We continue to hear this “Great Resignation” period has more jobs than candidates, but that is not necessarily the case at the top level.
Some hotel leaders are struggling to find good career opportunities. It seems that the higher you get on the hospitality ladder, the harder it is to continue climbing it. Frustration kicks in, as the fear of stagnation propels you to that less-than-perfect opportunity.
At the same time, there is another group of people also looking for growth: investors. While in the past raising money was the biggest obstacle to development, today finding the right opportunity is the biggest challenge for entrepreneurs with full wallets. Since they can only grow based on the number of good deals available to them, sourcing opportunities is crucial.
The scarcity of deals might be an advantage for a smart professional looking to grow, as bringing an opportunity to an investor could unveil a fantastic career opportunity. In other words, if you don't like the jobs that are out there, create a new one. To do that, we must first unleash the inner deal-maker we all have inside; find a good opportunity and pitch it to the right investor. Below are some tips to that end.
The initial step is to find investors looking to enter or grow their hospitality portfolio. It could be the owner of the hotel you work at, a former employer, a competitor, the winner of the local lottery, or even that regular at your bar. The first conversation should be about how hospitality can fit into their investment strategy, as well as gauging the degree of affinity with the business. Most hotel investors I know love hospitality, which makes them better prepared to show commitment during tough times.
Second, I recommend having a couple of ideas or opportunities at hand. Development experts over-complicate what a deal should look like. Ultimately, it is putting the right product in the right location. Here is a breakdown of these two concepts:
- Right location means a market (city, neighborhood, street) that is expected to experience an increase in demand bigger than the increase in supply. Normally we judge the markets by how good they are now. Chances are, however, that good markets are poised to receive new hotels, whereas low-performing markets might not. Try to identify markets with little supply growth, where demand might rise. For example, a city with an airport getting an expansion, a town with a new university campus or a neighborhood getting a concert arena.
- Right product is aiming at that untapped (or less-served) segment in a particular market that will yield the highest return. If you see full-service hotels getting exorbitantly high rates, propose a luxury concept. If select-service hotels are consistently getting reservations for five nights or more, you might want to recommend an extended stay product. A lifestyle hotel with a strong food and beverage component might be a good idea for a gentrifying borough. Sometimes just a new hotel, where existing inventory is old, might allow you to beat the incumbents.
Next, be clear about what you can bring to the table. Remember that you are pitching a deal as well as yourself. Envision the new hotel, which quickly becomes the market leader. What will it have in terms of competitive advantage, besides the location and brand? Will it be a unique restaurant offering that you can deliver, or maybe it will have the best service in town thanks to the top talent you have identified over your career.
Finally, a good developer brings a way in which the investor can materialize this idea. Everyone can say “we should build a hotel in front of the Eiffel Tower.” The challenge is bringing a tangible opportunity. A land for sale, an existing asset that could be purchased, or a hotel project in need of an equity partner.
Once you put all these together and run a feasibility check, it is time to build a pitch which should sound something like:
Mr. Kent, let me tell you about this idea. Last week, LexCorp announced it would build its new headquarters right outside Smallville, where little hotel inventory exists. As of today, there are two select-service hotels that perform well despite being dated. As the main producers of Kryptonite, LexCorp will host thousands of clients and executives that will most likely prefer a newer full-service hotel. Given my expertise in business full-service hotels, and my personal connections with LexCorp, I am certain this venture would be a success. Our preliminary numbers indicate that a four-star hotel would yield a 20% cash-on-cash return. Last week, I toured the vicinity and found a land for sale across the future headquarters in case you'd like to consider it.
I hope this advice gets you excited about the prospect of creating a new opportunity for yourself and others. Good luck!
Hugo Desenzani is chief executive officer of Intursa (Libertador Hotels, Inversiones La Rioja).
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community.Please feel free to contact an editor with any questions or concern.