At a time when new hotel projects are few and far between and the transaction pace is slow, Valor Hospitality Partners is busy with new prospects around the world.
Valor has a lot of irons in the fire in the U.S., said Craig Strickler, president of the Americas at Valor. Over the last year or two of development, with costs going up and now stabilizing and interest rates beginning to fall, the company is bullish on the future. It has several projects that have been in the works for about 18 to 24 months that are moving faster now.
Internationally, Valor has three luxury projects in the United Kingdom and Ireland slated to open in early 2025. It has another in Saudi Arabia, its first in the country. The 151-key Hijla Hotel will be part of Le Premier, an upscale mixed-use development in Abha, and it is scheduled to open later in 2025.
Valor also has several projects in multiple countries across Africa.
There are so many new opportunities to enter new countries because hotel franchising and third-party management are so new in international markets, Strickler said. Third-party management has been in the U.S. for a long time, but it’s only in recent years that it’s snagged a foothold overseas.
And while brand name and market awareness are important, Strickler emphasized that his company's primary client is the hotel owner.
“We try to balance that fine line with a little lean on the owner to drive the profitability that they're looking for out of their asset,” he said.
At the same time, Strickler said he’d like to think Valor has made a name for itself with the global hotel brands, particularly in the soft-brand and lifestyle spaces. Its success so far has led to it receiving phone calls for new projects with Hilton’s Curio and Tapestry Collections, Marriott International’s Autograph Collection and Tribute Portfolio and IHG Hotels & Resorts’ Vignette and Kimpton brands.
Growing and maintaining the portfolio
As hotel transactions have slowed, there’s pent-up demand from owners to make deals, Strickler said. They have to make changes, make investments and make their money work for them.
To maximize that mindset, Valor brought in Chief Development Officer Dwayne Marshall in 2022.
“We’ve gone on a marketing spree over the last few years, bringing new partners to us to help find deals for them and for them to bring deals to us, along with developing the relationship from the development side of the brands,” Strickler said.
To maintain its management portfolio, Valor has to perform, Strickler said. During the pandemic, the company managed a set of distressed hotels that ended up doing so well, the owners turned around and sold them to get out from under them. That’s a risk third-party operators take, but the goal is to use the experience and build on the relationship with these capital partners.
When it has these opportunities with boots on the ground and an understanding of the market, it has to find those flexible owners who are more interested in a stabilized asset than owners who are interested in distressed assets with opportunistic upsides, he said.
“We’ve got to find a balance of those two different types of ownership groups that are interested in an opportunistic play for future development things, but then also the established ownership groups that are interested more in cash flow and maintaining an existing asset that performs,” he said.
A focus on food
One thing that helps differentiate Valor from its competitors is Savor, its food-and-beverage company, Strickler said.
“We’ve been trying to tee this up for a while, and now we’ve got a global footprint with three excellent chefs leading the culinary direction of that company in different regions across the globe,” he said.
While some hotel companies run hotels with restaurants, Valor thinks of its food-and-beverage operations as standalone restaurants with hotel rooms attached, he said.
“Most of the people that are in the business know, [food and beverage] is what will make or break you,” he said. “It makes the vibe. It makes the success of the hotel, and it drives people to come, want to stay at the hotel, because they want to be at that hotel because the bar is popular, the restaurant, the food is great.”
Valor has a full food-and-beverage team in the U.S. It has an analyst who advises on menus. There’s an outlet activation director who is essentially a revenue manager for food and drinks who focuses on getting customers in and keeping outlets activated to drive occupancy in the restaurant.
The labor force
The hotel industry has seen its labor force stabilize, but at a much higher price point, Strickler said. Now that wages have stabilized, Valor has been able to fine-tune its operations model and focus on talent retention for its "hotelitarians," what the company calls its employees. The company reviews its turnover percentages monthly to make sure there aren’t any concerns at individual properties or companywide.
As of October, the turnover rate was down 20 percentage points year over year, he said.
“We always like to say that our hotelitarians are not a cost center — they’re an asset on the balance sheet because we value them,” he said. “If we don’t have them, we are going to spend a lot of money filling their roles or finding people who will temporarily fill their roles.”
Valor has made a big push to stabilize some of the benefits cost, which have also increased, he said. For the first time in a while, it didn’t have any increase in its cost of medical last year, and the company is looking for a similar opportunity this year.
The company is in the process of going through its Healthy Habits program for the second half of 2024, Strickler said. In August, it did a steps challenge encouraging employees to walk more by offering roughly $10,000 in prizes.