Hotel CEOs talk 2017, supply and the sharing economy
 
Hotel CEOs talk 2017, supply and the sharing economy
06 FEBRUARY 2017 9:41 AM

Several top executives shared their thoughts on current hot-button issues in the hotel industry during panels at the 2017 Americas Lodging Investment Summit.

LOS ANGELES—The hotel industry’s top minds gathered in Los Angeles at the end of January for the 2017 Americas Lodging Investment Summit, with many expressing optimism for the coming year.

Here’s a collection of some of the most noteworthy comments hotel CEOs made during panel discussions at ALIS.

Richard Stockton, CEO, Ashford Hospitality Prime
Sam Nazarian,
chairman and CEO, SBE Entertainment Group
Greg Mount, president and CEO, Red Lion Hotels Corporation
Geoff Ballotti,
president and CEO,
Wyndham Hotel Group
David Kong, president and CEO, Best Western Hotels & Resorts
Jim Amorosia,
president and CEO,
G6 Hospitality
Elie Maalouf, CEO of the Americas, IHG

On expectations for 2017 and supply
Richard Stockton, CEO of Ashford Hospitality Prime: “We’re finding ample capital available at competitive prices. I know construction lending is available. … Then you’ve got a number of debt funds that have been raised to fill the gap. As you look at real estate cycles over time, what usually gets us in trouble is supply overshooting demand. I don’t think that’s going to happen in 2017; supply is pretty controlled. I think you really need to keep an eye on what happens in ’18 and ’19.”

Mitesh Shah, senior managing principal and CEO of Noble Investment Group: “To be in this business, you have to be an optimist, and we’re probably more optimistic than four or five months ago.”

Sam Nazarian, chairman and CEO of SBE Entertainment Group: “From our position as an asset-light opco, we’re very excited about ’17 and ’18. … We’d like to get more skill and potentially more M&A. There’s good cause to be optimistic.”

Greg Mount, president and CEO of Red Lion Hotels Corporation: “I think you’re seeing still a little bit of a sugar high from the election results. There are still some things to be determined, but I think you’re seeing more confidence in C suites and consumers. … And I think we’re seeing a number smaller regional companies becoming hesitant and concerned about being relevant when consolidation comes on, and that’s where opportunism comes in.”

Geoff Ballotti, president and CEO of Wyndham Hotel Group: “From an industry standpoint, we’re very optimistic. … From Wyndham’s standpoint, we’re incredibly optimistic in terms of our portfolio.”

On the sharing economy
David Kong, president and CEO of Best Western Hotels & Resorts: “What’s surprised me and continues to surprise me is Airbnb. It’s a company with a valuation of $30 billion. Obviously, very sophisticated investors have high hopes for Airbnb. … It’s surprising to me that in our industry, especially big brands, say Airbnb is of no consequence because obviously it’s eating into our market share.

“In some ways, Airbnb’s impact on our industry is going to be greater than the (online travel agencies’) impact because the OTAs’ impact on the industry is a rise in distribution costs. It’s a channel shift. … But Airbnb is a market share shift. You actually lose the business to Airbnb.”

Jim Amorosia, president and CEO of G6 Hospitality: “Not everyone is looking at it the same way, and quite frankly, it’s not a consistent impact across the country. There’s a lot of density, especially in the deeper urban areas. But I think there’s an ability as an industry to see this and deal with it quick (than the OTAs).”

Elie Maalouf, CEO of the Americas for InterContinental Hotels Group: “I don’t think anybody, at least in the large brand business, is ignoring the issue. I think we are recognizing that there are a lot of forces that have already existed in the industry, which is nonbranded alternative accommodations. … We’ve taken the position that we’re in the branded accommodations business.”

On the impact of Marriott-Starwood
Maalouf: “We hired over a dozen people from Starwood that are really great performers, great colleagues, and joined us late last year. … For us it was an opportunity to pick up some great talent. Starwood was a great company with a great heritage and a lot of great people.”

Stockton: “One of the things we see as a benefit is if we own an asset we’d like to reposition, all of a sudden without having to terminate that management contract, now we have more options. If we have a Marriott-managed asset or a Starwood-managed asset, we can look across the brands.”

The appeal of soft brands
Kong: “There are a lot of independent hotels that value their freedom and don’t want to abide by rigid brand standards, but at the same time they needed to have an alternative to the OTA channels and also have a way to tap into the brands’ reservation systems. So soft brands allow independent hotels to have the best of both worlds.”

Expectations for the Trump administration
Stockton: “It seems this is a man of action, but whether or not his actions result in the right things, we’ll see. But he’s clearly someone who has promised a lot, and I guess he feels he needs to start delivering. I think we will see an increase in spending, which drives (gross domestic product) growth. We’ll see an increase in inflation, which is good for our industry, and hopefully we’ll see a reduction in taxes, which will increase corporate spending.”

Ballotti: “The message is simple: It’s listen and let us help you. And there’s an openness on so many different fronts right now, including a regulatory standpoint that we’ve all been struggling with. Joint-employer is the biggest issue.”

On muted RevPAR growth
Shah: “There’s nothing wrong with (2% to 3% revenue-per-available-room growth). It’s coming through rate, and you’re still getting 4% or 5% NOI growth. I struggle to find another real estate class where you find those kinds of returns.”

Mount: “Sometimes it can be a bit deceiving in how it’s viewed, particularly in the public markets, as the ultimate barometer. We try to make sure to try to educate when we’re out there speaking with different investors on what that really means.”

Ballotti: “The comps are getting easier this year. We all talk in our calls about the oil markets beginning to come back. Those hammered us hard, and we were still at 2% or 3% growth. Those comps only get easier.”

1 Comment

  • kevin candley March 15, 2017 8:00 AM Reply

    How about more opportunities for ownership to GMs.

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