolutions Lisa Sexton of Marriott International Kenneth Fuller of Vine Investment Partners
44 minutes | 3 months ago
293 | Crisis Managers: Coronavirus challenge redefines GM role
{caption}DUAL ROLES: General Manager Antonio Jones and others in administration have become very hands-on at the dual-branded Staybridge Suites Atlanta-Midtown and Crowne Plaza Atlanta-Midtown during the coronavirus crisis. They’re filling roles once held by rank-and-file employees pre-pandemic. A study shows general managers are spending a record amount of time on the job as they cannot afford to bring back laid-off employees in a time of uncertainty.{/caption} General managers break time barriers as they work to keep hotel businesses afloat Antonio Jones has been a general manager in hotels in several cities over the past 20 years. And he’s worked to save hotel businesses in the wake of disasters such as the terrorist attacks of 9-11 and Hurricane Katrina’s devastation of New Orleans in 2005. These days, Jones is general manager of a dual-brand complex in Atlanta – the Staybridge Suites Atlanta Midtown and the Crowne Plaza Atlanta Midtown, which is managed by Spire Hospitality. The management company is an affiliate of the property’s owner, AWH Partners LLC in New York City, which acquired the 500-room property in 2014 when it was branded as a Melia. Over the next two years, AWH Partners spent $20 million on renovating and repositioning the asset. InterContinental Hotels Group owns the brands. Staybridge Suites is an upscale extended-stay hotel and Crowne Plaza is an upper-upscale full-service property. The complex’s seasoned GM is applying what he learned in previous challenging circumstances to keep the hotels operating. Jones believes the U.S. hospitality industry will recover from the unprecedented downturn in business caused by the coronavirus pandemic, but it will take more than a year for performance to reach pre-pandemic levels. Until then, Jones is committed to the long haul. “When you look at pre-COVID, we were always at a mindset how do we become innovative, how do we stay on the cutting edge and invest for the future. Right now, all those things are on hold,” Jones said. Keeping the hotels’ business solvent for the next six to 12 months is the most important thing right now, he said. “Every expense is critical.” And that includes labor costs. The staffing level at the property declined from 130 employees to 25. Tate and Teresa Sims, director of operations, are performing tasks they’ve had not had to do for years, including preparing meals, cleaning rooms and staffing the front desk. They both stay take turns staying overnight at the hotel so they can be on hand for any issues that arise. Occupancy was down in April and May, but business began to pick up in the summer. Tate said the increase in occupancy corresponded with the federal government’s stimulus-check distribution and its Pandemic Unemployment Assistance program, which gave people who lost jobs because of the coronavirus crisis $600 a week on top of their regular state unemployment benefits. The increased business was welcomed but Tate said it was not enough to call all the hotel’s employees back. That meant Tate and Sims were turning rooms over when demand would surge, staying up until 2 a.m. to get the laundry done. {caption}INCREASED WORKLOAD: Hotel Effectiveness, a technology company that helps hotels manager labor costs, recently calculated the number of minutes per occupied room being spent by several departments in its clients’ hotels. The research shows general managers and assistant general managers are spending record-levels of time on the job during the coronavirus pandemic. {/caption} Profound Changes Del Ross, chief revenue officer at Hotel Effectiveness, a technology company that helps hotels manage labor costs, said his research shows that general managers continue to go above and beyond a normal work week. Hotel Effectiveness charted the division of labor by determining the number of hours per occupied room being worked at its clients’ hotels. The findings reveal the allocation of labor has dramatically changed from pre-pandemic to today, Ross said. The biggest change is in food and beverage as most hotels have stopped or dramatically scaled back that department. But every worker role in the hotels has changed, and more so for assistant general managers and general managers. “That is the category where the change is quite profound,” Ross said. “It will be very interesting to see how long these changes stick around.” Ross noted before the pandemic, hotels in Hotel Effectiveness’s data set broke down the average time invested per occupied room to one minute for assistant general managers and two minutes for general managers. From mid-April to early May – the worst period of the COVID-19 pandemic – hotels were down to nearly zero staffing levels and minutes per occupied room for both assistant general managers and general managers sharply increased, 250 percent for assistant GMs and 272 percent for GMs. The shift in work load makes sense, Ross said. But what he found surprising is that while general managers have called back an average of half the staff, their time spent at work has not decreased in tandem. “It’s still way, way up from what it was before the pandemic,” Ross said. “Seventy-eight percent higher for the assistant general manager and 86 percent higher for general manager. “They’re spending nearly twice the amount of time per room as before the pandemic because they’re still doing multiple jobs.” General managers continue to work the front desk and turn rooms and perform all kinds of tasks that were once the responsibility of hourly and salaried workers “not because they want to,” Ross said, but because “the variability of occupancy is so extreme and hard to predict the decision to add staff for these variable staffing roles like housekeeping and the front desk is not a trivial one.” General managers don’t want to bring back hourly employees only to have to lay them off again if business drops off. “So they just knuckle down and clean another room,” Ross said. “I think as long as uncertainty in the market exists, they’re going to still do that.” But they can’t keep on like this for long. “You can’t expect general managers who’ve reached the peak of their careers to unclog toilets forever.” GM Revolution Ross said he and others in the industry wonder how the pandemic roles of the general managers have changed for good, especially since the role had been a hard one for hotel owners to fill pre-pandemic. In a September interview with Long Live Lodging, Ross said weaknesses in hotels’ on-property leadership were showing in the year or two before the coronavirus crisis struck. That’s because the unemployment rate in the U.S. was a record low of 3.5 percent and the hospitality industry was challenged with finding skilled employees – from line level workers to administration ranks. As a result, many employees were being moved into management roles before they were truly ready to take on such responsibilities. The job proved too much for many of newly minted managers. “A year ago when we were looking at the turnover rate in hotel employment, the highest turnover position in hotels at that time across the U.S. was assistant general manager,” Ross said. “We’re learning today that the lack of management depth is really hurting hotels right now. The gap between the experience of the general manager and experience level of a line-level manager is creating a great deal of stress and strain on the GM’s job.” LISTEN: THE BIG PAUSE: Episode 288 of Lodging Leaders podcast explores challenges hoteliers face in bringing back employees or attracting new recruits amid the coronavirus pandemic. The slowdown in business has allowed hotel owners and operators to review their hiring and retention practices that were in play pre-pandemic when the U.S. unemployment rate was 3.5 percent and good workers were hard to find and keep. Ross expects a revolution among general managers once the worst of the pandemic is over and hotels get on the road to recovery. “This was always a hard job, a high stress job. And it hasn’t gotten any easier,” he said. “Now add to it the burden of leadership that can’t be shared because of the lack of depth” of experience of other managers; the on-the-job risks and hazards that did not exist six months ago; and the added stressors of figuring out how to run a hotel business during a pandemic. “We’re actually going to see a separation of the ranks of GMs,” Ross said. “There’s going to be a new definition of the job” and many of the changes will “endure going forward.” Resources and Links David Miller at Focus Hospitality Management Antonio Jones and Alan Tate at Spire Hospitality Brittany Guevara at Zenique Hotels Del Ross at Hotel Effectiveness Bryan DeCort at Hotel Equities
35 minutes | 3 months ago
292 | People of Persuasion: Travel influencers grow in sophistication and significance in COVID-19 age
{caption}PIN THIS: A map pin is part of the marketing collateral of ‘Let’s Go There,’ a social media campaign by U.S. Travel Association designed to encourage Americans to start thinking about vacationing and planning excursions in the COVID-19 age. Influencing travel via social media channels is not new, but it’s taken on more significance as travel consumers shift their lockdown state of mind to one of safety as they venture out. The coronavirus pandemic is giving travel influencers new meaning as well, say professional travel bloggers, communications experts and brand marketers who see influencers becoming more trusted as content creators that target their messaging to specific consumer demographics.{/caption} As consumers emerge from lockdown mode, hoteliers should consider adding social-media-savvy tastemakers to their marketing schemes, say experts The U.S. Travel Association says “with the right recovery initiatives in place” the nation’s travel industry will begin to heal from the gutting caused by the coronavirus pandemic. A major step toward bringing back 800,000 jobs and generating more than $70 billion in travel spending in 2021 is the association’s Let’s Go There social media campaign that’s all about enticing Americans to start thinking about taking vacations. The nation’s travel industry has a long way to go. STR last week reported hotel occupancy for the third quarter of this year averaged 48 percent, a decline of more than 32 percent in the same quarter of last year. RevPAR averaged $48.58, a decline of 48.5 percent. STR notes, “The absolute occupancy and RevPAR levels were the lowest for any Q3 in STR’s U.S. database.” In an Oct. 23 presentation, Jan Freitag, senior vice president of lodging insights at STR, said business performance will most likely not improve in the fourth quarter. That’s mostly because of the dearth of corporate travel business. Freitag said some significant findings emerged in the third quarter. Americans prefer limited-service hotels over full-service properties. They prefer to stay in hotels in rural markets versus urban accommodations, and they would rather drive than fly to destinations. The current reality has the travel sales and marketing sector working to come up with new ways to encourage Americans to go on a road trip, even though COVID-19 remains a threat to health and safety. To that end, the U.S. Travel Association recently launched Let’s Go There, a social media campaign that encourages Americans to start planning a getaway. Let’s Go There has more than 60 partners representing hotels, resorts, destination markets and theme parks. The multi-tiered program uses multimedia content in the form of videos, photos and graphics that focus heavily on health and safety protocols adopted by hotels and travel-related businesses. It also encourages consumers to practice safety measures such as wearing face masks and social distancing. Brian King of Washington, D.C., is global officer in charge of digital, distribution, revenue strategy and sales at Marriott International, and is co-chair of the Let’s Go There campaign. The U.S. Travel Association and supporters began to develop the program at the beginning of summer as they watched coronavirus outbreaks surge throughout the country and the travel industry continue its nosedive into negative territory. “What’s great about the travel community at large is we’re friendly competitors but when times are tough and our industry is under duress, we all lock arms,” King said. “None of us has faced something like this before.” The USTA and its members formed a communications committee to decide “how do we want to start talking to consumers when the time is right,” he said. “In May and June none of us knew what the new normal was going to be like, and we were trying to think far enough ahead of what things could look like and what consumers would want to hear or not hear. “We did some research and we learned that consumers were desperately missing travel. They knew they couldn’t travel … but there was this void they wanted to fill. “What we learned was if they just had something on the books – It could be six months to nine months from now – it changed their mood; it gave them something to look forward to,” he said. The overarching message of Let’s Go There is that the travel industry will be there when Americans are ready to travel. WATCH: TRAVEL ADVOCATES: In this video, Roger Dow, president and CEO of U.S. Travel Association, and Jennifer Zimmerman, chief of strategic officer at McGarryBowen and co-chair of the committee that created the association’s consumer marketing campaign, Let’s Go There, explain the project designed to encourage Americans to make travel plans and revive an industry that’s been decimated by the coronavirus pandemic. Who’s Traveling? Digging deeper into just who is willing to travel and when, IZEA, an influencer marketing agency in Winter Park, Florida, in July surveyed more than 1,200 internet users over 18 years of age and discovered that attitudes and behaviors of travel consumers shifted over the first few months of pandemic. In April nearly 20 percent of survey respondents were in total lockdown compared to a little more than 4 percent in July. This indicates that consumers have shifted from “lockdown mindset to a safety mindset,” reports IZEA. By mid-summer, respondents between the ages of 18 and 29 were the most likely to visit a hotel, a bar and the beach. IZEA advised that marketers target this age demographic for the time being. Across the board, respondents are using more social media platforms. The greatest increases are on YouTube and Facebook but they’re spending more time on all social media channels including Instagram, Snapchat, LinkedIn, TikTok and Twitter. That means the role of the digitally present commercial influencer is more alive than ever. Now is the time to connect with prospective travel consumers who, nearly eight months into the pandemic, are dreaming about their next trip. {caption}PEOPLE OF PERSUASION: Carol Cain of GirlGoneTravel.com, a travel blog, visits the Sandals Resort in Jamaica. Cain also is a marketing and branding professional who advises travel businesses on how to strategically align influencers’ content and expertise with traditional marketing programs to target new customers. Episode 292 of Lodging Leaders podcast features Cain and other social media experts in a report about the value of travel influencers in the COVID-19 age.