Jeff Higley on Jan. 27 opens the 2020 Americas Lodging Investment Summit. It was a first for Higley, a veteran of the lodging industry trade media who last year became president of BHN Group, producer of ALIS along with parent Northstar Travel Group and AHLA.
The 2020 Americas Lodging Investment Summit in January drew more than 3,000 attendees to the L.A. Live complex in Los Angeles.
As many debated how the year will play out with regard to profit making, major hotel franchisers revealed new brands and significant redesigns to existing brands. Hospitality companies also announced new developments; ancillary organizations such as Castell Project released results of industry studies; and industry leaders and innovators received awards and recognition.
Judy Maxwell, principal and director of editorial at Long Live Lodging attended ALIS. This report is her reporter’s notebook of the summit. It also is the debut of Long Live Lodging’s project called The BulletInn, a news update on new trends and issues and those we’ve reported on and continue to watch.
ALIS is about deal making, and in Episode 246, Lodging Leaders focused on the hotel-transaction climate in the U.S.
First up in BulletInn is the overall forecast for the hotel business this year. While the industry ended 2019 up in all metrics, this year will see revenue growth go flat. STR forecasts 0 percent growth in business as supply outpaces demand in major markets.
STR and Tourism Economics revised their industry outlook at the start of ALIS 2020 that shows no growth in RevPAR this year.
Coronavirus a Black Swan?
In the weeks leading up to the conference, industry leaders said they feared a black swan event that would hasten the industry’s course correction.
During ALIS, coronavirus was an emerging topic in the news. U.S. airports, including LAX, were screening for possible carriers, but the size of the problem was a big unknown. Tyler Morse, CEO and managing partner of MCR Hotels, said during a panel discussion that he believes China was not being transparent about the size of the outbreak, including the number of deaths. He suspected the numbers are much larger than China is admitting.
Johns Hopkins on Feb. 10 reported more than 40,500 cases internationally, with more than 360 confirmed outside of mainland China. The number of reported cases was down from the 2,650 reported the day before, a 20 percent drop in 24 hours.
Currently, industry watchers say the loss of travel business from Chinese tourists will be a major blow to the U.S. travel and tourism sector. On Feb. 2, the U.S. government enacted travel bans, including foreign nationals who visited China over the previous 14 days and declared the virus a public health emergency.
Commercial airlines have stopped flights between the U.S and China. Oxford Economics is now forecasting that the U.S. will experience a loss of 1.6 million visitors from mainland China and 4 million hotel nights will be lost this year.
Gateway cities such as Los Angeles and New York City have seen a drastic drop in tourists and business.
The virus has been reported in 20 countries. The World Economic Forum released a global risks report, noting coronavirus has surpassed the SARS outbreak in 2003 in the number of victims, including deaths. At that time, it was reported global tourism industry saw a 9.4 million decline in tourism worldwide as SARS started in China and spread to 25 countries. The global travel industry lost between $30 billion and $50 billion.
Today the industry accounts for more than 10 percent of the world’s GDP, and before the outbreak of coronavirus, economists predicted a strong international travel year with a 3 percent to 4 percent increase in travel worldwide.
Forward, Women Advancing Hospitality, held a morning session on Jan. 27 at the start of the Americas Lodging Investment Summit in Los Angeles. Forward is a project of the American Hotel & Lodging Association, co-host of ALIS 2020. Included in the Forward panel were, from left, Rachel Humphrey, COO and vice president of franchise relations at AAHOA and former interim president and CEO of the association; Leeny Orberg, executive vice president and CFO at Marriott International; and Talene Staab, global head of Tru by Hilton. Humphrey and Staab have participated in reports by Long Live Lodging and its Lodging Leaders podcast. In Episode 245, Humphrey shared her experience leading AAHOA, including her decision to not pursue the top leadership role at the association. In Episode 218, Staab talked about industry efforts to encourage more women to invest in hotel ownership. Lodging Leaders also focused on the uphill climb faced by women in the hospitality industry in Episode 204, which was recorded in part at Forward’s inaugural event in November 2018 in Chicago.
Forward, Women Advancing Hospitality, which opened the conference on Jan. 27, with a panel of women in hospitality leadership. Forward is a project of the American Hotel & Lodging Association, co-host of ALIS 2020.
Moderated by Andrea Foster, senior vice president of Marcus Hotels & Resorts, the panel featured Mary Beth Cutshall, executive vice president and chief development officer of Hospitality Ventures Management Group; Krissy Gathright, executive vice president and COO of Apple Hospitality REIT; Rachel Humphrey, COO and vice president of franchise relations at AAHOA; Leeny Orberg, executive vice president and CFO of Marriott International; and Talene Staab, global head of Tru by Hilton.
