Construction pipelines for several hotel firms reached a standstill at the start of the pandemic. As the industry gears up to enter 2021, hotel brands and owners are realizing that demand eventually will come back, and they’ve got to be ready for it.

“They can’t start [building or renovating] once the demand arrives. They have to be a little bit ahead of it,” said Harry Sladich, executive vice president of lodging development and franchise operations at RLH Corp., with brands such as Red Lion and Knights Inn.

With brands redirecting investment to supporting existing assets, new developments and conversions have dropped off. To stir interest, many companies are showing more flexibility with their brand requirements, said Adam Zembruski, principal of the lodging division at Stone Bridge Investment Group.

As an example, Zembruski said maybe a year ago a brand’s standard might have been that “90% of your guestrooms need to be guest-ready, full [quality assurance] brand-ready before they give you the OK to open, [but] I think that percentage has gone down.

“I’ve seen, heard [about] and walked new-builds myself — several newly opened hotels that only have less than one-half of their rooms ready to sell. Ballrooms are being used as storage, [food and beverage] areas are closed and used for expanding the social-distancing spaces. Pools are not filled, and closed, along with fitness rooms and other small, enclosed rooms. That never would have happened in the years prior to COVID,” he said. “I don’t necessarily think it’s a ‘relaxation’ of their standards; it’s more of a response to the economics and an agile shift in getting things done.”

Timothy Osiecki, president of development at AWH Partners, which owns Spire Hospitality, said the brands have been very cooperative and helpful. Spire’s portfolio consists of brands including Marriott International, InterContinental Hotels Group and Hilton.

“We have communicated frequently, on a weekly basis. They are here more than ever. Whatever it is we need that’s a reasonable request, they give it to you,” he said. “If there’s anything that needs to be tailored, tempered, cut back or otherwise looked at differently … if it makes sense, they’re going to give you a ‘yes.’”

Sladich said owners like to sign deals with RLH because its brand standards are not as overarching as some others might be. He said brand standards are often thought of as physical items the brand asks the hotel to buy, but it also addresses policies, procedures and cleanliness.

“In this environment, [RLH] is very favorable if you’re considering coming on board and entering the system without having to do a bunch of property-improvement plans or brand standard changes,” he said.

Owners are also able to request flexibility on brand standard requirements.

For example, if an owner says "‘I’d like to go ahead and put your new bed package in, but can I do that at the end of next year?” … We’re saying, ‘Yes, you can,’” Sladich said.

He added that RLH is writing property improvement plans differently now. The company is allowing the owner to only complete what’s important to the brand currently, then move to more requirements in the future.

“We understand that their revenues are suppressed right now, and we can’t of course expect them to do this until their revenues come back,” Sladich said. “It’s kind of a staged entry into our brand. It’s all based on [return on investment]; that’s why we’re attractive to a lot of folks right now.”

Zembruski said he applauds the brands for their flexibility, because some developers and franchisees were three to six months from opening hotels and training employees to start.

AWH’s Osiecki said the supply chains for furniture, fixtures and equipment have been interrupted, which has affected the construction timeline. Social distancing among workers has also been challenging and caused some delays, he added.

AWH has a full-service Marriott in Cincinnati, Ohio, that was scheduled to be completed in May. That property is just now wrapping up, Osiecki said.

“A large part of that is because we lost a lot of workmen … and we couldn’t get a lot of products,” he said.

Osiecki said the brands were very understanding about delays with products, offering the flexibility to either substitute that product or manage through the delay and wait for the product to arrive.

“In many cases, it didn’t matter because we didn’t have any occupancy in the hotels anyways,” he said. “We just saw it through, whatever path we were on, without making changes to product that was already designed and in some part of the procurement process.”

On Sept. 21, RLH announced it opened its first newly constructed, dual-branded Red Lion Inn & Suites and Americas Best Value Inn in Katy, Texas.

Sladich said that project paused for about 30 days and most of the money for furnishings and fixtures and bank financing was already in place before the pandemic.

“Someone deciding to build a brand-new hotel that’s making that decision today, it’s going to be a little bit more of a climb than those that were already underway when the pandemic hit,” he said.

Osiecki said there have been conversations with the brands about the type of materials and furnishing, fixtures and equipment that will be used going forward, such as shifting to less-porous surfaces and touchless faucets, but he acknowledged it can be at a higher cost.

Stepping up heating, ventilation and air conditioning filtration standards is also easier with new-build hotels than existing hotels or conversions, he said.

“There’s no question that all of our mechanical and HVAC systems going forward are going to be looked at very differently,” he said, adding it will be favorable for whoever can invest in that because it gives an added sense of comfort to guests.

Sladich said of the brand standards that RLH does require, the biggest one it paused is food and beverage. For example, it has stopped requiring the breakfast bar or buffet and allowed its upscale properties to close its restaurants.

For development, Sladich said guestrooms are still first and foremost.

“I’m certain that properties that are predominately room inventory are going to continue to go ahead [with that],” he said, adding that there’s hesitancy about investing in food and beverage, meeting spaces and event centers.

Sladich said RLH is working closely with its owners to make those decisions before instituting something.

The company’s development team that is selling franchises right now is focused on the properties they feel fare best during a crisis and are underrepresented, such as extended-stay properties, he said.