Prism Hotels & Resorts’ “secret” to doubling the size of its portfolio from 25 hotels to 50 over the course of the pandemic was taking care of its owners, President CEO and founder Steve Van said.
“When the pandemic hit, we knew our owners were really devastated, and our income was devastated, but we decided not to terminate a single employee, because we knew our owners would need those employees, particularly sales and marketing, to help with their hotels,” he said.
In a video interview with Hotel News Now during the NYU International Hospitality Industry Investment Conference, Van spoke about how his third-party management company worked with owners to keep them happy, managed its rapid growth and has handled ongoing labor issues.
Not only did Prism not cut employees like its competitors did, it added more support staff for owners, Van said. That made owners happy because revenue at Prism-managed hotels increased by 20% to 50% compared to hotels operated by other management companies, he said.
“By doing the right thing, we benefited immensely from that, and our owners gave us other hotels, and other owners heard about what we're doing, so that's why we doubled the size in a short period of time, just by giving the great service that they deserved,” he said.
Prism invests most of all in its culture of caring for its employees, guests and owners, Van said. There’s a national survey of employee satisfaction that shows 70% is average, and Prism has 95% satisfaction, he said.
“That’s because we really care about our employees, and they know it,” he said. “We don’t have any big shots in Prism. I’m not a big shot, nobody else gets to be one. We care about each other.”
Even so, people are leaving because working in hotels has become too stressful, he said. The job should be fun, and that’s important to many young employees coming into the business.
Amazon warehouse jobs have been a tempting alternative for many employees, but Van said that after five or six months of putting together boxes and taping them shut, former hotel employees will want to come back for some human interaction.
“I don’t think it’s as dire as everybody says it’s going to be,” he said. “It’s bad, but I think we’ll come out of it when the life returns to the party.”
Prism recently held a conference for commercial mortgage-backed securities special servicers and special-asset lenders, and they cover 75% of the $57 billion in hotel loans that are in default, Van said.
“Let me repeat that again: $57 billion in hotel loans are in default,” he said.
The combination of federal aid to businesses, such as the Paycheck Protection Program, the forbearance offered by lenders and brands pushing back on renovation requirements have held back a flood, but the water is rising behind the dam, Van said.
“Most of our clients in the special servicing and lenders for special assets are saying, ‘Get ready. We’re going to have lots of foreclosures next year,’” he said.
During the past two downturns, Prism picked up management of roughly 150 distressed hotels, Van said, adding that he expects it would do the same again.
Now that travel is coming back, the requirements are going to return to normal for hotel owners, so the number of distressed assets will grow.
“Whether it’s a tidal wave or a flood or whatever, we don’t know, but we think it’ll be something,” he said.
For more of Van's interview, watch the video above.