Interstate Hotels & Resorts President and CEO Mike Deitemeyer caught up with HNN at the Americas Lodging Investment Summit to talk about his company’s culture, growth strategy, labor issues and more.
LOS ANGELES—With a significant global third-party management platform, Interstate Hotels & Resorts is investing a lot of time into growing both its people and its portfolio, company President and CEO Mike Deitemeyer said.
In a video interview with Hotel News Now at the 2019 Americas Lodging Investment Summit, Deitemeyer spoke about his company’s mission to create value for its hotel owners that comes from a company of Interstate’s size and scale. The ability to leverage that scale comes from expanding the company’s portfolio, not only sheer numbers but in diversity of properties, as well as creating a better workplace for its employees, he said.
Focus on people
When he rejoined Interstate, Deitemeyer said the mission he saw for the company was to evolve against commoditization in the space. That involved moving its office from Ballston, Virginia, to Crystal City, Virginia, and he added that the company did this six months before Amazon announced it would move there.
“I like to say Amazon followed us,” he said.
The move helped put some energy back into the company, he said. The new headquarters is dynamic with an open-floor space, and its lobby has a living-room feel to it that creates opportunities for collaboration that didn’t exist before.
“We have the opportunity to share our culture in a casual environment,” he said.
Interstate hired Carrie David as its chief human resources officer less than a year ago, Deitemeyer said. Since then, the company has been building its foundational leadership development programs, and it’s relaunching its core values and thinking about its competencies and how it thinks about talent.
“Obviously the development of people is a marathon, not a sprint and so how do we think about that?” he asked. “What I’m hopeful for is all these programs we’ve been talking to our people about, the leadership opportunities that exist, we’re going to see that come to life this year.”
Deitemeyer and his team went on a road show last year toured 57 hotels, and he plans on continuing that practice this year. He met with the hourly associates and GMs to thank them and talk to them about how the company will leverage its scale and bring value to owners, he said.
“It will be the continuation of our development of our people and then really just continuing to refine kind of our operating teams and what we’re doing there,” he said.
Third-party managers don’t typically manage hotels for 20 years, Deitemeyer said. Instead, they’re managing for different types of investors who have different theses themselves. As a result, the company has been spending time better understanding its portfolio mix, he said. That introspection showed that while Interstate significantly increased its upscale select-service properties in 2017 and the first part of 2018, it had not grown as much in full-service as he would have liked.
Today the company is setting targets around resorts, upper-upscale hotels and full-service in different segments. Deitemeyer said it’s exciting to have in Interstate’s pipeline 160 management contracts the company is actively engaged in on some level, and 60% of those are full-service, up from 45% about two years ago.
“We’ve added a couple Westins in the last six months, we’ve added a new-build resort,” he said. “Here I’m staying over in LA to go to a signing of a 400-room upper-upscale hotel. We’re building in Anaheim. So there’s been some really great movement there.”
Of its 568 signed hotels, the company now has a percentage of lifestyle hotels in the high single digits, such as Indigos, Autographs, ACs and independents, Deitemeyer said. Now 23% of the contract pipeline is lifestyle hotels, he said.
“There’s evolution I think what people think, what customers want, what kind of experiences they want, and you see it in our pipeline,” he said. “I like that the correlation where you see development happen, our broader portfolio should look like that or we’re missing the mark somewhere.”
The industry will be on a slow and steady path for the next few years, Deitemeyer said. Some say that there might be a recession next year, but this year should still have reasonable RevPAR growth, he said. There’s compression on expenses, but this is generally a positive time for the industry.
“Long term, I think we’re positioned to kind of weather the storm,” he said.
If, as a third-party manager, Interstate can save owners any amount on their cost, Deitemeyer said he hopes that even during a downturn, his company can still grow and bring value to individual hotels.
“I’d like to sit here four years from now and having weathered a recession shown that although profitability may not be (high), but we’ve grown, we’ve added hotels, we’ve added contracts, and we’ve done it because we’re providing great value,” he said.
There’s a lot of talk about artificial intelligence and customer relationship management technology driving innovation in the industry, Deitemeyer said, but in his mind, it all goes back to how hoteliers know their guests when they walk in the door and how they leverage that.
“I’ve been an old-school believer in just have amazing Wi-Fi, great bandwidth in your hotel, and the consumer’s going to dictate what tools they’re actually using,” he said. “Our job needs to be to know what you like and what you want the way when you go to Amazon’s website they deliver content that they think you’re interested in, how can we anticipate the customer so that we know you better, you feel special when you come in because we’ve gotten that done.”
With all of the technology people have at their fingertips, they still strive to be recognized, he said, and those little touchpoints make a difference.
“We’re in the hospitality business, so to me, I just think that that technology built around artificial intelligence and the CRM and how we use that data is the evolution that’s going to stick long term,” he said. “Otherwise, we’re commoditizing ourselves and we’re just beds, and I prefer not to believe that’s where we’re going.”