As part of the Americas
Lodging Investment Summit’s Patron sponsorship program, ALIS organizers asked
Ennismore’s Jason Hsiang eight timely questions as we prepare for the 22nd
annual event January 23-25, 2023, at the JW Marriott/Ritz-Carlton Los Angeles
L.A. LIVE. Following are his responses.
ALIS: How has
inflation and the threat of a recession affected expansion of lifestyle brands
throughout the Americas, but with a particular focus on the U.S.?
impact of high inflation and a recessionary environment is not as severe in the
lifestyle space as it may be in other segments. The majority of the lifestyle segment
and leisure guests tend to weather these periods of economic uncertainty quite
We are also in such
multi-variable environment now – in certain markets ADRs have grown upwards of 30%
from 2019, therefore offsetting increasing operating costs. Pent up demand
after two long years of suppressed travel under the pandemic is overcoming air
traffic challenges (prices, delays), and there are longer lengths of stay as travelers
are working remotely – and these factors are helping margins. We believe this recovery
momentum from people returning to travel may well take through to the other
side of the current market conditions, as maintaining rates help hotel recover
forecasts show supply growth checking in at about 1% each year for the next two
or three years. How do you see it playing out based on the Ennismore/Accor pipeline?
latest data shows ~1.6% US market growth in the next two years. First, we see a
shift in what is being built: a “commodity-type” hotel is not as attractive on
a P&L and there’s an abundance in supply in most markets. Second, we see
many developers turning away from those big box brands and looking to
reposition with lifestyle brands to maximize returns. Third, developers are
more willing to combine hotel assets with other uses, such as branded
residences, extended stay concepts, co-working spaces and searching for ways to
differentiate their property.
Ennismore is an integrated
lifestyle collective with Carte Blanched F&B division, AIME Design Studio, Partnership
Studio, and the largest portfolio of hotel brands exclusively in the lifestyle
space, which is benefiting from this shift in demand in our industry. We are well
positioned to take advantage of the market preference and expect to see our portfolio
grow exponentially in the next two to three years.
the message to hotel owners, investors, and developers from the lending
community in general as 2023 approaches?
see strong demand for clearly differentiated product and specifically,
lifestyle hotels. When a brand can connect with guests on a cerebral level, it builds
a strong following and lasting loyalty. The unique experiences guests take away
from their stay result in the best direct marketing for the hotels.
bring hotels to life with their own personality and energy. Whether it is Hyde
Beach Club at SLS South Beach or the Hoxton Chicago as a central hub and melting
pot for the neighborhood, a lifestyle hotel takes focus and vision to create. Ennismore
has been built around the challenge of being able to create these unique, founder-built,
14 lifestyle brands and grow them with scale without losing what the brand set
out to deliver. About 45% of our company is focused on building and creating
content (through design, restaurant & nightlife/entertainment concepts,
digital marketing, and partnerships), while collaborating with Accor’s global infrastructure
for sales, distribution, and IT.
on your portfolio and what you’re seeing throughout the industry, what makes
lifestyle hotels in general such a target for development?
define a lifestyle hotel as a multi-faceted offering that can anchor a
neighborhood as a destination in itself; can bring in locals and travelers;
that has design elements that create its own personality and identity; create
authentic experiences; and has restaurants and bars that actually make people
want to stay there.
the right activation to create a highly profitable hotel – programming which
maximize revenue generating space, F&B concepts which drive room nights and
higher ADR index, creative design which incorporate local culture, lifestyle
hotels are one of the most compelling in the industry. These offerings become
attractive for both developers and guest alike. Also, lifestyle hotels have also
experienced the benefit of bleisure travel (blending of business and leisure) as
consumer expectations and behaviors have profoundly shifted. Ultimately,
developers have come to realize lifestyle hotels maximize revenue resulting strong
industry leading ROI.
has the labor shortage affected the hotel development process? Is it something
that the industry will deal with long term?
suspect the industry will struggle with the labor shortage for the next few
years as we will need to work hard to compete and attract talent from other
industries. It is encouraging that people are going back to work and
encouraging to see a new equilibrium with people working remotely from home or
wherever they chose to be.
There are many variables why someone
chooses where to work – attractive comps/benefits, a safe and inclusive work
environment, providing job satisfaction and upward mobility, (the list goes on)
– it’s not enough to get just one or two of those right. Our perspective is
that you need to make a place where people enjoy working, are inspired by the
product and engage in a strong corporate culture while allowing their
individual personality shine.
the status of the shortage of materials and the supply-chain issues and their
effect on development? How much time have these issues added to the development
all connected. The labor shortage contributes to the supply chain issues, all
the way from production to delivery and installation. Contractors and
subcontractors, being short staffed has been a challenge, and even in some
cases backlogs in local government organizations have caused delays in getting
We have seen this affect hotel
developments anywhere from 6 to 12 months but may be seeing that delay coming
back down and stabilizing. This makes projects take longer and stresses
developers’ balance sheets in the process. Getting a strong and motivated
project team and the right consultants on board can really help speed the
process up. Working with a global company brings with it global solutions … if
you can’t get your furniture from one supplier, having a global network of
suppliers in place can really help.
ALIS: What’s the most under-estimated challenge the hotel industry
faces, and why?
have too many choices and developers are always trying to keep up with shifting
preferences and trends. Today’s travelers are all looking for brands they can
identify with or experience a local culture. Developers can see many of the big
brands have oversaturated most markets and diluting brands to keep growing.
They are mired in their own exclusivity areas. There are city centers out there
with literally more than 100 hotels from the same group. It can be hard to get
excited about a world class distribution system when you share it with 100
ALIS: What’s the most
under-estimated opportunity for the hotel industry, and why?
HSIANG: I have to pick two: The first
is F&B. F&B is traditionally included as an amenity to define hotel chain
scale, and generally is an afterthought in most hotels. Ennismore views F&B
as transformative – it can define a property, can provide outsized ADRs, and
increase total revenue generated when done right. F&B is as important as
the hotel rooms themselves, yet we often see amazing properties completely miss
this. When you bring in the right expertise, understanding of the business
model and creative minds together, you can see significant benefits.
The second point is the
online, digital footprint. Ninety-one percent of guests 35 and under book hotel
stays through online channels. These travelers make up 46% total hotel stays
and will account for a larger portion of the traveling pie in the future. Meeting
those customers in that space and delivering interactive experience is becoming
more critical. Ennismore as a dedicated digital studio focused on the booking
experience to creating synergies with our external brand partners, we want to
build an online ecosystem that meets consumers’ expectations.