{/caption} Travel Blogger Bringing joy and hope to the idea of travel is the mission of Carol Cain of New York City, creator of Girl Gone Travel, an online travel blog from the perspective of a female travel consumer who is also a wife and a mother. Cain doesn’t only write and photograph her travel adventures domestically and abroad; she also tackles tough topics such as travel bans, personal safety, traveling as a woman of color and advice on how not to get scammed by someone who claims to be an influencer. Cain is also founder and CEO of Brave World Media, a branding agency. Cain started travel blogging in 2008 when she left her career in public relations to stay home with her children. Her first blogs were about her experiences as a resident of New York City where she and her children would take in attractions, parks and events. That same year, NBC named Cain as one of the city’s best bloggers. She parlayed that into a business that has taken her all over the U.S. and to 30 countries across five continents. Though the term “influencer” is becoming overused, Cain said it’s the right description for what she does. The more modern term is “content creator,” but it’s all the same, really. “If you think about what influence is in general anyone of us can be that,” she said. “The concept behind influencer was this idea that you could bypass the advertorial sort of forced marketing approach to branding or advertising and treat it as if you’re talking to your mother, your friend, your sister.” When Cain writes about travel she starts by thinking about what she would want to know if she were planning this trip for herself or family. “There are a lot of different things that come into play that inform readers’ decisions in whether or not to plan a trip” to a particular destination, she said. Cain has watched the role of brand influencer change over the past 10 years. Where brands once turned to TV and movie stars to promote their products, content creators are now everyday people who have learned how to master social media and deliver messages targeted to specific people groups. The influencer community was small a decade ago, Cain said, as many influencers tried to figure out how to make it a sustainable business. What’s changed today, she said, is not only is the community much larger, influencers are a lot smarter. “You have a generation now that this is all they’ve done.” Many social media influencers are not professionally trained in marketing. That doesn’t mean they aren’t good at what they do, but the practice is different than what it was a few years ago. Content creation by influencers today is “very curated, very filtered,” Cain said. “Everything is very thought out, very calculated.” And that usually means it’s a lot more expensive to hire an influencer than it was a decade ago. Cain advises hotels and other travel businesses on how to find and recruit influencers. She encourages hotel marketers to do their homework on prospective influencers. Otherwise hiring a spokesperson can be rife with misunderstanding and miscalculation. Working With Influencers When it comes to finding content creators, brand ambassadors or influencers, there are many places to look. Netanya Trimboli of Washington, D.C., is founder and CEO of Travel Influencer Expert, which encourages collaborations between influencers and brands. For eight years, Trimboli was head of communications and public relations for Hostelling International USA until she lost her job in August as a result of the coronavirus crisis. It’s a good thing that she kept up side gigs as a freelancer for content creation and branding agencies over the years because it allowed her to quickly shift and establish Travel Influencer Expert, which offers training for current and would-be influencers that focuses on professionalism. She also teaches hospitality businesses how integrate social media influencers into their overall marketing strategies. {caption}TRAINER OF INFLUENCERS: Netanya Trimboli of Washington, D.C., founded Travel Influencer Expert, an online training program for influencers that also advises hoteliers and others in the hospitality industry on how to effectively work with the social media personalities to spread the word via social media about their stay experiences. Influencers today are more professional and their content can be an effective part of a hotel’s overall marketing campaign, Trimboli said. Episode 292 of Lodging Leaders podcast features Trimboli and other social media experts in a report about the value of travel influencers in the COVID-19 age.{/caption} Trimboli agrees with Cain that roles and expectations have changed for influencers. When considering whether to enlist an influencer, hotel owners and marketing teams should go beyond inviting someone to stay overnight and in exchange post positive reviews on social media. Even in the modern world of digital content creation, that’s an old method. Instead, Trimboli says, hotels should know what they want out of an influencer and how the influencer’s work will complement its other marketing content. “It certainly has grown from casual exchanges to strategic activations,” Trimboli said. Used to be, a hotel or resort would have a loose contract with a self-declared influencer, and owners and managers would cross their fingers that they’d get a good review. “Every year that I’ve been working with influencers it’s gotten more sophisticated,” Trimboli said. She advises that hoteliers who add influencers to their marketing schemes be “painfully specific” in what you want to have written or posted about your property, right down to the number of sentences on specific topics. “One thing people might not realize is that influencers program their posts,” Trimboli said.  “Very few will post in the moment. Most want to think about the post, write something thoughtful and put the time into that. “So if you contract two Tweets and two Instagram posts, make sure they’re timed with whatever you have going on at your end.” Influencers are just as niched as traveler demographics. Hotels can create promotional campaigns specific to certain groups and hire influencers who cater to that audience. “Think of influencers as more than the sum of their following,” Trimboli said. “Think of them as strategic consultants and if you treat them this way they will rise to the occasion.” Influencers also can offer ideas on content hoteliers and their marketing teams may not have thought about, Trimboli said. So it’s smart to ask about their ideas and what would work best with their followers. “Just start brainstorming with them and I guarantee it will be more effective than if you just said, ‘OK, you can stay this weekend and write what you want to write.’ “If you have those strategic conversations with influencers, they’ll start to feel more like a brand advocate than just someone you paid to do to something. They’re now vested in this; they came up with the idea and they’re excited about it.” To find the right influencer, Trimboli recommends you start with her, of course. But she also suggests such companies as IZEA, Wanderful and The Network Niche. Influencers also can recommend other influencers. And perusing online sites such as Twitter, Facebook and Instagram with a key word or a hashtag might yield a connection. Resources and Links Netanya Trimboli of Travel Influencer Expert Carol Cain of Girl Gone Travel and Brave World Media Brian King of Marriott International and U.S. Travel Association’s Let’s Go There campaign
35 minutes | 3 months ago
291 | On The Brink: Hotel associations lobby on Capitol Hill to ward off disaster
{caption}CLOSED FOR GOOD: Highgate Hospitality on Oct. 1 closed its Hilton Times Square Hotel in New York City. Average occupancy in New York City hotels was below 40 percent, compared to more than 90 percent a year ago, reports STR. The 478-room full-service Hilton Times Square opened in 2000. The closure put 200 people out of work. The shuttering of the landmark property is the tip of the iceberg, say industry officials who forecast a wave of hotel closures unless the federal government provides direct relief to an industry suffering steep losses as a result of the coronavirus pandemic. (Photo: Hilton){/caption} The end is near for much of the U.S. lodging sector unless Feds soon provide fiscal relief, say industry advocates Time is running out for the nation’s 57,000 hotels in need of federal government financial relief as the coronavirus pandemic in the U.S. heads into its eighth month, say leaders at AAHOA and the American Hotel & Lodging Association. The U.S. hotel industry is hanging on by a thread as foreclosures on hotels are happening every day, say Cecil Staton, president and CEO of AAHOA, and Chip Rogers, president and CEO of AHLA. But they’re not the only ones sounding the alarm. An Oct. 15 letter addressed to President Donald Trump asking him to approve “immediate modifications” to the federal government’s $600 billion Main Street Lending Program is signed by Staton and Rogers and 78 other industry leaders, including CEOs of major hotel franchisers. According to research from the American Hotel & Lodging Association, two thirds of the nation’s 57,000 hotels will close without federal government relief. Experts Lodging Leaders interviewed say hotel businesses are on the precipice of failure, and if they fall they’re taking more than 5 million jobs with them. Congress and the U.S. Department of Treasury this week are hashing out another round of stimulus spending. Congress is expected to vote on some form of relief this week. Meantime, government affairs advocates at AHLA and AAHOA are on Capitol Hill every day lobbying Congress to enact legislation that will save the hotel industry from the death throes of the COVID-19 pandemic. LISTEN: ON THE BRINK OF DISASTER: Episode 291 of Lodging Leaders podcast examines efforts by AAHOA and AHLA on Capitol Hill to ward off a wave of hotel business foreclosures that could cut the number of the nation’s 57,000 hotels in half. One of the major goals is the expansion of the Small Business Administration’s Paycheck Protection Program into a second round of funding. They’re also asking the U.S. Treasury and the U.S. Federal Reserve to redo the Main Street Lending Program to enable small businesses to borrow money to pay their mortgages and ward off foreclosure. Industry leaders such as Staton and Rogers are fighting to be heard above the noise emanating from The Hill this election season. Staton works to cut through the political din with the collective voice of hotel owners – small business investors and operators whose needs are often overlooked when big government moves to bail out big business. “We have been at the ready for now months, talking to members of the House, Senators, members of the administration on literally a daily basis about trying to get more relief that would be specific to hoteliers,” Staton said. “We’re really at a precipice,” he said, noting a wave of hotel foreclosures is imminent. When the coronavirus pandemic brought international and domestic travel to a halt in March, most of AAHOA’s members were able to get forbearance on mortgage payments from their traditional lenders. But it’s been more than six months of delayed payments and banks are now facing regulatory roadblocks. Even if banks wanted to extend the terms of mortgage they cannot without the approval of the FDIC and a cash infusion to shore up the delinquent loans. In addition, Rogers noted that as a result of the roadblocks traditional lenders are beginning to shy away from financing hotels, which could spell trouble for owners and investors in the near future. {caption}LOAN DEFAULTS: As this bar chart shows, the coronavirus crisis has hit lodging the hardest, reports Trepp. The firm also reports the CMBS delinquency rate for hotels was 23 percent in September and 26 percent of hotel CMBS loans were in special servicing. (Source: Trepp){/caption} CMBS a special case Hotel owners facing CMBS debt are in league of their own as special servicers of this form of private debt cannot offer debtors a break in payment schedules without financial penalties. So far, no federal legislation or financial policy has addressed troubled mortgages among the $16 trillion commercial real estate debt market and the $550 billion commercial mortgage-backed securities or CMBS market. One major tool is a House bill called the Helping Open Properties Endeavor Act or HOPE Act, which would offer financial aid to hoteliers with commercial mortgages. The act would allow the U.S. Treasury to guarantee loans that comprise up to 10 percent of a hotel’s mortgage debt. According to Trepp, the CMBS delinquency rate for hotels was 23 percent in September and 26 percent of hotel CMBS loans were in special servicing. Trepp reports that “both numbers illustrate a sector that is rife with distress and has yet to find a real source of respite.” Executive Orders Requested AHLA reports unless the federal government gives hotel owners financial aid, more than half of the nation’s hotels will go into foreclosure. Staton said the relief does not have to be in the form of new legislation, noting the Trump Administration can unilaterally create a rescue package without Congressional approval. The letter to Trump focuses on such action: “We are writing today to respectfully urge you to take immediate action to provide an injection of liquidity for industries hardest hit by this pandemic, including ours, by fully utilizing the Federal Reserve’s 13(3) emergency lending authority. This can be accomplished by establishing an asset-based lending facility or by replacing the rigid EBITDA leverage test with a loan-to-value ratio test.” {caption}STATE HOTEL CLOSURES: The American Hotel & Lodging Association broke down the number of hotels in each state and how many would close if Congress does not extend the Paycheck Protection Program and if the Federal Reserve and the U.S. Department of the Treasury do not rework the Main Street Lending Program to enable asset-based businesses such as hotels to access $600 billion in loans to pay their mortgages. (Source: AHLA using data and analysis from Oxford Economics).