Hunter Day Two: Labor tops hoteliers’ concerns
Hunter Day Two: Labor tops hoteliers’ concerns
23 MARCH 2018 8:14 AM

Editors recap the second day of the Hunter Hotel Conference with takeaways, quotables and more highlights from the event.

ATLANTA—The second day of the Hunter Hotel Conference started out with a warm tribute to Raymond Schultz, who founded Hampton Inn in 1983, as he was presented with the Hunter Conference Award for Excellence and Inspiration.

But the conference quickly got back to down to business as panelists touched on the current status of labor challenges, quiet uncertainty of when the next downturn will be and whether it’s a buyers’ or sellers’ market.

Day two recap video

Photo of the day

Raymond Schultz, managing partner for Schultz Hospitality and an original founder of the Hampton Inn brand, received the Hunter Conference Award for Excellence and Inspiration. His son Rick Schultz, SVP of hotel operations, focused service division for Hilton, introduced his father with the following words: “The ability to see the next big thing, taking calculated risks, always being part of the front-line team … unlike Indiana Jones, Captain Kirk and Sherlock Holmes, Ray uses these skills in real life.” (Photo: Stephanie Ricca)

Quotes of the day

“I feel like the madness has to stop on development costs. On that front, we’re feeling hopeful that costs will start to level out if not go down a little.”
–Ryan Phelps, VP of acquisitions for T2 Hospitality, speaking about the increase in construction costs in recent years during the “Hotel values in a changing market” panel.

“It’s all hands on deck as an industry. I think the (American Hotel & Lodging Association) has done a fabulous job, but I think every person in this room, in this industry, really has a responsibility to try to engage on this.”
–Ken Greene, president, Americas, Radisson Hotel Group, speaking about how to get ahead of labor challenges.

Slide of the day

Mark Woodworth, senior managing director of Americas research at CBRE Hotels, said during Thursday’s “Statistically speaking” panel that supply is one potential threat to the hotel industry. He shared data showing the majority of U.S. hotel markets the company tracks are expected to see average supply growth greater than 2% this year. (Slide: CBRE)

Editors’ takeaways

The different kind of optimism flooding the hotel industry found its way to this year’s Hunter Hotel Conference. The fantastic tribute to Hampton Inn founder Raymond Schultz reminded us that history does indeed provide insight to what could happen in the years ahead, but it was the crystal-ball gazing that struck me as an interesting underlying theme on Thursday.

STR’s Jan Freitag pointed out that the U.S. hotel industry is entering its ninth consecutive year of revenue-per-available-room growth, and there’s 193,000 rooms in the pipeline. Perhaps, as CBRE’s Mark Woodworth said, it is time for the first watch to go on duty. (I learned from the clever Mr. Woodworth that first watch is actually from 8 p.m. to midnight so ships can be alert during dusk. I always thought it was at the crack of dawn.)

The optimism permeating the industry is one of calculated forecasting. Executives have been repeatedly poring over forecasting models and are more confident than ever that the current cycle has plenty of steam to carry it into 2020.

Aimbridge Hospitality’s Dave Johnson is a big believer that tax reform is going to drive more demand for hotels. Every CEO recognizes the urgent situation surrounding the rapidly shrinking labor pool throughout the country. Rumors are swirling that yet another brand acquisition is coming in the next week or so—as are more rumors of when Hilton’s next brand launch will be. Tightening debt markets and the labor crunch in the construction industry have slowed the building process by as much as six months.

The quiet confidence in the industry—no one wants to jinx the cycle—is maintaining an even flow. No one seems to be running around aimlessly. The calculated moves by companies to address issues of the day, grow their portfolios and dodge potential speed bumps are more in vogue than ever.
—Jeff Higley, Editorial Director

You expect owners and developers at an investment conference to talk about financing and investment, which they definitely did during Day Two general sessions here at the Hunter Hotel Conference. But even more than that, today on every panel I attended I heard speakers talk about the dwindling availability of good labor at all levels of a hotel operation.

Dave Johnson, president and CEO of Aimbridge Hospitality, called the availability of hotel labor his No. 1 concern. Eric Jacobs, Marriott International’s chief development officer for select-service and extended-stay brands, said it’s the top issue he hears about from Marriott’s owners. And even Kenneth Vecchione, soon to be CEO of Western Alliance Bank, said that yes, financial capital is important, but “human capital is the most important thing.”

I don’t think it’s lip service this time around. Executives at all levels of the industry are seriously worried about this now, particularly as they get more and more involved in net unit growth and launching new brands designed for mass distribution.
—Stephanie Ricca, Editor-in-Chief

While panelists throughout the day seemed resistant to the impulse to explicitly label current market conditions as a “sellers’ market,” they repeatedly acknowledged the fact that sellers are the ones sitting in the power seat for the time being. It seems to come down to the simplest economic principle: supply and demand. If the audience at Hunter is indicative of the larger industry landscape, there are significantly more people out in the market right now who are looking to buy than who are looking to sell.

Lee Hunter, COO of Hunter Hotel Advisors, noted that pre-conference surveys showed 24% of attendees are looking to buy hotels, compared to 4% trying to sell assets. During the first day’s general sessions, Tyler Morse of MCR attributed that to the fact that it’s been relatively cheap to refinance debt, reducing the motivation to sell. It’s fair to question where the supply-demand dynamics for assets will push hotel valuations over the next couple of years.
—Sean McCracken, News Editor

It’s safe to say that Day Two’s common theme was labor issues, as it was a top concern of almost every panelist I heard speak. Adding pressure to the challenge of finding and retaining good talent is new supply from brands to compete for the labor pool. One panelist referred to it as a “street-corner fight.” With brands like Tru by Hilton popping up on every block, and unemployment at a low rate, how does a property compete? Most panelists agreed companies must invest in their people because, at the end of the day, if a property doesn’t have good people to support it, the infrastructure as whole won’t be successful. Marriott International’s Eric Jacobs stressed that the industry needs to continue to educate the workforce on the benefits of investing in a hospitality career, as well as those in technical and culinary schools.
—Dana Miller, Associate Editor

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