Taking a pulse on hotelier confidence in economic cycle
Taking a pulse on hotelier confidence in economic cycle
16 OCTOBER 2019 9:14 AM

Members of the Lodging Industry Investment Council shared their thoughts on where they are in the current economic cycle, as well as on ways to cut costs, and mergers and acquisitions.

PHOENIX—Discussion about the current state of the economic cycle can vary based on who is talking, as the curve and its effects can be different for any individual company at any given time.

Examining perceptions across different companies within the hotel industry, therefore, can help to take a pulse of the level of confidence.

To open up the conversation at a Lodging Industry Investment Council meeting during The Lodging Conference, Hotel News Now asked LIIC members on video “Where is your company in the current cycle?”

Carlos Rodriguez, CEO of Driftwood Acquisitions & Development, said he believes the industry is at an inflection point. His company remains an active buyer and continues to look for deals, but it is a market-by-market situation.

He said there are still plenty of opportunities, but Driftwood is underwriting more carefully now and will be going forward, he said.

“Obviously payroll is going up and margins are getting squeezed, and (average daily rate) and occupancy (are) not going up as it used to in the last few years,” he said. “We believe we are close to the peak, but we’re still active, we’re still looking to place money, we’re still looking to normally acquire hotels (and) develop under the right circumstances in the right markets.”

Watch the video below to hear what other members of LIIC had to say:

Cutting costs
Also during the meeting, members discussed ways to cut costs.

Jack Levy, SVP of finance at Pyramid Advisors, said his company is incentivizing staff to find ways to save on energy costs such as turning lights off that don’t need to be on. Currently, Pyramid’s portfolio doesn’t use technology to automatically do that, but he said he hopes for a solution in the near future.

Rodriguez said his company is implementing energy-saving technologies to control air conditioning when guests are not in their rooms.

Laura Benner, SVP of hotel asset management at Colony Capital, said her company is piloting technology that detects when a guestroom toilet has a leak and alerts the hotel’s engineer to fix it right away. Some hotels in Colony’s portfolio have also installed low-flow shower heads, she said.

Others are looking to robots to minimize cost and labor with housekeeping.

Doug Dreher, president and CEO of The Hotel Group, said he is exploring robots that can deliver linens.

Bob Rauch, president and CEO of RAR Hospitality, said he’s implemented service delivery robots and maid bots at his hotels, noting that injuries from housekeeping tasks are the most prevalent workers’ compensation claim at his hotels.

On the payroll side, Rodriguez said Driftwood likes to import labor through student programs for about fourth months during peak season. Getting employees in certain parts of the country right now is “very difficult,” he said, and these programs have been helpful.

Andrea Foster, SVP of development at Marcus Hotels & Resorts, said her company also employs students who are on the J-1 visa program.

To maintain profitability, Benner said the select-service hotels in her company’s portfolio are charging for parking, which is “100% profit.” Her hotels have not yet implemented resort fees, she said.

Mergers and acquisitions
LIIC members said they aren’t too worried about the recent spate of mergers-and-acquisition among third-party management companies and what it will mean for the industry.

Bill Stadler, EVP and chief investment officer at Aimbridge, said the Aimbridge-Interstate deal will help attract and retain quality labor. Employees will see a career path “with our company,” he said.

Rodriguez said he sees good things to come with the scale that deal will provide, but the benefits of having a smaller company include personal touch, he said.

“When you get big, you also have to worry about too many people, too many layers of management,” he said. “But for us, from a personal perspective … I don’t see (the deal) affecting us one way or another.”

Mary Beth Cutshall, EVP and chief development officer at HVMG, called the Aimbridge-Interstate deal quite an accomplishment, noting it will open up some opportunities for employees within the company and perhaps elsewhere in the industry.

“It’s just going to depend on the individual, the market, conflict,” she said.

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