{/caption} Staton said AAHOA members are grateful for and made use of the Paycheck Protection Program funds, which were part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act enacted in late March. Aug. 8 was the deadline for businesses to apply for a share of the $670 billion Paycheck Protection Program and more than $130 billion was not allocated. Staton thinks that pool of money and other leftover funds from other CARES Act programs should find a more useful life. Namely, shifting the money to a revised Main Street Lending Program Though the unallocated sum was retired on Oct. 1, the start of the federal government’s new fiscal year, Rogers of AHLA said Congress can re-allocate the money. Even the most fiscally conservative members of Congress agree to reallocation of the funds, he said. “If it’s limited to businesses that are hurt most, we think that $130 billion will cover that.” {caption}HOTEL SOLD TO PAY DEBT: Ashford Hospitality Trust, a hotel REIT based in Texas, in August reportedly sold its Embassy Suites Midtown Manhattan in New York City to Magna Hospitality for $115 million. Ashford Hospitality Trust acquired the 310-room property in January 2019 for $195 million. The sale satisfied $145 million in delinquent debt created by the coronavirus pandemic. Ashford Hospitality Trust in May returned $30 million from the federal government’s Paycheck Protection Program after being publically blasted for taking the funds meant for small private businesses and facing scrutiny by the U.S. Securities and Exchange Commission. {/caption} Short of revisions to the Main Street Lending Program, the most meaningful help for hoteliers can come from a relaunched Paycheck Protection Program, Rogers said. “What we know will change for certain is who’s eligible, and the eligibility will be tied to what percentage of revenue loss you have suffered as an individual business. With the numbers we’re talking about now, with 25 percent probably being the threshold, virtually every hotel is going to qualify. So we’re happy there,” he said. AHLA has asked Congress to include property taxes in the revised Paycheck Protection Program. “It’s a really smart thing to do because [Congress] is talking about giving money to local governments anyway. And they can help the property owner and help local government with the same dollar.” As the stimulus program came to an end in late summer, AAHOA and AHLA sent numerous letters to Congress imploring House and Senate leaders to launch a second round of stimulus money that includes significant changes to initial programs. In May, the Democratic-controlled House passed the Health and Economic Recovery Omnibus Emergency Solutions Act or HEROES Act that would expand the Paycheck Protection Program. The Republican-controlled Senate will not consider the $2 trillion proposal and is working to devise its own plan. Earlier this month Congress rejected a nearly $2 trillion proposal from the Trump Administration. The Senate is expected to vote this week on what’s being called a “skinny bill,” which proposes $500 billion in relief just two weeks before the election. All proposals so far include an expansion of the Paycheck Protection Program. {caption}More than 150 travel organizations have joined the U.S. Travel Association’s COVID Relief Now campaign that is imploring the federal government to provide financial aid to the travel industry that will lose 1.3 million jobs by December if Congress or the White House fail to act.{/caption} Relief in a Bind In a letter AAHOA sent in July to Republican and Democratic leaders of both chambers, the association noted hotel owners have exhausted the Paycheck Protection Program funds. They were able to pay their employees but they weren’t allowed to use the money to pay on their mortgage debt. The U.S. Small Business Administration handles the Paycheck Protection Program. It also administers the Economic Injury and Disaster Loan program, which was renewed in the wake of the coronavirus crisis with $365 billion available in disaster loans. Staton wrote the program provided limited assistance to hotel businesses, mostly because of lending caps. Another huge frustration is the Main Street Lending Program, a six-hundred-billion dollar $600 billion initiative from the Federal Reserve that would lend money to business harmed by the pandemic. But hotels are asset-based operations and as a result many lenders in the Main Street Lending Program would not underwrite hotels. To date, less than 5 percent of the program’s funds have been allocated and almost none of it has gone to hotel businesses. Rogers said that 5 percent allocation is really no allocation at all. AHLA has urged U.S. Treasury Secretary Stephen Mnuchin to consider revising the program. “If you created this program that you yourself wanted, that you said would be a lifeline for businesses to survive and yet none of the money is going out, then by definition have to go back and look at it and say, ‘How can we change the rules to make this work?’” Rogers said. Paycheck protection is part of an abbreviated proposal that the Senate is considering. Called the Skinny Bill, the $500 billion measure is a pared-down stimulus proposal meant to help businesses weather the next few months and hopefully spur more meaningful relief. “The reason we’ve been supportive of the ‘Skinny Bill’ is that it does include the PPP which is the main thing we need legislatively,” Rogers said. What’s frustrating is that both Democrats and Republicans favor a revised Paycheck Protection Program. “Let’s agree on the things we can agree on,” he said. “Let’s get it done now so businesses have access to that money.” LISTEN: RELATED REPORTS: Check out our previous podcasts related to this report and the coronavirus crisis. Episode 264 on government relief offered early on in the pandemic. Episode 278 on the CMBS debt crisis. Episode 281 on private equity rescue capital waiting in the wings. Episode 256 in which AAHOA’s Cecil Staton talks about the impact the downturn has had on the hotel industry in the early days of the coronavirus. Business Insurance Proposal Girish Patel, principal and managing director at NewGen Worldwide, helped form an organization called HOTELS Together that promotes ideas and proposals to keep hotels solvent through the coronavirus pandemic. The organization said it joins AHLA in supporting the Workplace Recovery Act proposed by U.S. Senator Steve Daines of Montana. The measure would create a federal program that reimburses insurance companies that cover business lost as the result of government-mandated shutdowns in response to the coronavirus pandemic. The Workplace Recovery Act would be retroactive, covering up to 90 percent of business lost since March 13, when President Trump declared the coronavirus pandemic a national emergency. Daines’ bill is similar to other proposals modeled after the 9/11 Terrorism Risk Insurance Act. Patel, who is a lawyer, said Venable LLP, a law firm in Baltimore, advised in a paper that the Trump administration, including the U.S. Department of the Treasury, can legally move forward and unilaterally pass any form of relief to the nation’s business community. That means aid outlined in proposals such as the HOPE Act doesn’t have to wait for Congressional approval. The White House can immediately rule that borrowers on loans from conventional banks and CMBS facilities can qualify for relief. Resources and Links Cecil Staton of AAHOA Chip Rogers of AHLA Girish Patel of NewGen Worldwide and co-founder of HOTELS Together
36 minutes | 3 months ago
290 | DAY-CATIONS: Hotels turn guest rooms into private office spaces
Work-from-hotel an emerging business model that might remake the hospitality industry during and after the coronavirus pandemic, say experts Last week, Arne Sorenson, president and CEO at Marriott International posted a blog on LinkedIn about the value of hospitality professionals returning to the office to work. Like many businesses across the country, employees stationed at Marriott’s corporate headquarters in Bethesda, Maryland, pre-pandemic have worked from home for the past six months. Marriott had about 4,000 employees at its corporate headquarters in the beginning of the year. It laid off two thirds of its corporate staff in March as the coronavirus pandemic brought travel to a grinding halt. The company has begun to call employees back to work at its headquarters while extending furloughs for others and announcing permanent job cuts for 700 employees effective this month. In his blog, Sorenson laid out a plan that has employees easing back into working from their offices. “While remote work will be a bigger part of our future than any of us anticipated in the past, it is increasingly clear that getting back to the office, sensibly, flexibly and in phases, is the appropriate next step,” Sorenson writes. Those commenting on Sorenson’s blog include Yannis Moati, founder and CEO of HotelsbyDay, an online booking platform that offers hotel rooms for day use. Moati disagrees with Sorenson’s assessment of the necessity of returning to the office, noting remote working can benefit hotels struggling to fill their rooms. “Our industry is hurting, with more vacancy than ever before,” he writes, noting the large geographical footprint of hotels. “This is the one time (sic) opportunity to re-evaluate what our industry’s mission is.” Open for New Business Moati is a former travel agent who lives in New York City. HotelsbyDay.com allows users to book rooms for day use via its mobile app. Since its start in 2015, more than 1,500 hotels around the world have signed up as participants. Moati was seeing a continuous increase in the program’s use before the pandemic hit. Pre-pandemic, Moati said, more than half of HotelsbyDay customers were leisure guests; 30 percent were people who were on layover at airports; and another 10 percent booked for business use. Almost all the layover business is gone, he said. HotelsbyDay’s business was down 82 percent in April. In September it was down by 26 percent compared to pre-pandemic traffic. “So we are climbing ourselves back up from that hole.” A big part of the bounce back, Moati said, is the business sector. With an estimated 40 million people working from home, HotelsbyDay has seen a 35 percent increase in “work-from-hotel” bookings. The day-use guest demographic, he said, is “hyper local,” with more than 60 percent coming from less than 25 miles away. The trend is “suddenly opening the door of that hotel to a much larger audience than ever before,” Moati said. READ: ‘OFFICES ARE DEAD’: Yannis Moati, founder and CEO of HotelsbyDay, espouses the business benefits of the work-from-hotel concept in this opinion piece he penned for MarketWatch. Hotel owners and operators will reorganize their business models to accommodate the emerging demand, he writes. Hotel Companies Respond Recognizing the boost that day use can have to a hotel’s bottom line, hotel companies such as Hyatt Hotels Corp. and Hilton have rolled out remote-work promotions. Hilton’s WorkSpaces launched this month, and Hyatt Hotels’ program, Work From Hyatt, in September expanded throughout North America. The programs invite guests to use rooms at select full-service hotels through which they can accumulate loyalty points and avail themselves of the hotels’ amenities such as room service and the fitness areas. Early in the coronavirus pandemic, Andrew Alexander, president of Red Roof, and Marina MacDonald, chief marketing officer at the company, returned to Red Roof’s headquarters in Columbus, Ohio, despite the fact that most of its employees were working from home for health and safety reasons. Soon after, the economy hotel franchiser rolled out “Work Under Our Roof” campaign to give people an option to working from home, where they may not have the space or the level of quiet they need to get the job done. For $29, a day guest can use a room from 8 a.m. to 6 p.m. at select Red Roof hotels. “It’s interesting, because when the COVID situation first hit and people started to work from home, sometimes it’s your own experience that generates these ideas,” Alexander said. Alexander and MacDonald came back to office in April. “We realized that so many offices were close and that wasn’t an opportunity for a lot of people,” Alexander said. But he and MacDonald “knew we had to get out of our house.” They probably weren’t the only folks who felt like that. Along with the day rate for remote workers, Red Roof also rolled out day-room promotions for long-haul truck drivers and college students displaced from their dorms when the schools closed in the spring. “We just thought about: Who are the people who were displaced one way or another and how can we use our 110 rooms at our chalet hotels to make their lives better?” Alexander said. Growing Loyalty Red Roof rooms are organized to cater to workers by providing large desks and strong wireless internet connections. Several years ago, Red Roof must have foreseen the surging guest demand for reliable internet. It launched its Verified Wi-Fi initiative that promoted franchised properties that could guarantee they had enough bandwidth to serve every guest in need of Wi-Fi. The test of strength has turned out to be a plus in the COVID-19 age. Pre-pandemic, Wi-Fi was the number-one guest amenity. Right now, cleanliness is the top consideration by guests, Alexander said, but reliable Wi-Fi is a close second. “We certainly didn’t see the pandemic coming, but we did see the Wi-Fi revolution coming and that’s how we retain guests who have a high level of loyalty.” With regard to loyalty, HotelsbyDay is tracking some trends the industry might want to pay attention to, including converting guest rooms into work lounges. Moati suggests hotels might want to remove the beds from some rooms to cut down on the cost of upkeep. Hotels that are doing this are seeing repeat customers. {caption}RESORTING TO WORK: The Hyatt Regency Clearwater Beach Resort and Spa is among the 1,500 hotels offering rooms for day use on HotelbyDay.com’s platform. Hyatt Hotels Corp. has also rolled out its own remote-work program called Work from Hyatt.{/caption} Co-Working Passé? Moati believes the more hotels adapt to renting rooms to remote workers by day, the more the trend will disrupt the co-working industry. “The hotel has everything a co-working company has and more,” he said, if you count amenities such as the pool, fitness room, food and beverage and the spa. “The disruption can be enormous.” However, one hotelier Long Live Lodging interviewed isn’t seeing it that way. Raj Chudasama is managing partner of Kriya Hotels in Dallas, Texas. It has its own hotels and it manages other properties. Earlier this year, Kriya opened Venture X, a co-working franchise. In 2019, when Kriya Hotels was building its new headquarters, it was looking for businesses to rent office space in the building. Chudasama came across Venture X at the Hunter Hotel Investment Conference. He realized marketing co-working spaces was similar to selling hotel rooms. And who could better deliver on the promise of hospitality than a hotel operator? {caption}NOTHING VENTURED: Kriya Hotels opened its newly built headquarters in Dallas, Texas, in 2019. In February, it opened Venture X in the same building, a co-working franchise that would have enabled Kriya to generate revenue through shared office space. A month later, the coronavirus pandemic struck and business sharply fell in both Kriya’s co-working and hotel operations.