The Blackstone Group wields its scale almost as a weapon, leaving the company poised to do things so many other companies can’t even dream of, but even they aren’t immune to macro issues like a tight labor environment.
Do you remember that feeling you’d occasionally have as a kid when you’d feel suddenly more aware of the idea that you were just a speck in the grandness of the cosmos and how disarming it is to feel conscious of your own smallness?
Thinking about the hotel industry, I think there’s a similar sensation when listening in on The Blackstone Group investor call.
While Blackstone is continually a player in the hotel space, as their recent flirtation with purchasing the LaSalle Hotel Properties portfolio proved, they’re obviously much more than that. In fact, the market capitalization of the largest company in the hotel industry—Marriott International—is less than a 10th the size ($40.7 billion) of the assets under Blackstone’s management (more than $450 billion). It’s interesting that the LaSalle deal is clearly the largest ever for both that company and its ultimate suitor Pebblebrook Hotel Trust, but the prolonged back and forth on the deal didn’t even necessitate a mention or analyst query during the Blackstone call.
So with everyone opining on where the industry is headed in the long term, especially with the current cycle seemingly growing pretty long in the tooth, I think Blackstone’s public reporting can provide some insights into the bigger picture.
Not shockingly for a company that just reported quarterly profit of $911.4 million, executives seemed pretty optimistic even in the face of some market turbulence during the company’s recent third-quarter earnings call with analysts. I thought it was interesting that at one point during the call, Blackstone President and COO Jon Gray noted the company “can afford to be patient.”
I think Blackstone can afford to do a lot of things.
But one potential stumbling block they did note was an increasingly tight labor environment, something the hotel industry has obviously had recurring issues with of late. Executives noted the company’s “biggest issue is finding and retaining talent.”
“We have to have great people, and those people have to be real team players who fit in our culture and want to be part of something bigger and better,” said Tony James, the company’s executive vice chairman and former president.
With all of Blackstone’s heft and resources for finding the right people for the right roles to be the top hurdle shows you just how imperative it is for hotel companies to sink resources into their employees.
Gray even went so far as to note talent is a big determiner of how Blackstone will distribute its considerable resources in terms of acquisitions.
“For us, the ideal acquisitions target is small with the key talent, expertise and relationships and when you put it in the Blackstone system can get incredible growth,” he said, noting the company wants “to acquire great talent that shares our values … and help them grow at a faster rate than before.”
So as my colleague Steph Ricca so eloquently put it recently, it’s time for hoteliers to put their money where their mouths are when it comes to investing in people.What do you think? Let me know via email or on Twitter.
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