While many hotels avoided the worst of the damage from hurricanes Irma and Harvey, speakers at the Hospitality Asset Managers Association Fall 2017 conference said there is still significant work to be done before a full rebound.
IRVINE, California—Hoteliers are continuing to grapple with the effects they’ve seen from hurricanes Harvey and Irma, which struck Texas and Florida, respectively.
Speaking at the Hospitality Asset Managers Association Fall 2017 conference, several asset managers said they’re still trying to get the lay of the land in Florida and are starting to work though recovery efforts in Texas.
Derrick Yee, VP of asset management for Watermark Capital Partners, said his company’s Florida properties have largely avoided damage, but are still affected by the conditions surrounding the hotels.
That means Yee and his company expect a quicker return from their three mainland hotels—The Ritz-Carlton Key Biscayne, Miami; The Ritz-Carlton, Fort Lauderdale; and the Boca Raton Marriott at Boca Center—than the Hawks Cay Resort in Duck Key, Florida, because of the significant amount of infrastructure damage seen in The Keys.
“I’m still waiting for the final update,” he said. “Our team’s down (at Hawks Cay Resort) with some of our emergency repair groups, flying in by helicopter. … We know we don’t have any power. We know so far it looks like most of the structures are there. So our biggest thing is utilities. Everything for us is going to be based on utilities and when they get up and running again.”
He said the top concerns include the conditions of roads and water infrastructure in the area.
“We hope (reopening) will be sooner than later, but the biggest thing is sort of playing it ear by ear, day by day,” he said.
Yee said his company’s had a strong plan of attack before the storm hit, and part of that was making sure employees got out of town to avoid the worst of it. He said that last part wasn’t particularly easy, and at one property a GM was pretty insistent they should stay there to take care of the hotel. Ultimately, the only personnel left behind were small security teams, one of which actually prevented an attempt to loot a property.
“Before the storm, it was about making sure everyone was in a safe place,” Yee said. “Our hotel in Miami Beach, that manager at one point was thinking they should stay. We still thought it was tracking to hit Miami as a Category 5, (so) we told him we had to get out. Everything else can be replaced; human life can’t be.”
He said after the fact, the top thing now is constant communication with team members and cashing in on the services they lined up before the storm.
“A lot of it is just making sure before the storm hit that we had lined up as many resources as we had available so when we can go back, we can go back as quickly as possible,” Yee said. That includes “emergency remediation services, contractors and our insurance companies.”
The Chartres Lodging Group, on the other hand, had exposure in Houston, which was hit by Hurricane Harvey. Officials with that company said they were lucky that the DoubleTree Suites by Hilton Houston by the Galleria saw “no physical damage and remained fully operational.”
Anjali Agarwal, EVP of asset management for the company, said the storm served as a reminder of how dedicated some of that hotel’s team members are, including one who said she waded through waist-deep water to get to work.
Now Agarwal and Eduard Wedel, senior director of asset management at Chartres Lodging, said one of their focuses will be making sure those employees are taken care of.
“Right now we’re gauging the employee impact,” Wedel said. “We’re putting together a list (of employees whose homes and belongings were damaged and destroyed) and assessing things like employees’ transportation needs.”
Agarwal said one of her focuses will be making sure those who went above and beyond are recognized for their efforts—including both employees and first responders. She said for employees in particular that could include a financial component and recognition events.
She noted the property will likely benefit financially in the short term from staying open through the storm and seeing demand shift from more damaged properties, but she expects 2018 to be “flat or maybe slightly down.”
Wedel said there are some reasons for optimism in the market, though, including potentially increasing oil prices and low supply in the Galleria submarket.
Robert Mandelbaum, director of research information services for CBRE Hotels’ Americas Research, said in each of the storms, hotels seemed to avoid the worst damage.
“There really weren’t that many hotel closures compared to Hurricane Katrina,” he said.
But the hurricanes could have a decidedly negative effect on some things that have been bright spots for the hotel industry, he said. Three areas that have seen decreasing costs have been food, utilities and insurance, and Mandelbaum said each of those things went up after Katrina, and could do so again.
“So there could be expense impact in addition to the revenue impact,” he said.
*Clarification, 20 September 2017: This story was changed to feature a more recent photo of The DoubleTree Suites by Hilton Houston by the Galleria.