{/caption} Kriya Hotels had some agreements in place and Venture X opened in February. “It was the worst possible time to open,” Chudasama said. His team expected to have 80 percent of its co-working space occupied by the end of this year. Because of COVID-19, occupancy is at 15 percent, the same level as Kriya Hotels’ lodging accommodations. Those using Venture X are either laid off and seeking work or employed but working remotely and would rather not work from home. “It’s case by case,” Chudasama said, adding most customers are single users. As the business slowly re-emerges he is seeing small enterprises with just a few employees rent out large rooms in which they can socially distance workers. He believes small- to mid-size companies will be the main users of flexible work space in the coming months and years. “Hopefully, corporate business will come back strong, but I don’t see that happening for another couple of years.” Chudasama said along with marketing its Venture X business, Kriya Hotels also tried to promote the work-from-hotel concept at its properties near the Dallas Fort Worth International Airport. But marketing online to prospective day users these days is “extremely competitive” and requires spending to make your hotel stand out, he said. Advertising a hotel for day use or a co-working space costs about $100 per guest. The competitive landscape forces day rates to stay at $50. “I don’t know what’s easier, selling a room on Priceline or Hotwire or selling for day use,” he said. LISTEN: To hear our previous report about co-working check out Episode 242 at LodgingLeaders.com/242. Another trend Kriya Hotels believes is taking place is one in which a guest will check in for an overnight stay at the normal rate but only use the room during the day. Because of the contactless protocols that brands demand hoteliers’ provide, Kriya Hotels has no way of knowing for sure why the guest left without staying overnight, but Chudasama thinks the room was used as a work space. In Kriya Hotels’ Venture X building, Chudasama is seeing a shift in the user demographic as companies seek flexible work options for their employees. He’s paying attention to large nationwide companies such as Amazon, Alphabet Inc. and Microsoft that are deploying the hub-and-spoke model. The corporations are contracting with co-working companies and hotels to enable their employees to work remotely. In other cases, employers are giving workers an allowance to use on remote-working options. A monthly allotment of $500 per employee at a hotel is a lot cheaper than renting a corporate office building for the entire team. “I am seeing more flexibility now in everything,” Chudasama said. Resources and Links Raj Chudasama of Kriya Hotels and Venture X Yannis Moati of HotelsbyDay Andrew Alexander of Red Roof Episode 242 | Desk Sets: Hoteliers capitalize on coworking trend
37 minutes | 3 months ago
289 | OTA Protest: Reform Lodging members to blackout rooms
‘Lights Out, OTA!’ a strategic move in hoteliers’ battle to regain control of their businesses, say participants In April, when the coronavirus crisis had sunk hotel occupancies to unfathomable lows, online travel agent Expedia Group researched what kind of support hotels and other lodging providers needed to survive the downturn in business. At the end of May, the company announced a $275 million global recovery program for what it calls its lodging partners. Most of the funding is in the form of marketing credits and a 10 percent reduction in commissions on new bookings. Expedia Group also has allowed hotels to defer by 90 days the commission payments the properties collect from guests who book on OTA’s channels. But one group of hoteliers is not buying it. Reform Lodging, a new organization with nearly 2,000 hotel owners as members, plans to protest commission rates being charged by Expedia Group and Booking Holdings. Reform Lodging has launched Lights Out, OTAs!, during which its members plan to remove their hotels’ rooms from the OTAs’ inventory on Friday and Saturday. It’s the hoteliers’ first planned attack to regain control over their businesses from both OTAs and franchisers, say owners. Expedia Group declined our request for an on-the-record interview, but a spokesperson who asked not to be identified provided background information about its relief program. The relief is available to owners of independent and branded hotels, but the franchisers of the brands are required to opt in. Sagar Shah, co-founder and president of Reform Lodging, said he has not heard whether major hotel franchisers are participating. Shah is also managing principal of Yatra Capital Group, a family business that owns hotels and senior living facilities. He said Reform Lodging is a think-tank that represents the interests of hotel owners on a variety of issues created by the coronavirus crisis. In a survey of 114 members, all but six agree that while OTAs are necessary in a crisis, their commissions are too high and threaten owners’ ability to turn a profit during the current downturn in business. Shah recently attempted to get the attention of online travel agencies in a letter addressed to Peter Kern, CEO of Expedia Group, and Glenn Fogel, CEO of Booking Holdings, in which he asked for financial relief in the form of reduced OTA commissions. Reform Lodging’s letter, dated Aug. 13, is indicative of the type of advocacy the organization plans to practice in the coming months. “We realize that the OTAs have been rather quiet with respect to what’s happening right now, and we felt it was necessary to strike up a conversation with them,” said Shah. {caption}DEAR OTA: Sagar Shah, co-founder and president of Reform Lodging, wrote this letter to Expedia Group and Booking Holdings to raise concerns about the online travel agencies’ commission rates it’s levying for reservations made through their various channels during the coronavirus pandemic. Also signing the letter is Rich Gandhi, co-founder and chairman of Reform Lodging.{/caption} Shah and members of Reform Lodging also want to send a message to major franchisers that they, too, skim too much from third-party online reservations, increasing the cost of guest acquisition beyond what owners can manage at this time. “When it comes to a franchised hotel or property we’re not directly negotiating with the OTAs,” Shah said. “It’s really up to the franchisers. They’re the ones who strike deals with the OTA partners. And so we wanted to put all stakeholders on notice and essentially start that conversation.” Shah did hear back from Expedia Group’s Melissa Maher, chief inclusion officer and senior vice president of marketing and industry engagement at Expedia Group. He said he had not heard from Booking Holdings as of last week. Maher, he said, seemed sympathetic to hoteliers’ plight, but offered no additional solutions beyond Expedia Group’s relief program. Maher declined Lodging Leaders’ request for an interview. A spokesperson with Expedia Group responded to a separate request on condition of anonymity and provided background on the company’s relief program. Troubled Quarter It’s hard to know the size of the impact the Lights Out, OTA! might have on the OTAs as both companies are feeling the pain of the economic downturn caused by the coronavirus pandemic but they have access to hundreds of millions of rooms in their supplier inventory. Expedia Group notes in financial documents filed with the U.S. Securities and Exchange Commission that its business success largely depends on its travel suppliers, including hotels. It had 1.6 million properties in its global inventory pre-pandemic and lodging comprises 70 percent of its revenue. Hotels rooms are on its five channels, Expedia, Hotels.com, Trivago, Orbitz and Hotwire. Its home-sharing platform, Vrbo, provided 765,000 properties. It said in the case of a regional or global recession, “domestic and global economic conditions can deteriorate rapidly, resulting in increased unemployment and a reduction in available budgets for both business and leisure travelers, which slow spending on the services we provide and have a negative impact on our revenue growth.” In its 2019 annual report filed in February, the company included the then-emerging novel coronavirus among factors that could negatively impact its business because of decrease in demand and an increase in costs. It wrote it expects the “2019 Novel Coronavirus” to impact its financial results “to a material degree.” At the end of last year, Expedia Group reported revenue of $12 billion. Halfway through this year, Expedia Group clearly felt the impact of COVID-19 outbreak. “The second quarter of 2020 represented the worst quarter the global travel industry experienced in modern history,” said Peter Kern, vice president and CEO of Expedia Group, in the company’s July 30th news release. The company posted $566 million in revenue and a $740 million loss in net income compared to the second quarter of 2019 when it had $3.2 billion in revenue and $187 million in net income. At the end of 2019, Booking Holdings reported revenue of $15 billion. Its channels include Booking.com, Priceline, Agoda and Kayak, a metasearch platform. Booking.com generates the most business for the global OTA. It has 2.3 million properties around the world, including 460,000 hotels. As with Expedia Group, Booking Holdings also noted in its annual report released in February the emerging coronavirus as a possible threat to its business performance. Glenn Fogel, CEO of Booking Holdings, told analysts in an Aug. 6 second-quarter earnings call that domestic travel in the U.S. and Europe buoyed the company’s results. It posted revenue of $630 million and net income at $122 million compared to $3.9 billion in revenue and net income of $980 million in the year ago quarter. International travel is out as domestic leisure guests seek accommodations closer to home as long as the coronavirus pandemic continues. Fogel said Booking Holdings is developing new marketing programs to help suppliers capture more of this business. Secret Negotiations In the letter, Shah writes Expedia’s relief program will mostly benefit independent hoteliers and small hotel chains. He notes that franchisees of major hotel brands are wholly dependent on the size of the commissions that franchisers have negotiated the OTAs. According to Lodging Leaders’ sources, the lowest negotiated OTA commission is 10.5 percent for franchisees of Marriott International brands. Franchisees are not privy to the details of the negotiations, something that rankles Shah and other owners. “I would want the OTA agreement between franchisors to have more scrutiny because it’s my hunch there might be more that meets the eye in those agreements,” he said. “Hoteliers are just looking to be acknowledged, I think they feel that over the years they’ve lost control of the narrative. With the growth of even smaller OTA shops, owners are losing control of their own products. That’s the fundamental argument here.” {caption}REVENUE SHARE: La Quinta Inn & Suites by Wyndham in Hot Springs, Arkansas, is among six hotels VIPA Hospitality owns in the destination market. It is the largest hotel in its Hot Springs portfolio. Parth Patel, president of VIPA Hospitality, said OTA commissions coupled with the franchiser’s take for marketing and reservations, skims off a third of the rooms’ revenue. After paying other operating costs, Patel clears about one third of the room’s revenue, making it difficult to turn a profit during the coronavirus pandemic.{/caption} ‘Double-dipping’ on Revenue Parth Patel, president of VIPA Hospitality, plans to participate in Friday and Saturday’s Lights Out, OTA! Protest. “The main focus of this is to tell the OTAs and the brands also that we are tired of the OTAs having total control over our inventory,” he said. VIPA Hospitality is a family business that owns six hotels in Hot Springs, Arkansas, and is jointly invested in five other assets in Illinois, Indiana and Michigan. Hot Springs is a tourist-centric market and though Patel’s hotels were closed in April and May, business began to return over the summer from a low of 8 percent occupancy in April to 60 percent in July, still lower than usual. As Patel works to eke out revenue to pay his operating costs, the biggest issue beyond OTA commissions is what franchisers charge owners for the booking through an OTA. Patel and other hoteliers claim franchisers are unfairly double-dipping on online bookings and eating into owners’ profits. The La Quinta Inn and Suites by Wyndham in Hot Springs is the largest hotel in VIPA Hospitality’s portfolio. Patel uses the hotel as an example of how much he pays for online bookings. For all of 2019, OTAs generated 36 percent of the hotel’s reservations. Expedia comprised 20 percent of the bookings, Booking.com was 15 percent and opaque channels accounted for 1 percent. From January to August of this year, OTAs generated 44 percent of the hotel’s bookings. Keep in mind, Patel said, the hotel was closed in April and May so that’s six months’ worth of OTA-generated business. It breaks down to 28 percent from Booking.com, 14 percent from Expedia and 2 percent from opaque channels. Add to the OTA commission of 15 percent even more charges initiated by the brand for the third-party booking and Patel sees a 30 percent skim off his room revenue. After operating costs are subtracted, the hotel clears about a third of the room revenue. What’s unfair, he said, is the franchiser did not generate that business but it still levies a charge on the reservation. In La Quinta Inn & Suites by Wyndham’s 2020 franchise disclosure document it lists several fees related to third-party reservations made at a franchisee’s property. For example, the brand exacts 4.5 percent of gross room revenue for a system assessment fee, which goes toward marketing and reservations and other services. It also charges $2.25 per third-party booking. And the same amount for an internet booking. La Quinta Inn & Suites by Wyndham is not alone in its reservation fees. It’s common practice across all brands and major franchisers. Patel said though Expedia’s relief program is a start, it is not enough for hoteliers who are eking out a