PHOENIX—During breaks at The Lodging Conference, HNN staff met with brand, ownership company and management company executives to discuss the latest news and developments within their organizations.
Carlson Rezidor Hotel Group
Carlson Rezidor Hotel Group signed its first four Radisson Red hotels in the Americas: Radisson Red Bogota, Colombia; Radisson Red Cali, Colombia; Radisson Red Campinas, Brazil; and the Radisson Red Minneapolis Downtown.
Javier Rosenberg, COO and executive VP of managed hotels in the Americas, said Carlson’s Red brand rollout is a reflection of the regional industry strength it’s seeing around the world.
“There is continued growth in North America, where we’ll see a couple more years of strong metrics, but we’re also seeing significant expansion in Latin America,” he said.
Since the company launched the upscale select-service brand in early 2014, Rosenberg said it has been gaining momentum and has 12 projects signed in North America.
“The DNA of this brand calls for an urban setting,” he said. “We want cities with personality, and we even have some smaller cities we’re working with. This is not a highway brand—you need that urban setting.”
The company plans to open 60 Radisson Red hotels globally by 2020. Overall, Rosenberg said likely the brand will end up at around 35% conversions and 65% new builds.
“We believe in the individuality of each hotel,” he said.
Chesapeake Hospitality
Chesapeake Hospitality is looking to build on its recent growth and will entertain opportunities to invest in deals, according to W. Chris Green, principal and senior VP of operations.
Green said Chesapeake is open to becoming asset buyers, but it’s a difficult environment to do that when prices for hotels in tertiary markets are $200,000 per key. The company is looking for upscale select-service products such as Residence Inn and Hilton Garden Inn.
“We’re interested in (joint ventures) where we’d be general partner,” Green said. “We’re a strong sponsor because of our track record that goes back to the 1950s. We expect three to four of those types of deals to happen over the next 12 to 18 months.”
The company isn’t looking to develop hotels because of timing of the economic cycle.
“Even if you can build a hotel for 25% less than current key valuations, you probably don’t have the time to take advantage of what’s left before the downturn,” Green said. “Secondary and tertiary markets are heating up for deals. There are still assets out there that can be bought.”
The diversity of Chesapeake’s client base is a good indicator of its ability to adapt, Green said. The company manages 28 hotels in 14 states for 13 owners.
Chesapeake’s main focus is the eastern seaboard from Philadelphia to Miami, but it has properties in Oklahoma City and Houston, has secured a deal in Milwaukee, and is working on deals in Chicago and New Orleans.
Chesapeake’s biggest challenge is finding the right people to hire at the hotel level, Green said.
“As the economy has gotten better, other industries are taking (the hotel industry’s) people,” he said. “We as an industry have an erosion of people into all different market segments.”
The company’s biggest opportunity is maximizing returns, especially when it comes to distribution platforms.
“You can move 1% to 3% bookings off (online travel agencies), and the overall impact to your financials is huge,” Green said. “For us to be relevant we’re going to have to be aggressive and stay ready for the downturns.”
Chesapeake was the management offshoot when MHI Hospitality became a REIT in 2005. (The REIT changed its name to Sotherly Hotels in 2013.)
Choice Hotels
David Pepper, senior VP of global development for Choice Hotels, shared updates on the company’s Comfort Inn and Comfort Suites brands, following Choice’s $40-million property-improvement incentive launched in 2013.
He said the 300 hotels that took advantage of the company incentive are seeing incremental revenue-per-available-room gains, averaging 5% higher than non-participating hotels.
“Everything we’re doing with the Comfort brands—terminating older properties and improving existing hotels—is paying off,” he said. “Developers are coming to us, looking at markets that are performing well and backfilling markets where we terminated old (product). It’s bringing us new guests.”
In particular, Pepper said weekday occupancies are increasing across the brand. “We’re really gaining share there and attracting that business traveler,” he said.
The company also is seeing momentum with its Cambria brand, he said. “It’s on a tear right now,” he said. “We’re going into markets where we have a lot of demand and little supply from a Choice perspective, and terrific operators as well.”
Next to open are properties in White Plains, New York, and hotels in the Chelsea and Times Square neighborhoods in New York City. “We broke ground at LAX, at DFW and we’re about to break ground in Miami,” he said. “It’s our highest occupancy and (average-daily-rate) brand in the system.”
Greenwood Hospitality Group
Greenwood Hospitality Group’s focus has been to grow with two to three new hotels a year, said Aik Hong Tan, principal for Greenwood. With 12 properties now, he expects to reach up to 20 by the end of next year.
One of its hotels, the Renaissance Allentown, opened in January of this year, and, at the time of the interview, his company was scheduled to close on another with its capital partners within the week. The company is under contract to open a DoubleTree by Hilton in Kansas before or after Thanksgiving, he said.
The year has gone well for Greenwood, he said, and the difficult part has been staying disciplined to keep pace and not outgrow its resources.
“I think one of the things we’ve learned is partners are so important,” he said. “Even though we may be a management company, we need to find the right capital partner. They have discipline. They have the deep pockets to withstand the inevitable downturn and hopefully have the same philosophy of doing business.”
Stonehill Strategic Capital
While Stonehill Strategic Capital was already having a good year, business picked up a bit further this summer with nearly $200 million in financing for 11 hotel projects.
Mathew Crosswy, president of Stonehill, a Peachtree Hotel Group affiliate, spoke to the success his company is seeing. As of the interview, the company had provided more than $350 million in financing for hotel projects and is on track to top $500 million in projects by the end of the year.
“The summer is when everything started to come really to fruition,” he said, adding the company’s pipeline is as robust as ever.
The ramp-up has been exceptional, he said, and Stonehill continues to see a lot of opportunity. Executives are targeting a wave of commercial mortgage-backed securities debt maturities coming through with $6 billion undercapitalized debt that originated in 2005, 2006 and 2007.
“We closed on two that had a maturing loan in 2015,” he said.
WoodSpring Hotels
WoodSpring Hotels, which operates the Value Place and WoodSpring Suites brands, shared a new interior design package for WoodSpring Suites at The Lodging Conference. Mike Varner, executive VP of brand strategy and management, talked about the company’s growth plans for the brand moving forward.
The company launched WoodSpring Suites this spring, and the first property opened in July.
Varner said the company has 10 hotels in active construction, with another 20 set to break ground over the next four to six months.
The new interior design prototype for WoodSpring Suites is designed to increase rates and appeal to customer preferences, he said.
“Our target guests say they’ll pay 25% more than what they pay for Value Place,” he said.
The company conducted extensive customer research in developing the new interior design and incorporated details reflecting how guests use the rooms.
“We have an engineered-wood floor now, because even though we cleaned the carpet between each guest, nobody gave us credit for it,” Varner said. “Same with the white bed, which we now have as well.”
He said that costs to owners will go up about 5% with the new design. Most of that comes down to the bathroom improvements, which include a stand-up shower, he said. Another new feature is a lightweight metal bed frame, designed to discourage bed bugs.
“The whole experience has been designed to make (the hotels) easier to operate,” Varner said.