Big deals and big thinking share the spotlight in this day-long learning intensive.
The
best hospitality deals of 2022 were the biggest news on the second day of this
year’s Americas Lodging Investment Summit (ALIS) in Los Angeles. Winners in five categories were
chosen from strong fields of finalists representing the hotels, companies, and
executives responsible for the most influential hotel industry deals in 2022. Nominees
for the awards were evaluated by expert judging panels based on outstanding
business performance in each sector
Selected
as this year’s best-in-class transactions were:
Development of the Year (Full Service) 2022 (includes branded and
unbranded - luxury and upper upscale chain scales, and casinos): 1 Hotel and Embassy Suites – Nashville, Tennessee.
Finalists in this category also included The Ritz-Carlton New York, NoMad – New
York City, New York, and The Tampa EDITION – Tampa, Florida.
Development of the Year (Select/Limited Service) 2022 (includes branded and
unbranded - upscale, upper midscale, midscale, and economy chain scale): citizenM Chicago Downtown – Chicago, Illinois. Finalists in this category also included Arlo Wynwood – Miami, Florida, Radio Hotel
– New York City, New York, and YOTEL/YOTELPAD Miami – Miami, Florida.
Single Asset Transaction of the Year (Over US$25M) 2022 Waldorf Washington
DC – Washington, DC. Finalists in this category also included Sheraton Boston Hotel
– Boston, Massachusetts and Sheraton New York Times Square Hotel – New York City, New York.
Single Transaction of the Year (US$25M & Under) 2022: Old
Santa Fe Inn – Santa Fe, New Mexico. Finalists in this category also included
Holiday Inn Express Hilton Head Island – Hilton Head Island, South Carolina and Residence
Inn Atlanta Buckhead/Lenox Park – Atlanta, Georgia.
Merger & Acquisition of the Year 2022: Watermark Lodging Trust acquired by Brookfield
Asset Management. Finalists in this category also included the
49% Stake in Noble Investment Group acquired by Host Hotels & Resorts and
Radisson Hotel Americas acquired by Choice Hotels International.
The ALIS awards also recognize doutstanding
accomplishments by the most influential people in the sector:
Jack A. Shaffer Financial Advisor of the Year 2022: Teague Hunter, president
& CEO, Hunter Hotel Advisors. Finalists in this category also included
Larry Kwon, managing director, Moelis & Company and Gregory Rumpel, senior managing
director, JLL Hotels & Hospitality Group.
Arne Sorenson Social Impact Leadership Award: Geoff Ballotti,
president and ceo, Wyndham Hotels & Resorts.
Thought-leading Diversity Solutions
Day 2 also provided an in-depth tutorial in optimizing
opportunities from increasing diversity.
Diversity, equity and diversion were designated as major factors in accountability
among industry leaders speaking at a boardroom outlook panel at ALIS 2023 where more than 2,600 delegates were in attendance at the JW Marriott at LA Live.
The takeaway from panelists Geoff Ballotti, president &
CEO, Wyndham Hotels & Resorts, Michael George, president & CEO,
Crescent Hotels & Resorts, Mark Laport, president, CEO, Concord Hospitality
Enterprises and George Limbert, president, Red Roof, was that the industry has
made significant progress toward inclusion, but that there’s still a long way
to go.
What to watch for: More diversity councils at the corporate
and property with “teeth.” “It’s not
enough to have committees of color,” Ballotti said. “We need to get this issue
into the boardrooms.”
Also on the agenda will be more widespread corporate initiatives
such as Wyndham’s “Women Own the Room” to put women on a hotel ownership track.
Moderator Rod Clough, president, Americas, HVS, underscored
the importance of diversity not only as a social priority but also as a
bottom-line essential. “The industry has a labor shortage. Putting an emphasis
on diversity can address that. If people can look at a company and see people
who look like them, they’re going to be more open to working there,” he said. “With
predictions of ADR gains not rising as fast as in 2023, we’ll have fewer
dollars to spend. Think about the cost of replacing a team member. By creating
a safe, non-threatening inclusive work culture, we can drive employee
commitment and retention.”
Trends in capex spending
Sessions
throughout the second day of ALIS offered fresh strategies for optimizing ROI.
Stephen
Hennis, founder of Hotelogy, Arvada, Colorado, shared an indepth look at capital
expenditures with his presentation on the International Society of Hospitality Consultants
(ISHC) CapEx 2023 study. Partnered by the Hospitality Asset Managers Association and
STR, the 6th study on capital spending, repairs and maintenance compiled
data from over 700 U.S. hotels encompassing more than 3,100 data points of
capital spending to identify the priorities for the over $15 billion of capex
being invested in U.S. hotels in a typical year.
What
the findings showed is that, if 2020 and 2021 are excluded from the comparison
data, capital spending as a percentage of total revenue would have remained relatively stable
over nearly a decade, varying slightly from 2014’s 8.3% high to 2023’s 7.9%.
However, capex spending per available room was a different story,
rising from $3,702 in 2014 to $6,440 in 2023.
Hennis
outlined some “mythbusting” results from the new study, including 4% replacement reserve. Unsurprisingly, resorts played to the strength
of demand and allocated 10.6% for capex as a percentage of total revenue in
2023, followed by 9% for urban hotels. The biggest pullbacks were in airport
and extended stay hotels in comparisons between 2023 and 2014.
“There
are three key takeaways from this data,” he said. “First, the 4% replacement
reserve is insufficient. Second, numerous factors including revenue, amenities,
location, age and product type impact capital spending levels. And, third, external
factors including economic conditions, supply availability, labor and inflation
impact the timing and cost of capex.”
The
complete study is schedule for release in the spring of 2023.
Think like a customer
Costs are also on consumers’ minds, and that’s forcing a rethink
on everything from service style to F&B. “Customer expectations are
changing. Paying $34 for a bagel and salmon was not a big deal when people could
expense it,” said Octavia Marginean-Tahiroglu, general manager. St. Regis, New York, during a Meet the Future session with her boss, Tony Capuano, CEO, Marriott International. “Now, when customers are traveling with their families, it is a big
deal. Hotels will need to change menus to be more considerate of how that pricing
looks to their guest.”