profit amid the coronavirus pandemic. He’d like brands to be part of the relief program that goes deeper than marketing credits and deferred commission payments. “Moving forward it has to be in partnership with the brands. Whether it’s the brands or the OTAs, someone has to reduce the fees,” he said. “I have a problem paying a (brand) marketing fee on an OTA reservation because that’s not the brand’s marketing dollars, the business wasn’t from the brand.” Patel said the COVID-19 pandemic has united hoteliers and “the time has come when there has to be a change in the hotel industry” to enable hoteliers’ success and ability to continue to invest in the industry. A continuation and an increase in private owners’ investment would also benefit the OTAs and the brands, he said. But with the fees the two entities charge, it’s become more difficult for owners to make a profit. ‘Unsustainable’ Business Model Robert Cole is founder of RockCheetah, a hospitality consulting company, and he’s a senior analyst of lodging and leisure travel for Phocuswright, a travel industry research company and a subsidiary of Northstar Travel Group. Cole said he’s not surprised that groups like Reform Lodging are waging war against the status quo in both online travel agencies and hotel franchisers. “What you’re seeing is a conflict between the business models between hotels owners, third-party management companies, brands and online travel agencies. And when you look at it fundamentally, the hotel owner pays for everything; they’re the ultimate service provider. “So just purely from a distribution perspective, I believe on average about 12 percent of total revenue goes into brand-related or franchise-related fees. “The root cause of the conflict between OTAs and hotels is an existential battle because the business models are in conflict. The hotel brands get paid on every booking regardless of the source; OTAs get paid only when they produce something.” Echoing Parth Patel’s economic analysis on his hotels, Cole derives that hotels pay a third of their gross room revenue to acquire a guest. He said it’s “an unsustainable level for the hotelier.” Even more unsustainable is the plunge in business performance across the entire hotel industry. Booking activity that Phocuswright tracks shows dramatic plunges into negative territory for major hotel companies as well as the OTAs over the past six months. Just before the pandemic hit with full force, brands were outpacing OTAs with direct bookings. Cole studied Phocuswright’s tracking of search traffic from September 2019 through August 2020. The information he shared is only part of the picture because the data was gleaned from global searches made from desktop computers. To demonstrate the dramatic fluctuations in online business worldwide, consider that in February, Booking.com had 69 million desktop searches on its site. That fell to 13 million in April and climbed to 80 million in July. Cole noted that in February Hotels.com and Booking.com had the most search traffic compared to three major hotel companies, but the number of searches on their domains had declined by 5 percent and 9 percent, respectively, from September 2019. Meanwhile, Marriott International’s searches were up 7 percent and Hilton’s were up by four percent 4 percent in the same time period. Choice Hotels International was down by four percent 4 percent. Expedia Group owns Hotels.com and Booking Holdings owns Booking.com. The companies own many more distribution channels and, of course, the industry has more hotel franchisers, but Cole added Marriott, Hilton and Choice for the sake of demonstration. In April, all five domains had declines in desktop search traffic ranging from 75 percent to 86 percent when compared to September 2019. In July, Booking.com had an uptick of 6 percent in searches while the others had less of a decline compared to September 2019. Resources and Links Robert Cole of Phocuswright Parth Patel of VIPA Hospitality Sagar Shah of Reform Lodging
36 minutes | 4 months ago
288 | ‘The Big Pause’: Hotels retooling employment policies as business slowly returns
Prospective hospitality job recruits gauge companies’ standards of care in workplace safety and diversity in a year of crises Two nationwide crises emerged in the U.S. this year – the coronavirus pandemic and the public reckoning of systemic racism in just about every aspect of American life. The outbreak in March of COVID-19, the illness caused by the novel coronavirus, forced hotels to close or drastically cut back on their workforces as occupancy plummeted to unprecedented lows. A couple months later, America’s streets resounded with the voices of citizens denouncing racism and businesses began to respond by promising new and better commitments toward diversity, inclusion and equality in hiring and promotion. Combined, the crises have rattled the hospitality industry’s employment strategies. Hotel owners and operators are struggling to bring back laid-off workers and recruiting new employees in the wake created by the intertwined events. Jobs Picture America’s hospitality employment sector has been ground zero for the economic fallout caused by the COVID-19 pandemic. Tourism Economics recently reported that in March and April nearly 17 million jobs in leisure and hospitality were lost. The leisure and hospitality industry includes lodging accommodations, food and beverage, and arts, entertainment and recreation. Overall, it has begun to recover slightly. Four million jobs were created or restored by July. But more than one quarter of people who worked in the industry remain unemployed. In addition, the pace of rehires and new hires has significantly slowed, from 2 million new jobs in June to 200,000 in July. {caption}In an August employment report for the U.S. Travel Association, Tourism Economics showed 17 million jobs in leisure and hospitality (light blue) were lost in March and April. The dark blue segment depicts jobs pre-pandemic. Jobs in leisure and hospitality are returning, albeit slowly. Though leisure and hospitality comprise 11 percent of the nation’s jobs, the sector accounts for 40 percent of current unemployment. “If every industry recovered to their pre-pandemic levels except for leisure and hospitality, the unemployment rate would fall from 10.2 percent to 6.2 percent, still 2.7 percent higher than pre-pandemic levels,” reads the report.{/caption} Del Ross is chief operations officer at Hotel Effectiveness, a technology company that manages labor costs for hotels. He has his own data that align with what Tourism Economics has found – that hotels are employing about half the workers they did before the COVID-19 pandemic. In many cases, hotel owners and operators that are hiring back are finding out that many furloughed workers are reticent to return. This has led managers to reconsider how they onboard employees in the midst of the COVID-19 outbreak. It’s a balancing act, for sure. “The number of people you have to keep onboard at a hotel to keep it from falling apart and the number you have keep on for very minimum staffing are actually very close,” Ross said. {caption}HIRING PACE: Hotel Effectiveness research reveals where hotels are rebuilding their workforces over the past six months and where rehiring remains flat.{/caption} Besides the challenge of generating enough revenue to pay workers, hotel owners and operators are finding out that many laid-off workers do not want to return to the job out of fear of contracting COVID-19. “People were afraid to come to work because of the high-touch nature of what we do,” Ross said. “We’ve been very focused as an industry on the guest experience, guest safety and guest health. But employee health is critical as well, especially to the employees. They want to know what you’ve done not only to make the guest safe but to make them safe. “Some hotels really had to learn about how to communicate this. They couldn’t simply say, ‘Hey, you want your job back?’ They had to say, ‘Hey, you want your job back? I wanted to tell you about some of the things we’ve done to protect you when you come back.’” Ross has also discovered that although hotels on average are staffed at half capacity these days, they’re paying their hourly workers about 4 percent more than they were pre-pandemic. And, if owners aren’t paying more, wages and salaries of full-time staff are at the same levels they were in February. {caption}WAGE PRESSURE: Hotel Effectiveness has charted upticks in hourly wages from February through August. The average increase is 4 percent. {/caption} Ross attributes the trend to several factors. Throughout the pandemic, hotels have retained their highest-skilled and therefore highest-paid employees who are working the hardest jobs right now. Other changes are occurring or are just ahead. The slowdown in business has allowed hotel owners and operators to review their hiring and retention practices that were in play pre-pandemic when the U.S. unemployment rate was 3.5 percent and good workers were hard to find and keep. Ross calls this time “a big pause.” Pre-COVID-19, Hotel Effectiveness studied the troubling pace of employee attrition and turnover. “One of the reasons for that was the absence of curated engagement with people when they came on board. This was a chronic problem. We have an opportunity to revisit these things.” Hotel managers are changing the way they onboard new employees to be on the job for the long haul, Ross said. They’re detailing the job descriptions and performance expectations up front and they’re spending more time on training. They’re also more mindful of employees’ job satisfaction and mental health. “Employee communication is something that is front and center right now,” Ross said. “The level of intention as to how we engage with our team members is in a new place.” Managers have improved the clarity in which they communicate new cleaning standards, for example. “We cannot afford now for there to be any ambiguity in our instructions on how to clean a room.” In the COVID-19 age, employees also are learning how to manage guest behavior and expectations from check-in to check-out. Hotel Effectiveness is tracking these things, Ross said, “because it’s a big wide world of uncertainty right now.” The casual communications methods of the past can make hotels’ business vulnerable. “They can make what is turning out to be a protracted recovery a lot more painful and lot longer,” Ross said. Keeping Culture Alive Bryan DeCort, chief operations officer at Hotel Equities in Atlanta, Georgia, spends a good part of his day communicating with hotel brand representatives, employees at the properties the company manages and members of the administration staff who are working from home. In mid-March, the 30-year-old hotel-management-and-development company with more than 150 hotels in its portfolio had about 3,000 employees. In April, it dropped to 850 employees. By September it had called back or hired about 1,400 people, DeCort said. Business is crawling back month over month with hotels in destination markets seeing a faster rebound than properties elsewhere. At Hotel Equities’ corporate headquarters, employees have not been brought back and those who remain have had their salaries reduced. “We are certainly not out of the woods,” DeCort said. The important thing for now and the months ahead is to keep the company culture alive by creating a sense of cohesiveness. “We’ve done a number of things that are very intentional and in line culturally when we think about how we interact with our associates at every level of our organization,” DeCort said. Since the beginning of the pandemic, Hotel Equities has been “hyper-communicating” with employees “in real time as the dynamics around us continue to evolve.” DeCort and others in operations at the company talk remotely every week with representatives of more than 30 brands. DeCort and his team also talk to general managers at least twice week and they do a weekly “huddle” with business teams in which they discuss hotels’ key performance indicators. DeCort also started a monthly video call with GMs and directors of sales that he coined “The Scoop.” The COO provides updates on Hotel Equities’ business strategies and initiatives and leaves time at the end for questions. It’s been so well received, he said, it’s become a “critical touchpoint” that has grown to include more employees. Staying in touch with the various team members is not only vital to maintaining the company’s culture, it’s also a strategic move that helps hotels get back to business and on the path to recovery when the COVID-19 pandemic begins to ease. “We had a strong culture going into COVID and typically in these environments you see a flight from quality and a flight from people and culture,” DeCort said.  “We’ve told a compelling culture story forever. We live it; we wear it; we breathe it. We’re incredibly intentional and protective of it. “There’s been an absolute shift and pivot beyond the hospitality business on the importance of people. Just being decent, being communicative and kind and being supportive; recognizing that there is no playbook for what we’re all going through, and we’re each experiencing this differently. “We’re just doing it the best we can – thoughtfully and respectfully. We want to make sure we have a building to come back to, a company to come back to and that our folks want to come back. And that’s the goal every day.” {caption}CULTURE CLUB: Hotel Equities in September posted this photo collage on Facebook to pay homage to its housekeeping teams across the more than 150 hotels it manages during International Housekeeping Appreciation Week. Bryan DeCort, COO, said stoking the company’s strong positive culture is a top commitment during the coronavirus pandemic.