CEO insights lead off HICAP ANZ in Sydney

SYDNEY – When asked on Thursday at Hotel Investment Conference Asia Pacific: Australia-New Zealand about the devastation of the wildfires in Hawaii, Honolulu-based Outrigger Hospitality Group President and CEO Jeff Wagoner said it’s hard not to get emotional about the damage in cities like Lahaina.

“We had 79 employees that lost their homes as well,” Wagoner said. “So, this is the way the entire city looked. And this isn’t a small little town. It’s a pretty large town. A lot of residents, a lot of local businesses were damaged here.”

Outrigger’s property in Lahaina, The Plantation Inn, an 18-room bed and breakfast the company had purchased before the fires, completely burned to the ground.

But despite the devastation, something at the property gave him a sign of hope: the sign for The Plantation Inn was undamaged without a scorch on it.

“This is truly amazing that could sit there [undamaged] like that through this entire town burning down,” Wagoner said. “It just really is a tragedy what has occurred. Two thousand homes were lost, and 115 lives were lost at this point. But we’re going to rebuild the town. We’ve got to figure out how to do it. It’s going to take a long time, but it’s something that I think, when I saw this, one of our employees actually went in and was able to take this picture. It said to me, we got to rebuild this hotel, and we need to rebuild this town.”

Wagoner and Miami-based SH Hotels and Resorts CEO Raul Leal were interviewed by Jeff Higley, president of The BHN Group, on the opening day of HICAP ANZ programming in Sydney at the Sofitel Sydney Darling Harbour. Conversations ranged from the recover in Hawaii, to labor shortages and deal making, as well as other challenges and opportunities of the day.

Raul Leal (left), CEO of SH Hotels and Resorts, interviewed by Jeff Higley at HICAP ANZ

Leal said his experience starting in the back of a hotel house at age 15 gives him a unique perspective on the hospitality industry’s labor shortages right now.

“I think the industry has changed quite a bit. And the expectations of the hotel team have changed quite a bit, especially after COVID,” Leal said. “Now’s the time, if we want to reinvigorate the industry, to start focusing a lot on the employee journey, and what matters to people today… If we don’t create a different environment for the industry in general, across the board, I think it’s going to be tough for a while… I think providing people the tools to succeed in the future, maybe even outside the hotel business, is something that we probably haven’t done well. And I think today’s employers are looking for that.”

Wagoner said the biggest obstacle to making deals today is on the financing side.

“We were looking at a property recently in Vietnam, and interest rates in Vietnam are 10-plus%. Interest rates in some of the key markets are really tough to deal with… so you’ve got to find the right deal and the right location. The property we were looking at in Vietnam, with the interest rates, it’s very difficult to make that pencil.”

When asked about the biggest challenges for hotel investors, Leal said one was construction or the lack thereof.

“Construction, in some places, has come to a dead stop,” Leal said. “Certainly, in Europe, it’s already in the opposite direction of construction. And in the U.S., it’s stagnant at the moment… The construction costs and land acquisition will be an issue for a long time. So, the kind of products that you’re going to be able to do in this environment are going to have to get the average rate and are going to have to have other corresponding revenue streams as well to be able to make it work.”

Now’s the time, if we want to reinvigorate the industry, to start focusing a lot on the employee journey, and what matters to people today… If we don’t create a different environment for the industry in general, across the board, I think it’s going to be tough for a while.

Raul Leal

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But Leal still sees growth opportunities, especially in markets like Australia.

“Having said that there are tremendous opportunities and crossing borders everywhere. The consumer is looking for new and unique experiences,” he said. “I think you’re going to see opportunities like that all over the place.”

When asked about takeaway advice for the audience, Wagoner said to be proactive in all areas of the hotel investment business.

“One of the things that’s been important for me in our company, and one of the things I’ve learned through the pandemic is to be involved,” Wagoner said. “Be involved in government. Be involved in climate change. Be involved in workforce development. It’s critical that we don’t just sit back as an industry anymore and let things happen to us. We need to be involved. We need to be part of the process, we need to be part of the solution out there.”