Why improving assets is key to Outrigger’s growth

SYDNEY – When discussing his company’s portfolio, Jeff Wagoner, president and CEO of Outrigger Hospitality Group, said being in key resort areas is important, but so is the ability to improve properties and make a return on those investments with rate growth.

“We’ve spent and earmarked about $300 million in capital to improve these assets,” Wagoner said. “So, the strategy is not: buy a property, just put the brand on it, and move on. It’s to go in and improve the assets. And when you look at these markets that we’re buying in, there’s a rate spectrum that allows us to do that.”

Outrigger has 26 hotels in its portfolio in locations like Hawaii, Thailand, Fiji, Mauritius and the Maldives. Wagoner said a couple of recent additions in Hawaii illustrate his point.

“A good example is in Oahu or Waikiki. In that particular area, the rate spectrum is from $120 to $650,” Wagoner said. “So, if you buy an asset that’s running a $250 rate, you have a lot of room to be able to improve. When we put $85 million into a property, we expect to get that back because of the rate spectrum there.”

Wagoner was interviewed last week at The BHN Group's Hotel Investment Conference Asia Pacific: Australia-New Zealand in Sydney.

He said Outrigger is now on all four major islands in Hawaii, and it’s still looking to add other resort destinations worldwide.

“Fiji was important to us. Mauritius is important. The Maldives was important to be in that market again. And there are several other destinations, one being Australia, that we’d love to be in as well.”

My gut is it’s going to be the middle of next year before we have some stabilization, where we can look at year-over-year, typical growth of 3% or 4%.

Jeff Wagoner

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He said being on the beach rather than also in urban settings is a good fit for Outrigger.

“When you look at all the other big brands out there, there’s not a lot of pure resort brands,” he said. “We think it’s a niche that we fit in. We know how to manage that particular type of property well, and we will stick with it.”

Wagoner said he’s optimistic about the industry but is taking more of a micro view versus a macro one.

“When you think about the recovery out of Japan or China. How does that happen? We all think, okay, the border is open. So now it’s going to come, and it doesn’t come just overnight,” Wagoner said. “And we learned that in Japan, because of whether it’s currency issues, or whether it’s the conservative nature of travel, or whether it was subsidies within the market that kept people local instead of traveling, you have to look at each one of the real micro-environments to determine what’s going to happen over time.”

Still, he feels good about the industry heading into 2024.

“My gut is it’s going to be the middle of next year before we have some stabilization, where we can look at year-over-year, typical growth of 3% or 4%.”

Wagoner also said he learned a valuable lesson about the Hawaiian market during the early panic of the pandemic. 

“Everybody’s trying to figure out a way to have non-touch check-in… So I went to one of the companies that do kiosk check-in, and I said I probably need to buy 30 of these… But I asked how many kiosks check-in are in any of the resorts in Hawaii?”

The answer was zero.

“Not one hotel has a kiosk check-in, and it hit me that this is all about the face-to-face interaction, especially in that resort environment where the customer is still looking to sit down and talk to you and find out how they plan their trip and the things that they can do within the market,” Wagoner said. “So, I think the people experience in our space is going to be critical moving forward.”