{/caption} Although Hotel Effectiveness has charted hourly wage increases in the thousands of hotels it tracks, DeCort said Hotel Equities is not seeing that trend. It’s a world of difference from a year ago, when the industry was challenged with finding willing workers amidst a very shallow labor pool in many of its markets. Back then, hotels faced the wage pressures created by the Amazon and Walmart and other large hourly employers. That wage pressure remains in the COVID-19 era. Large employers are the main reason, but in some cases it’s because many laid-off part-time workers are receiving as much in unemployment benefits as they would on the job, DeCort said. “That’s very, very real.” The trend depends on the market and whether the employees are part time or full time, he said. “Where you can affect a 40-hour work week, you see less of that.” Providing consistent hours compels people on unemployment to return to the workforce. While a lot of laid-off hospitality workers have enrolled in online continuing education courses while sheltering in place, DeCort said the main skill people can bring to the job in the COVID-19 is a form of athleticism. “There has to be a willingness more today to jump in and learn a new skill. Attitude matters today more than it ever has.” One of Hotel Equities’ value statements, “Hire an attitude and teach them the business” is especially salient today, he said. “The reality is as we, like most businesses, take this opportunity and are forced to be more horizontal in how we’re structured, we are asking our teams to do more with less.” Unequal Playing Field As hotel managers stare the COVID-19 work structure in the face, they’re also challenged to rethink their hiring practices toward greater workforce diversity. It was an unusual summer. The death of George Floyd on Memorial Day weekend at the hands of police officers in Minneapolis sparked civil protests from coast to coast. Many companies examined how they practice diversity, inclusion and equality from the rank-and-file up to the C-suite. The hospitality industry has been taken to task for not doing enough. A survey of 300 adults by Hcareers – an online platform that connects hospitality job seekers with companies that are hiring – reveals Black respondents believe the hospitality industry is less diverse than what their white or Hispanic counterparts believe. (See the infographic at the end of this article.) Two thirds of white and Hispanic respondents believe the industry offers equal opportunities toward advancement. In contrast, only a third of Black respondents agree. Perhaps that’s because Black people do not see themselves represented in the upper echelons of hospitality leadership. The Bureau of Labor Statistics 2020 Current Population Survey shows only 7 percent of management positions are held by Blacks. No matter the job candidate’s ethnicity, the Hcareers survey shows 75 percent of respondents would not work for a company that does not practice diversity and inclusion in hiring, training, retention and promotions. Douglas Tutt, CEO of Hcareers, said hotel companies are beginning to get the message. And it’s two-pronged. One aspect is minorities’ fear of returning to the front lines during the coronavirus pandemic and other is distrust of companies to truly care about advancing people of color from those front lines to higher positions of leadership. Some companies that work with Hcareers are making changes as a result of what the surveys have revealed, Tutt said. One company recently shared with Tutt’s team that beyond taking a public stand on Black Lives Matter it is expanding the idea of diversity and inclusion by rethinking and retooling its hiring, retention and promotion strategies. “In the hospitality industry, many of the jobs critical to running the business are on the front lines. And those jobs are disproportionately represented by people of color,” Tutt said. The COVID-19 pandemic has significantly affected Black Americans. The Economic Policy Institute reports Black Americans are more likely to contract the virus in part because they’re the essential hourly workers who are on the front lines. The Economic Policy Institute calls racism and job inequality lethal pre-existing conditions. The hospitality industry will always have hourly workers but systemic racism in the workplace and the coronavirus pandemic have converged to alter the way employers shape their employment practices. In its most recent survey, Hcareers found that 75 percent of respondents would not work for a company that’s not making an effort around diversity and inclusion. “That’s a wake-up call,” Tutt said. Not only do these prospective front-line employees weigh their opportunities against a company’s equal opportunity program, but they’re also paying attention to how a hotel is committed to keeping employees’ safe in the COVID-19 environment. “Here’s an opportunity to shape that message with what your intentions are and what you’re planning to do to cast as wide a net as you can to bring people back, but also that you’re serious,” Tutt said. The employment strategy should let current and prospective employees know about the company’s core foundations of how it thinks about its culture and how it relates to what is going on in the country, he said. “This is an opportunity to take a stand in a way that responds at the foundation level that people are telling me is important.” Hotel management can respond to such concerns by sharing its intentions with regard to inclusion and equality in hiring and advancing employees. The plan should include how management will hold itself accountable with regard to its long-range goals with diversity and inclusion. Hcareers gives employers a platform to not only post job opportunities but to share their stories with prospective employees through photos, blogs and video. Tutt says the medium is a smart way to let younger job shoppers know your business-growth strategy involves people of all backgrounds and ways of life. “We will come out of this. And at some point, even though we have skeleton crews at the moment, we will get on the other side of this and you’ll need to bring people back.” A company that takes a stand by creating a diverse hiring policy and acting on it, will emerge with a culture that is inclusive and more sensitive. “It will put you in a better position to draw from a larger labor pool,” Tutt said. “It just makes business sense to do this. It’s that much of an imperative. Why would you, in the face of all this evidence, not do something?” Resources and Links Douglas Tutt with Hcareers Bryan DeCort with Hotel Equities Del Ross with Hotel Effectiveness
32 minutes | 4 months ago
287 | The Long Haul: Extended-stay hotels show their strength in a crisis
{caption}THE LONG HAUL: A king suite is one room type of Everhome, an extended-stay brand Choice Hotels International launched in January. The company recently signed two ‘multi-pack’ deals with developers in California and Texas. Episode 287 of Lodging Leaders podcast explores the strength and resiliency of the extended-stay lodging sector as the coronavirus pandemic strains the financial performance of transient and group hotels.{/caption} Lodging investors find a room with a kitchen is ‘a good place to be’ in the COVID-19 age Hotels in the economy extended-stay category are riding the COVID-19 wave by providing a service that until recently many hospitality consumers had overlooked – the invitation to shelter in place as long as you want to at an affordable rate. Andrew Alexander, president of Red Roof, said the economy segment is the sweet spot for the hoteliers these days. But it’s truly the saving grace for extended-stay hotels. Red Roof added HomeTowne Studios to its brand family in 2018. It launched as a conversion brand and in April 2019, Red Roof rolled out a new-build prototype for the brand. And it’s proven to be a shining star. HomeTowne Studios business performance is up compared to the second quarter of last year, Alexander said. “Economy extended stay is truly the perfect place to be when you have this kind of downturn,” he said. “People are not sure where their lives are going and this is a great place for them to be while in transition.” HomeTowne Studios’ primary guest demographic is a mix of residents displaced because of an economic loss resulting from the coronavirus pandemic and essential workers such as health care professionals who do not want to risk taking the virus home or they want to live closer to the hospital where they’re needed. Occupancy in HomeTowne Studios is more than 80 percent, Alexander said. Owners of economy extended-stay hotels are “having a good summer. It shows that the economy segment is a really good place to be,” he said. [This post contains video, click to play] Discounts Maintain Occupancy The Highland Group recently reported that extended-stay hotels in all price tiers reported a loss in occupancy over the first six months of the 2020, but the economy-segmented accommodations had a 4 percent drop while mid-price and upscale charted occupancy declines of 26 percent and 53 percent, respectively. Extended-stay residents typically seek out the lowest price points as they plan to stay longer term. For that reason, Mark Skinner, partner at The Highland Group and author of the report, expects to see a rate war of sorts. He notes it’s a matter of time before hotels in the higher-priced tiers begin to lower their rates to compete. Although he doesn’t expect it to last for long. “During contractionary periods extended-stay hotels tend to focus on occupancy more than rate,” Skinner said. “So the way to do that is to go after longer term guests at a discount. It happens in all three price segments, but particularly the change is more abrupt in the upscale end.” The Highland Group’s report charts revenue losses in April among mid-price and upscale extended-stay hotels that are steeper than the economy segment. But it shows an across-the-board increase in room revenue, with the economy segment’s June room revenue nearing March levels. {caption}The Highland Group charts discounted rates in economy, mid-price and upscale extended-stay hotels in the first six months of the year. As the coronavirus pandemic hit the hospitality industry, extended-stay hotels dropped rate by almost half. But economy, which was already low, did not discount as much as its higher-price competitors and therefore kept its revenue in check.{/caption} “What tends to happen in contractionary periods is the discounts offered by extended-stay hotels are usually deeper than the overall hotel industry because they’re trying to keep that occupancy margin the highest,” Skinner said. Before the end of 2020, the rate adjustments will impact the earning power of the extended-stay industry. Skinner said an increase in supply in extended-stay’s upscale sector will put pressure on rates across the board. “There are a lot of new and reopened rooms in the extended-stay field that are at higher price points, and as they try to build business they’re going to notice the success of extended stay at lower price points and try to take some of that business. They won’t go to the very, very lowest price levels but they will dip into some fairly heavily discounted rates, and that will put pressure on extended stay rates overall.” A plus of the coronavirus crisis is that extended-stay hotels in all segments have seen operational costs decline as they cut back on housekeeping and put away the hot-breakfast buffets. CBRE recently reported that hotels in all sectors were able to lower their operational costs in July, with extended-stay reducing departmental expenses by nearly 32 percent per room. Skinner expects owners and managers of extended-stay hotels to re-examine what amenities to bring back and what to set aside as the industry recovers post-pandemic. He believes upscale brands will bring back the evening social hour because that’s when the general manager and director of sales can build customer relations. “It will probably look different than before, but I think it will come back.” {caption}MORE ROOM, LESS RATE: The Highland Group reports the growth in room supply in extended-stay is on the upswing. When the coronavirus pandemic struck many hotels were in construction while many others closed for business. By July, there were 526,000 rooms in extended-stay sector, an increase of more than 8 percent over July 2019. It’s the largest increase in extended-stay room supply The Highland Group has ever reported. The new rooms as well as the reopened rooms will put pressure on rates in the coming months.{/caption} Widening Margins Depending on how you look at it, the coronavirus crisis is either forcing or allowing hotel brands to review brand standards and guest amenities as they prepare for a post-pandemic comeback. Many companies, such as Extended Stay America, have created new programs to take advantage of current guest trends. It is reviewing its overall business performance and may permanently shift their sales and marketing and guest-service programs to continue with the strategies as the crisis eases. Bruce Haase, president and CEO, said the company is marketing to displaced college students who cannot share dorm rooms during the pandemic. Extended Stay America hotels in university towns are promoting Stay Smart, an off-campus program that caters to college students. Haase said the company got the idea from the sales team at an ESA in a Morgantown, West Virginia, home of West Virginia University. The results of the program will show at the end of the third and fourth quarters. Extended Stay America lost money in the second quarter, but the midscale brand changed the definition of success in the age of COVID-19. While the hospitality industry saw many hotels close all the way or partially and the loss millions of jobs nationwide, Extended Stay America was able to keep its 636 hotels open and most of its 8,000 employees working. At the end of June, its hotels had an average across-the-board occupancy of 80 percent, up from a low of 50 percent in mid-April. {caption}GROWTH TRAJECTORY: Extended Stay America charted the steady rise in occupancy and ADR during the course of the coronavirus pandemic, laid out on this page in its second-quarter earnings report. As with most extended-stay hotels in economy and midscale price tiers, business performance proved to be resilient.