Third-party operator Crestline Hotels & Resorts leveraged its years of experience, service culture and relationships with partners to continue growing through a challenging 2020 and to create new opportunities in 2021.
Having solid relationships, strong communications and a focus on service are what Crestline Hotels & Resorts’ CEO believes helped the company through 2020.
The beginning of 2020 started off stronger than expected, said President and CEO James Carroll. While 2019 was one of the best years the company has had, 2020 was looking to be even better, with the company ahead of its January and February budgets.
Things changed, of course, by mid-March, when the pandemic started in the U.S. and the bottom dropped out of the overall economy and the hotel industry.
“We had some charts we were producing on a weekly basis, tracking total revenues and occupancy and (average daily rate)—it looks like the steepest roller coaster you’ve been on,” he said. “It just tanked really within a two-week period, from a completely normal if not a decent year to almost (a) complete disaster.”
President and CEO, Crestline Hotels & Resorts
Only a few of Crestline’s hotels closed last year, Carroll said, adding the company worked closely with owners on these matters. The hotels were in urban locations where demand fell low enough to warrant closing for a couple of months. The properties were minimally staffed to maintain them and ready them to open as soon as conditions allowed.
The key to managing the beginning of the pandemic and navigating Crestline’s way through it has been excessive communications, Carroll said. Crestline has talked with its owners more than ever to understand better what they were seeing, what challenges they were facing, what they needed and what strategy they wanted to take to deal with the crisis.
Internally, Crestline increased the frequency of its meetings. Ones that previously occurred once a month were happening each week. Those held each week were moving to once a day.
“The situation was changing so fast that it was critical for our leadership team to be talking every single day about what’s changed, we need to do ‘X’ across all the disciplines and then getting that information out to our hotel teams and information from our hotel teams back to us,” Carroll said.
Crestline made the right decisions early on, including reducing hotel staffing levels to cut down on costs quickly as owners were struggling from a cash perspective, he said. However, the company chose the right mix for the remaining team members to allow the properties to still accommodate guests. The company kept a strong regional sales team, and while that was a higher expense for Crestline when revenue was down, it was an investment in the future.
Keeping strong regional sales and regional operations teams allowed them to guide and assist on-property teams through the tougher months of 2020. And it made a difference in their performance, he said.
One of the bright spots among the challenges of last year was in September when J.D. Power awarded Crestline No. 1 in guest satisfaction among third-party hotel management companies. The consumer insights firm has surveyed guests regarding the hotel industry before, but this was the first time it rated third-party operators.
“Winning the J.D. Power award for the best management company for customer service was thrilling,” he said. “Winning in the inaugural year, we were certainly thrilled to be the first ever to win that. It couldn’t have come at a better time.”
Crestline’s portfolio has 125 hotels and more than 18,000 rooms across 28 states and Washington, D.C., Carroll said. The portfolio encompasses select-service and full-service hotels, mostly in the upscale and upper-upscale segments. The company manages about 25 different brands by Marriott International, Hilton, Hyatt Hotels Corporation and InterContinental Hotels Group. It also operates independents and properties associated with universities.
“Having the expertise to operate things like large conference center hotels and high-end, full-service hotels down to your more suburban and even tertiary-market select-service hotels really gives us a vast experience and skill set within the company to take on all projects,” he said. “There's things you can learn in one type of hotel that you can pass on to another.”
Despite the challenges through 2020, Crestline was able to grow its portfolio through the year by almost 10%, adding a little more than 3,000 rooms, Carroll said. Some of the new management contracts were planned in 2019 while the rest were spread fairly evenly throughout the year.
The company doesn’t have a particular asset type or region they’re looking to grow in, Carroll said. What has allowed the company to be a steady leading management company for years is finding what owners are looking for as they go through different phases, such as acquisitions or dispositions, and adjusting to that.
“Then, based on what our owners’ needs are, we’re going out and helping them try to find those assets or underwrite some assets that maybe they haven’t looked at yet that we think could fit that profile,” he said. “We’re ready to assist them.”
Opportunities in 2021
This year is going to be another challenging year for everyone, Carroll said. The industry is going to start slow, and certain markets will see occupancy and average daily rate levels as low or lower than just after the pandemic started. However, there is a light at the end of the tunnel, he said, and the latter half of 2021 will get better.
“The high-quality management companies are going to be able to make a difference as those revenues begin to come back and we see some light and some opportunities,” he said.
The more experienced and talented operators that managed to keep their top-quality property and corporate teams through the pandemic have been able to work their relationships with guests, brands and other businesses, he said.
When those revenue streams come back, they will start as trickle, and there won’t be enough for everybody, he said. Crestline must do its job as a top-tier company to get that business before others do and continue to get more than its fair share of what’s available, he said.
“That's what I think will help our owners weather the storm and get through it quicker,” he said. “It also will prove that we're the right company to go with and hopefully see some growth as we proved that we're able to perform and able to get hotels back on their feet quicker.”
The events of 2020 forced companies to change their approaches to how they provided hospitality. One thing that didn’t change for Crestline is its company culture, and that’s something Carroll said he’s proud of. The culture built in the company is a solid, long-term culture that helped it weather the storm as best it could, he said.
“In our culture, I think service starts at the very top, and it’s really woven into what we do,” he said.
The hospitality industry of course is a service industry, he said, but it extends beyond service to hotel guests. It’s about trying to be of service to hotel owners and the partners Crestline works with, including vendors and suppliers.
“The key is at every level of your organization, your folks should know who it is that they serve and what service to those groups means,” he said.
During the pandemic, they were all reminded constantly that the corporate office and the infrastructure set up is to serve the single purpose of helping their hotels and on-property teams succeed, Carroll said.
“We as a corporate team don't directly add really any value unless we are making our hotels perform better,” he said.
Communication is important, and the company encourages the maximum level of communication up and down, he said. Every GM has Carroll’s office and cell phone numbers, and he encourages them to call if they need help and are having trouble getting in touch with their managers.
“Making sure that they know that they can communicate anywhere within the organization anytime they need is critical,” he said. “If you have a culture where your teams are afraid to tell you what’s really happening out there or are afraid to raise concerns, complaints, issues to you—you can’t fix something you don’t know is broken.”
Every department—accounting, human resources, revenue management, sales, operations, legal, etc.—was engaged in figuring out what the hotel teams needed the most, he said. With smaller on-property teams, the corporate office assumed some responsibilities to free up more time for the associates.
During the pandemic, many people were able to work from home, but hotel staff only had one place they could work, Carroll said. They were on the front lines and worked hard, many taking on multiple roles, including those they hadn’t performed before.
Many of the guests coming in had concerns, particularly about health and safety, and the hotel staff focused on serving them and taking care of them, he said. Many of Crestline’s hotels are near hospitals and medical centers, so guests included doctors, nurses and patients.
“I'm very proud to say (they’ve) really jumped in and made themselves available, providing the service any way they could every day,” he said. “That was wonderful to see our hotel teams with that service culture. They were taking care of each other, and they were taking care of our guests.”