At one point in the discussion, panelists advised the audience that, in some cases, it is smart to move down a career rung to be able to make a much bigger leap forward in the future.
It’s a common strategy deployed by both women and men as they strategically maneuver through their careers, said Peggy Berg, an industry consultant who in 2016 founded Castell Project, a non-profit organization dedicated to identifying and removing barriers women face as they strive to gain greater levels of responsibility and pay in the industry.
“I’ve been hearing that ever since I started Castell Project, and I don’t think it’s unique to women,” she said.
People who are “strategic” about their careers should be looking three years ahead to their goals. That may lead to the decision to return to school to earn a master’s degree or a certification. It also may require taking on a lesser role in a new department or at a new employer to gain exposure and experience in a different area of hospitality that would put them on track for a leadership position further down the road. “It can be a launching pad to something bigger,” Berg said.
LISTEN: Episode 249: Peggy Berg, founder and president of Castell Project, talks about areas where women are making gains in leadership in the hospitality industry and areas where they are barely represented.
Since Castell Project began, it has charted the movement of women in hospitality leadership. Its 2020 report Women Advancing in Hospitality Leadership was announced at ALIS. The third annual study was done by AHLA Women in Lodging and AHLA’s educational foundation.
It shows some progress is being made by women in corporate leadership. For example, seven women are CEO of hospitality companies, not a huge number but a significant increase from the three noted in 2019. “Seven is like a 20 percent increase in the number of women CEOs in one year. That’s a big move in the right direction,” Berg said.
“It says to me that maybe something fundamental is changing.”
COMPANY CHIEFS: Castell Project’s 2020 Women Advancing in Hospitality Leadership charts the number of women in leadership roles in hotel companies over the past two years. The study notes: “Overall, the attributes that correlate with success among male executives were found more often in female executives.”
Berg noted women are barely represented in certain areas of the industry, namely finance, brokerage and construction.
When it comes to lack of women in hotel development, one woman is on a mission to change that. Lodging Leaders in June featured Tracy Prigmore, founder of TLTSolutions, a hotel investment syndicate, in Episode 218 which explores the barriers to hotel ownership among women.
“Women are under-represented in many industries and we don’t know all of the reasons why, but in order to create change you have to tack action.” Tracy Prigmore, founder of She Has a Deal
A few months after the podcast aired, Prigmore launched She Has A Deal, a pitch competition in which the winner will receive $50,000 in equity toward a hotel project.
“Our goal in promoting the competition is to expose women to different career opportunities in hospitality,” Prigmore said. “They are choosing to alter the direction for their careers and taking advantage of the learning we are providing that can help catapult them on that journey.”
Four finalists from 17 teams will be named toward the end of March. These teams will compete for the win on April 25 at the Mclean Hilton in Mclean, Virginia.
Teams have one to three members, and they are all undergoing a nine-step process that teaches them what it takes to evaluate a deal. The projects being pitched include bed and breakfasts, independent boutique hotels and repositioning branded hotels.
Tracy Prigmore formed TLTSolutions, a hotel investment syndicate, after investing in a Hampton Inn.
A few years ago Prigmore wanted to invest in a hotel but struggled to be taken seriously by brand developers. She eventually was heard and invested in a Hampton Inn. She formed TLTSolutions to help others invest in lodging assets.
She Has a Deal is borne out of Prigmore’s experience and seeing other women interested in hotel investment. “I believe God has put this vision in me,” she said. “Women are under-represented in many industries and we don’t know all of the reasons why, but in order to create change you have to take action. If we have the conversation, we can remove the barriers; we can make progress.”
One industry leader who is willing to take measured risks toward modernization is David Kong, president and CEO of Best Western Hotels and Resorts.
Since Kong took the top role more than 15 years ago, he has worked to transition the company into a superorganism that can weather business cycles and sustain itself for years to come.
David Kong, president and CEO of Best Western Hotels & Resorts, said after a year of unsuccessfully lobbying more than 4,000 voting owner members in North America to take the company to a for-profit entity, he won’t try again.
Nearly 10 years ago, he was successful in convincing Best Western’s 4,000 plus voting members in North America to segment the flagship brand into three categories – or descriptors – based on amenities and price. The program created Best Western, Best Western Plus and Best Western Premier.
A few years later lifestyle brands Vibe and GLō were added. In 2018 boutique brands Aiden and Sadie joined the family.