{/caption} Haase became president and CEO of Extended Stay America last November. Like any new leader, Haase had some big plans for the brand, which launched a franchising initiative two and a half years earlier. It manages or franchises about 70 Extended Stay America hotels, but the rest of its portfolio is owned by ESH Hospitality, its pair-shared REIT. Among Haase’s first initiatives was to right the ship at Extended Stay America by reducing the amount of transient room nights sold and return the company to its true mission of providing long-term stays for people in search of a home. More than a third of its guests were transient, and Haase wanted to reduce that to about 20 percent to position the brand to get a stronger hold on the extended-stay category. “Transient guests are not our sweet spot,” he said. Haase thought the strategy would take some time to show results. But that was before the coronavirus struck. “The pandemic accomplished that for us in about a week. “Anytime there’s a downturn in the economy or a national emergency it affects people’s lives and they need short-term housing. We leaned heavily into that early on.” The company’s sales teams went after truly long-term business by offering discounts on stays of 60 days or more. And it saw a lot of business from local folks who were displaced. It’s returned to the retail rate now, but Haase says the beauty of extended-stay is the flexibility in pricing it offer owners and operators. Long-Term Business Though Extended Stay America saw a decrease in business from its national accounts in the second quarter, it made up for the loss by generating new business from other groups including people working in warehousing and logistics for online retailers such as Amazon and other working-class folks. These business travelers, Haase said, “do not have the luxury to sit on Zoom calls. They have to be physically present for their jobs and that’s a good thing.” The key to sustaining this business post-pandemic is serving guests where they’re at today. Guests want full control over their stay, Haase said. Whether they’re traveling for business or for leisure, they appreciate and use the kitchens. “We got a lot of new customers trying us for the first time,” he said. “It’s all about the service; it’s all about the relationship with your guest. It’s really about being there for people when they need you.” The extended-stay hotel concept is 35 years old. Jack DeBoer, considered the father of the extended-stay concept, and Robert L. Brock are co-founders of Residence Inn, an upscale extended-stay brand now owned by Marriott International. DeBoer went on to create Value Place for the budget segment in 2003. Value Place changed its name in 2015 to WoodSpring Suites and in February 2018 Choice Hotels International acquired the brand. Choice Hotels has long had MainStay Suites and Suburban as legacy brands. MainStay is a midscale conversion brand when it stands alone, but in recent years Choice has paired it with Sleep Inn in new-build dual-brand projects. Suburban is a conversion brand fixed in the economy segment. Choice Hotels parlayed its new-construction extended-stay play into a fourth brand, launching Everhome Suites in January in the midscale segment. Matt McElhare, director of extended-stay brand strategy and operations at Choice Hotels, said The Highland Group’s report bears out as Choice Hotels is celebrating the resiliency of its extended-stay brand family amid the coronavirus crisis. He said Choice recently signed two multi-hotel development deals for Everhome – a 10-hotel package in Southern California and a four-hotel deal in Austin, Texas. The franchise development strategy is borrowed from WoodSpring, which focuses on cluster-development deals in suburban and tertiary markets throughout the country. Like others interviewed for this report, McElhare said Choice Hotels’ extended-stay guests are truly in it for the long term as the core guest is less transient than before the pandemic. “That’s driven up our extended stay occupancy levels across our brands,” he said. Guests are essential workers in health care, logistics and construction. During the summer, the extended-stay hotels saw an increase in leisure travelers who like the option of a full kitchen in the room. Though the lengths of stay vary across the guest demographic, McElhare said, “Core extended-stay residents – folks in transition looking for a short-term residential solution – is demand that’s always there, and that’s helped contribute to the performance of the segment.” For franchisees of Choice Hotels’ extended-stay brands, the midscale and economy segments drive the highest operating margins, McElhare said. “For our WoodSpring Suites brands, for example, about 70 percent of the brand in 2019 was in the 54 percent margin. As we look at this year, these margins have remained relatively stable.” The extended-stay business model in the lower-priced tiers “allows for costs to be reduced to maintain margins, which makes it an effective investment.” Resources and Links Bruce Haase of Extended Stay America Matt McElhare of Choice Hotels International Andrew Alexander of Red Roof Mark Skinner of The Highland Group
35 minutes | 4 months ago
286 | Care Packages: Hotels can attract business with cause marketing
{caption}The coronavirus crisis has altered the traditional sales funnel, say hotel marketing experts.{/caption} COVID-19 reshapes the traditional sales-and-marketing funnel Theresa Hajko is director of revenue management for Spire Hospitality, a third-party management company in Irving, Texas. Hajko works from her home in Pittsburgh, Pennsylvania, and she got the idea for a marketing campaign Spire Hospitality calls The Great American Road Trip when she decided to travel to unique destinations in search of memorable experiences. Hajko calls her experiential bucket list “quirky” and “unusual.” She visited the Allegheny National Forest in Pennsylvania to see the Synchronous Firefly event that takes place in early summer. She then drove about an hour northwest and stayed at the Caboose Motel in Titusville, Pennsylvania, a lodging accommodation associated with Oil Creek & Titusville Railroad, an excursion train. Each room is a free-standing caboose. {caption}CABOOSE? CHECK.: Theresa Hajko, director of revenue management at Spire Hospitality, this summer spent a night in the Caboose Motel in Titusville, Pennsylvania. The experience was on her ‘quirky’ bucket list. During her trip, Hajko discovered she is not alone is seeking unusual travel experiences that include time spent outdoors so she created a marketing campaigned called The Great American Road Trip that offers stay-packages to prospective guests of Spire Hospitality’s hotels.{/caption} During the road trip, Hajko met other travelers intent on checking experiences off their bucket lists. “When I got back, I shared my trip on social media and I told other people. Everybody was so engaged with the idea of the road trip. I think right now travelers are looking to getting out and do something but they don’t necessarily want to involve air travel. Getting outdoors and back to nature is so popular right now.” Hajko said the marketing campaign for Spire Hospitality is meant to encourage the road trip and to generate business for the hotels in its management portfolio. Spire Hospitality’s Great American Road Trip offers package priced $25 above the sell rate. Guests participating in the program get gifts such as dining coupons, a S’mores-making kit and a picture frame. The program kicked off in mid-August and so far Spire Hospitality’s hotels have sold more than 80 packages. [This post contains video, click to play]   LISTEN: CARE PACKAGES: Hotels can attract business during the coronavirus pandemic by sharing a message of safety and caring. The care must be obvious with how the business treats its staff as well as serves its surrounding community, say experts. Episode 286 of Lodging Leaders podcast examines how the coronavirus crisis has reshaped the traditional sales-and-marketing funnel and what hotels need to do to attract the attention of prospective guests. Besides the guests who booked are hundreds more who were made aware Spire Hospitality’s hotels through the campaign. “A unique package will get attention and drive potential guests to your hotel’s website,” Hajko said. “If that potential guest doesn’t make a reservation right now maybe they’ll (book) in the future.” Creating consumer awareness is step one in the traditional marketing funnel. At the top of the funnel is discovery or awareness. Next is engagement with prospective customers as they learn about your business. Then there is lead nurturing, when the customer is considering the offer and marketing leads turn into sales leads. The final step is the sale or the conversion from a looker to a buyer. While some marketing tactics remain tried and true, the coronavirus pandemic has flipped the sales funnel because consumer buying habits have changed since mid-March, when the pandemic hit the U.S. {caption}PERSONAL SPACE: McKinsey & Company’s survey shows consumers plan to wear face masks in hotels and other retailers.{/caption} Glenda Lee, a consultant with TBT Hospitality in Washington, D.C., has worked in the hospitality industry for about 30 years. She has experienced a lot of ebbs and flows in the hotel business and notes her sales-and-marketing strategies are embedded in her early-career experiences in hotel operations. In the age of COVID-19, Lee says today’s marketing funnel is different than it was when it was first created nearly 100 years ago. “The scientific understanding of a funnel is pressure to push something into a space. And that really was the original definition of the sales funnel. It was visualizing the sales steps and doing some compression to go into a broader concept of what I want you to do. “Today? Buyers resist compression. Buyers want what they want when they want it,” Lee said. “Sales folks have to reinterpret the funnel. Do we still need to go through stages of introducing and making them aware of our product? Yes. But sometimes in the pursuit for engagement and loyalty those steps are skipped and are not as linear as they used to be.” Other factors influence buying decisions such as third-party reviews, discussion groups and one-to-one referrals. As such, Lee said, “I might be engaged and click buy before I know about the company, fully about the brand. Before I even engage with a sales person, I’ve already made up my mind that I’m going to buy. Whatever sales pitch you have I don’t need to hear. In fact you might talk me out of it if you give me a pitch I don’t even need.” She advises marketing specialists to remain fluid and nimble. And that means being ready to pivot depending on circumstances impacting travelers’ buying decisions. {caption}COMMUNITY SERVICE: The Hotel Revival, a Joie de Vivre property affiliated with Hyatt Hotels, in Baltimore, Maryland, posted this photo on Facebook to let folks know it’s adhering to health and safety standards in the age of COVID-19. The boutique property markets itself as a socially progressive, community-oriented hotel, writes Lauren Cohen in Baltimore magazine. During the coronavirus crisis, the boutique property in the city’s Mount Vernon neighborhood, offering free rooms to essential workers, including police officers who were sleeping in their cars between shifts. It has given out free bagged lunches and bags of fresh produce to residents. “Smiles are currency nowadays,” hotel GM Donte Johnson is quoted as saying. Hotels with a message of caring for their staff and their surrounding community will gain trust and loyalty from guests, marketing consultant Glenda Lee with TBT Hospitality in Washington, D.C., told Long Live Lodging.{/caption} Each hotel has to operate on its own. It needs to get tactical by re-examining its mission and change its messaging to fit with today’s consumer sentiments. McKinsey & Company’s COVID-19 U.S. Consumer Pulse Survey released in late August shows how consumer sentiment has changed over the six months since COVID-19 arrived in the U.S. People are tuned into what researchers are calling the health-and-caring economy. And hotels are part of the mix. The survey shows an increase since mid-March of consumers’ intent to book a hotel stay in the U.S. The study also reveals more people are shopping and buying online. But for consumers who plan to show up in person at a business, including hotels, most will base their buying decisions on whether the business treats its employees with care and whether staff members and customers wear face masks. The message consumers are sending businesses is loud and clear – health and safety is their top concern. But if your hotel can expand that consumer sentiment with a caring message, you may have a fighting chance at surviving the economic downturn caused by the coronavirus outbreak. As an example of a hotel that cares, Lee points to Hotel Revival in Baltimore, a boutique property that is part of the Joie de Vivre collection that is sponsoring food-collection drives to help the unemployed. “I am a staunch believer in cause marketing,” Lee said. “In hospitality, we’re defined about how we exhibit care. For sales and marketing teams, this is an opportunity where we become the storyteller, the care giver, the solution finder. We were before COVID, but we have to be a little bit more intense with that. “So how that story is told, how that care is provided and how those solutions are presented can be the narrative that we use when we write out our sales pitches, when we deliver our presentations, when we do the site visits, when we make a social media post and even our email signatures. It can be a big thing it can be a very minute thing but the message has to be consistent that we care, and that should drive revenue from others who believe in that care. “In 2020, that’s how loyalty is built.” Susan Barry is founder of Hive Marketing in Atlanta, Georgia. She dispenses practical advice on how hotels can fill the top of marketing funnel amid the pandemic and the associated consumer malaise. “The sales funnel is basically the buying path. It’s the path through which every potential hotel guest in the world gets narrowed down to who your actual guests are,” Barry said. The first step in the path is awareness. The prospective guest has to be aware that Hotel A exists. The next step interest. There needs to be something about Hotel A that sparks consumers’ interest. Third, consideration is the point at which the guest will decide which hotel to choose. Last is action or the buying decision. “I’m not sure actual funnel has necessarily changed, but if you drop a jelly bean down the neck of the funnel there’s a block right now between the consideration phase and the action part of the funnel,” Barry said. Travel consumers are nervous and hesitant to pull the trigger to buy. “In the past, the journey from consideration to action might happen two months in advance,” Barry said. “Now it’s happening two hours in advance of a trip.” Barry offers some tips on what hotel sales and marketing professionals should be doing right now. Hotels managers should divide the responsibilities among sales and marketing. Sales representatives should stand in the lobby and talk to people wearing business clothes or hospital scrubs. They should walk through the hotel’s parking lot or drive around and see what company-owned vehicles are parked there. “The most information and the best leads are coming from on-the-ground research right now,” Barry said. She also advises managers review the arrivals report every single day. Who are the guests checking in? If you see a company name in their email, ask if there are other things your hotel can be doing to make them feel safer. “Make it easy for them to refer colleagues,” Barry said. “Then last is to call previous business clients and ask how they’re doing.” At the beginning of the coronavirus pandemic in March, most hotel sales and marketing folks “slammed on the brakes” and stopped reaching out. “We didn’t want to see tone deaf,” Barry said. But now is a good time to reopen the channels of communication to find out how people are holding up and what’s new and different in their lives. “It’s about meeting people where they are right now.”