A year ago, Best Western Hotels acquired WorldHotels, a global family of independent luxury hotels.
Kong said Best Western added WorldHotels as an independently operating company to give Best Western’s loyal guests a higher-end experience than what the company was offering at the time.
At the same time, WorldHotels’ affiliation with Best Western plugs it into the global company’s marketing and technology platforms. “We can greatly help the hotels in WorldHotels become much more effective in everything that they do,” Kong said.
Last fall, Kristen Intress, former CEO of WorldHotels, came back as CEO.
Last year, Long Live Lodging featured Intress in two reports. Episode 216 is a multimedia report about the wellness trend in hospitality. Intress was included because she founded Fit Farm, a wellness retreat in Tennessee.
In Episode 244 Lodging Leaders explores the reason women remain under-represented in leadership in the hospitality industry.
Intress is one of the exceptions.
“As with any type of merger and acquisition there’s always going to be integration challenges,” Kong said. “It’s never easy. You have to overcome cultural challenges as far as differences as to how people think about things.” He called Intress a “God send in so many different ways. It is the right time and the right place for the right person.”
A couple years ago Best Western Hotels filed its intention with the SEC to change into a for-profit company.
Kong had met with the company’s board of directors, seven hoteliers representing seven regions of owners in North America. He also went on the road to visit hoteliers and explain the reason for proposing the transition.
Ultimately the membership voted to stay as a not-for-profit organization.
At ALIS, Kong tells Lodging Leaders what it took to share the idea with members and why it did not gain approval.
“It was a monumental undertaking,” said the CEO, who spoke at 60 town hall meetings to pitch the proposal to member owners.
He cited SEC multi-tiered processes that kept the proposal from coming to reality. The delay dampened members’ enthusiasm as they forgot what objectives a for-profit company would mean to their businesses and investments. Kong also noted U.S. securities law prohibits detailed discussions about a for-profit bid once an investment prospectus is issued. Not being able to answer members’ questions hurt the proposal’s momentum.
Kong said he won’t try to go public again. “You have to respect the membership’s vote.”
Del Ross, right, chief revenue officer for Hotel Effectiveness, accepts an award during the Jan. 27 Tech Challenge at the Americas Lodging Investment Summit in Los Angeles. Presenting the award is Rob Torres, managing director of travel at Google, who was host of the ALIS event. Hotel Effectiveness offers technology that helps hotels manage labor costs. Long Live Lodging and its Lodging Leaders podcast has featured Ross in several reports about labor and hiring in hospitality. Episode 231 focuses on the impact workplace culture has on hiring and retention; Episode 232 looks at how to plug leaks in labor costs; and Episode 243 explores how to keep good employees.
North Point Hospitality of Atlanta on Jan. 29 won Development of the Year Select/Limited Service 2019 at ALIS. JP Ford, left, of Lodging Econometrics, presented the ALIS award to S. Jay Patel, center, president and CEO of North Point Hospitality, and Whip Triplett, executive vice president of the ownership, management and development group. JK Patel is founder of North Point Hospitality.
The award recognized the company’s $140 million tri-brand Marriott that opened last year in Nashville. AC Hotel by Marriott, Residence Inn by Marriott and SpringHill Suites by Marriott Nashville Downtown/Convention Center has 466 rooms and 9,000 square feet of meeting space under one roof in the city’s SoBro neighborhood.
Long Live Lodging and its Lodging Leaders podcast featured North Point Hospitality leadership in its May 1 report about the country’s two triple-branded hotel projects. Tune into Episode 211, Triple Whammy: Tri-branded hotels change playing field.
Lodging Econometrics has tracked the hotel industry since 1998. Its global database includes new-hotel pipelines as well as renovations and brand conversions. Hotel franchisers once eager to launch new brands are focused on converting existing hotels because it’s a faster way to recover revenue lost to the COVID-19 pandemic than through new construction. In Episode 346, Lodging Leaders explores the increasing number of conversions in the U.S. hotel industry and what owners and operators need to consider before repositioning an asset.
In the first few months of the COVID-19 pandemic in the U.S., financiers anticipated a swell of distressed hotel businesses. Some raised rescue funds to respond to what they thought was a pending crisis. Though there are financial rescues taking place, the level of such activity is far below what industry advisers and fund managers expected. Commercial real estate investors positioned to act in the early days of the pandemic held off and are now just beginning to unleash their cash hoards totaling billions of dollars. Episode 345 of Lodging Leaders podcast explores the state of capital investment in the hotel industry.