26 minutes | 4 months ago
285 | ‘Allure of the Door’: Exterior-corridor hotels trending in COVID-19 pandemic
{caption}Almost overnight, the roadside motel is a hot commodity. Travelers are going by car and when they stop they want the safest stay possible so they’re gravitating to exterior-corridor accommodations.{/caption} Nostalgia for road tripping steers travelers to safe-haven motels Vishal Patel and Sunny Patel live in Tucson, Arizona, and wanted to develop a hotel that captured the outdoorsy ethos of the Sunset State. A couple years ago, they acquired an economy motel along a main street in downtown Tucson with plans to redevelop it into a hip gathering place for locals and visitors. The fact that the property is exterior corridor played into the partners’ buying decision. Today, as the coronavirus pandemic has made health and safety the number-one amenity sought by guests, Vishal and Sunny have hit pay dirt. Exterior corridor properties shunned over the past decade by many major franchisers have a new shine as travelers shy away from close human contact in fear of contracting COVID-19, the virus caused by the new coronavirus. [This post contains video, click to play] {caption}SUNSHINE + SAFETY: Vishal Patel and Sunny Patel opened their independent boutique hotel, The Tuxon, at the height of the coronavirus pandemic. The exterior-corridor property has attracted guests who have made safety and security top priorities during their stay. Having outside access to their rooms is a favored amenity.{/caption} The 112-room independent motel, renamed The Tuxon, caters to visitors’ heightened awareness of how the illness is spread. The design goes a long way to ease guests’ worry that they’ll unwittingly be exposed to the virus. Bryan Tubaugh is executive vice president at Focus Hospitality Management, manager of The Tuxon. He said while the hotel’s outdoor accessibility is definitely a selling point to travelers, it’s usually not until after guests arrive do they realize the benefit of being able to access their room without going through a lobby. “One of the things that we’re finding is guests don’t really choose the hotel because of the exterior corridor. However, when they arrive they realize, ‘Oh, my goodness, this is something we should take into consideration the next time we travel,’” Tubaugh said. Because guests can drive to their room’s front door, use mobile check-in and even order food and beverage via an app, the services create an “Aha moment” because of the safety it all provides, he said. LISTEN: ‘ALLURE OF THE DOOR’: Hospitality leaders celebrate the comeback of exterior-corridor hotels that give travelers a greater sense of control during the coronavirus pandemic and advise on how you can prepare your property to receive guests who value safety and certainty. The Tuxon is a conversion project. It was once a Motel 6. After a few weeks of watching the COVID-19 outbreak’s impact on travel and guest preferences, the owners decided to add an indoor-outdoor bar and lounge to the original plans. They also were able to expand the floor space to adhere to social-distancing guidelines. The hotel has gated access that assures only staff and guests are on property, which adds an extra element of safety in the coronavirus age. Besides the hotel’s layout and messaging that promotes safety, Arizona’s reputation for wellness is also a big selling point. “It’s funny, a lot of business travelers in the past would really frown on exterior corridor and now … we can really tie that into the natural outdoor setting that Arizona has to offer from the marketing standpoint,” Tubaugh said. “The messaging is saying we’re offering a safe environment while also the safety and wellbeing from being outside.” {caption}”THE CAR IS KING’: MMGY Intelligence reports prospective travelers plan to go by personal vehicle in the next six months.{/caption} More For the Road MMGY Travel Intelligence reported in August that most of the 1,200 would-be vacationers it surveyed plan to travel by car during the next six months. The 73 percent of respondents over 18 years of age who plan a road trip is up by 6 percent compared to a similar survey in July. These days, travel consumers rank health and safety as the number-one guest amenity in the age of COVID-19. And they feel more in control behind the wheel versus on an airline or cruise ship. “The car is king,” says Andrew Alexander, president of Red Roof. The chain’s older chalet-style hotels are seeing a resurgence in popularity as the company benefits from several consumer-driven trends in the COVID-19 age: The perceived safety of exterior corridor properties; the emergence of the essential traveler; the attraction of affordable hotel rates in an economic downturn; and leisure travelers’ desire for a road trip. Occupancy at Red Roof’s exterior corridor hotels is higher than their interior colleagues. “About 65 percent or about two thirds of our properties are exterior corridor and those properties are outperforming our interior corridor properties by 14 percent,” Alexander said. “It’s statistically significant.” Driving the awareness are guests’ posts on social media that highlight the perceived health and safety benefits of being able to access their rooms from the outside. “Exterior corridor is back in vogue and we haven’t been able to say that for 20 or 30 years. It’s quite exciting,” Alexander said. “I think that will create some long-term loyalty because (guests) will have good experiences at our hotels and they’ll say, ‘Why is that not an option for me going forward?’ I think we’ll see some good residual results.” {caption}LONG HAUL: MMGY Intelligence reports vacationers who plan to travel in their personal vehicles will drive farther than they did in pre-pandemic days.{/caption} Outdoorsy Brand Standards Another company that’s looking to the future with exterior corridor hotels is Red Lion Hotels Corp. Harry Sladich is executive vice president of lodging development and franchise operations at Red Lion Hotels. He said the timing is perfect to expand the brand and its outdoorsy image. After all, exterior corridor properties have long been part of Red Lion Hotels’ brand culture. About 20 percent of Red Lion Hotels’ inventory is exterior corridor. One of its original brands, Red Lion Inn and Suites was designed as exterior corridor and it fed into the company’s Pacific Northwest outdoorsy ethos. The company still values its exterior corridor hotels. “As a brand, we were never opposed or had any intention of sun-setting the exterior corridor hotel because it really with fits with where the brand came from,” Sladich said. “We thought we could take advantage of a lot of the bigger brands deciding all of sudden the exterior corridor hotel is detrimental to their brand image. We never thought they were detrimental or obsolete.” Guests of Red Lion Inn and Suites and its other exterior-corridor-friendly brands such as Signature Inn, America’s Best Value Inn and Knights Inn attract the proverbial road trippers – AAA members, families seeking an affordable vacation, car and motorcycle clubs who want their vehicles outside their doors, and folks who don’t want to haul their luggage through a lobby. “The newest thing now is to avoid the elevators,” Sladich said. “You know, there’s a saying by Confucius: ‘Study the past if you want to divine the future.’” Sladich points to the genesis of roadside motels, noting their number began to grow in the mid-1950s when President Eisenhower signed the Federal Aid Highway Act that financed the construction of 41,000 miles of interstate highways. Hotels began to pop up along the highways. “They were in great strategic locations and they haven’t moved,” Sladich said. “That’s why we see value in them.” To take advantage of the opportunity found in with the mid-century motels, Red Lion Hotels a few years ago re-launched Signature Inn. The brand was mothballed by a previous owner and revived by the former Vantage Hospitality Group. After Red Lion Hotels acquired Vantage Hospitality’s brands in 2016, it rolled out Signature as an upper-economy to midscale conversion brand with a hip mid-century design vibe to appeal to younger travelers. Other Red Lion Hotels brands heavy with exterior corridor properties are America’s Best Value Inn and Knights Inn. The franchiser added nearly 1,000 ABVIs to its inventory when it bought Vantage Hospitality. In 2018, Red Lion Hotels acquired the Knights Inn brand from Wyndham Hotels & Resorts, adding about 350 hotels. With about 900 of the hotels remaining in Red Lion Hotels’ system, Sladich said the properties are candidates for conversions to Signature Inn. Road tripping is popular and Sladich expects it to stay that way for some time. He advises hotels and motels how to attract and serve today’s road warriors. “All of our marketing has been geared to the road trip,” he said. “We are telling our hotels to pay attention to that.” Hotels can offer amenities such as water for the road. Staff members should find out what’s open in the area and be able to suggest places guests can visit during their stay. He advises that hotels “play off the nostalgia” of the road trip. He remembers when he was a boy, his family had a Bingo game with which he and his siblings would check off items they saw while on the road. “Hotels can do a lot of things to really play into the road trip,” he said. “It will help them win positive reviews and return business.” {caption}HOUSTON NEW BUILD: Super 8 by Wyndham debuted in 1974 as a roadside exterior-corridor motor inn. Today, its reputation as an affordable stay continues but what’s interesting says brand leader Michael Mueller is the number of Super 8s recently opened or under construction that are exterior corridor like this Super 8 Houston Northwest Cypress that serves oilfield workers.{/caption} Blue-Collar Wisdom When Wyndham Hotels & Resorts sold Knights Inn it may have reduced its inventory, but it did not weaken its fondness for exterior-corridor hotels. Michael Mueller, president of Super 8 at Wyndham Hotels & Resorts, said about one quarter of Wyndham’s franchised hotels in the U.S. are exterior corridor. And most of those are select-service brands such as Super 8, Days Inn, Travelodge, Howard Johnson, all in the economy segment, and Baymont Inn, a midscale brand. Most of the economy properties were launched as motor inns, Mueller said. Travelodge in 1940, Howard Johnson in 1964, and Super 8 in 1974. “They were designed for the road warrior, and they continue to serve guests’ needs.” As the coronavirus pandemic heightens travelers’ sensibilities regarding health and safety, today’s transient traveler is “realizing what the blue-collar guest knew all along,” Mueller said. Exterior-corridor properties are convenient and reduce access to other travelers. He noted owners seeing high occupancy include those catering to health care workers who want to avoid bringing the coronavirus home to their families. “These heroes can pull in any hour of the night without having any guest interaction. I think that says it all.” For the past few years, all of Wyndham’s legacy economy brands have been undergoing modernization through redesigns that continue to attract travelers who value the properties’ architecture as well as the price. As older exterior corridor properties become a renewed guest attraction, Wyndham is licensing newly built exterior-corridor Super 8s. Though exterior corridor “conjures up an image of an older hotel,” Mueller said nearly half of the Super 8 hotels under construction in the past two years are exterior corridor. In many cases, such as in the oil fields of West Texas, the properties serve a niche demographic. “I had a conversation with a developer just last year who couldn’t believe we were still building exterior-corridor hotels. He thought I was joking,” Mueller said. “But here’s the punchline: Super 8s are getting significantly more than their fair share of RevPAR. In some markets they’re seeing a 100 percent RevPAR index and in others it’s 150 to 200 percent RevPAR index. “If you would have told me last year that exterior corridor hotels would be in vogue in 2020, I wouldn’t have believed it,” he said. “But here we are in a new world.” Resources and Links Andrew Alexander and Matt Hostetler of Red Roof Michael Mueller of Wyndham Hotels & Resorts Harry Sladich of Red Lion Hotels Corporation Bryan Tubaugh of Focus Hospitality Management and The Tuxon hotel
27 minutes | 5 months ago
284 | Sharing the Wealth: Hotel industry leaders want to bring Black investors into the fold
The coronavirus pandemic and the resulting downturn in the travel industry will make it difficult for investors to find the capital they need to acquire and develop hotels. That means minority investors, in particular Black Americans, might face an uphill climb in qualifying for bank loans unless they can close the ever-widening equity gap. Several industry groups, including owners, are looking post-pandemic and reviving efforts to partner with Black investors in hotel development, including partially financing new projects. Industry leaders also want to educate minority owners of other commercial real estate assets how to reap financial returns through investment in hotels. Last week, Lodging Leaders reported on Black hoteliers introducing boutique concepts that celebrate Black heritage and culture. This week, we explore the state of Black hotel investment and how the coronavirus pandemic has strengthened industry leaders’ resolve to invite more minority investment into hospitality. We feature John Lancaster, new regional vice president of emerging markets at Choice Hotels International in Rockville, Maryland; Omari Head, director at Paramount Lodging Advisors, a hotel brokerage in Washington, D.C.; and Navroz Saju and Azim Saju of Hotel Development and Management Group, a family-owned business in Ocala, Florida. Resources and Links John Lancaster of Choice Hotels International Omari Head of Paramount Lodging Advisors Navroz Saju and Azim Saju of Hotel Development and Management Group
30 minutes | 5 months ago
283 | Seizing the Moment: Black hotel owners and investors see opportunity to prosper
In a recent Zoom conference hosted by the African American Chamber of Commerce of Greater Cincinnati and Northern Kentucky, hospitality entrepreneur Kristin Kitchen talked about her lodging company that showcases Black heritage and supports minority-owned companies. Kitchen is part of a trend toward building hospitality ventures related to Black history and culture, a sub-sector of the $200 billion global Heritage Tourism movement, which also ranks as the fastest-growing travel trend in America. As with most hospitality ventures, Kitchen and her company, Sojourn Heritage Accommodations, are struggling to do business amid the coronavirus pandemic, but the effort to increase the number of Black-owned hotels continues, albeit at a reduced pace. During the business lull, two entrepreneurs new to the scene are developing fresh concepts that celebrate Black culture and cater to the next generation of travelers. In this episode of Lodging Leaders we feature Damon Lawrence, founder of Homage Hospitality Group in Oakland, California, and Robin Staten, founder of Tiny Urban Escapes in Indianapolis, Indiana. They share their visions for independent boutique accommodations and how they’re preparing to capitalize on pent-up demand during and after the coronavirus crisis. Resources and Links Robin Staten of Tiny Urban Escapes Damon Lawrence of Homage Hospitality Group The webcast featuring Kristin Kitchen and several others representing Black hotel owners and supporters
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