Global growth, lighter model in Loews’ plans
LOS ANGELES—A year after getting it off the ground, Loews Hotels & Resorts’ three-pronged brand platform will allow it to expand worldwide while appealing to groups, business travelers and luxury-oriented leisure travelers, according to president & CEO Kirk Kinsell.
Kinsell, who was named to lead the New York-based company in December 2014, said during an interview at the Americas Lodging Investment Summit that Loews
will continue to seek to lighten its ownership stake in assets but won’t be shy about acquiring hotels that fit its expansion strategy.
“We’re asset heavy, so to speak,” Kinsell said. “We’d love to be more asset medium with a mix of management contract as well as an owned position in a hotel. “
The company fully owns many of the 23 hotels in its portfolio, but also has 50-50 joint ventures and management contracts in the mix, according to Kinsell.
“It’s really what’s appropriate in terms of that particular location and how we think about who might be bringing the deal to us and ultimately move more towards an asset medium, so it’s more a mix as opposed to a single formula in terms of how we’re structuring our hotels,” Kinsell said.
Loews demonstrated its willingness to invest when it acquired the 120-room Hotel 1000 in Seattle in late January from Thayer Lodging Group. The Seattle Times reported that that property sold for $83.5 million, or $695,833 a room.
“Ideally we could find a multi-hotel acquisition,” Kinsell said. “Yes, we’ve looked at (merger and acquisition) opportunities, but again not to be a player on the big, big landscape but more so just making sure that we can find a way forward that puts us in those strategic markets in the top 25 gateway markets in the U.S. and for that matter globally.”
That philosophy points to the company having an assertive, yet careful, approach to growth, the CEO added.
“We have grown by 40% over the last three years, so on a run rate as a percentage of growth, we’ve grown faster than anyone else,” he said. “We’re not going to compete on the consolidation game. We don’t have to. We’re very successful in the markets in which we choose. … What’s key to us is picking the right location with the right asset, with the right leadership team—and of course brand—across Loews Hotels.”
Where the brands stand
The company has three hotel brands, which Kinsell likes to refer to as platforms: Loews Hotel & Resorts, Loews Regency and OE Collection.
Loews Hotels & Resorts opened a high-profile property in Chicago last March and is preparing for the opening of the 1,000-room-plus Loews Sapphire Falls Resort in partnership with Universal Studios this summer. That opening will give the company five properties in Orlando.
Loews Regency has hotels in New York and San Francisco, and the recent Hotel 1000 acquisition in Seattle will be renamed Loews Regency Seattle by the end of 2016, Kinsell said. The company owns the hotel outright but over time will look to find a partner for it.
“Loews Regency has been very successful in New York with a customer who loves the experience, is a discerning traveler, it’s an upscale luxury offering,” Kinsell said. “We just felt that there was an opportunity for growth in that segment where we couldn’t serve everybody because of the Loews Hotels and Resorts is a bigger box, group and convention hotel.
“There was an opportunity for further growth in markets where you can’t either get access to that size of a convention hotel or there just wasn’t something that would be supporting that kind of group market,” he added. “It allows us to grow not only in the U.S., but respectively internationally.”
The 18-month old OE Collection has one hotel signed, Kinsell said. The Bisha Hotel and Residences in Toronto is scheduled to open by the end of 2016.
Chances for growth
There are widespread growth opportunities—from primary and secondary markets in the U.S. to primary markets around the world—for all three platforms, and Kinsell said Loews still likes opportunities for acquisition and management contracts.
“Domestically we’ve got a lot of markets still to grow in today—it’s 19 or 20 different separate markets,” Kinsell said. “Internationally, it’s an opportunity for us on all three platforms. … We don’t feel compelled to have to run around the world and put dots on a map.”
Europe or Asia will probably come first on the international front, according to Kinsell.
Any expansion will come during a time of strong industry fundamentals but a slightly uncertain global economic environment, Kinsell said.
“There’s going to be a bit of a reset,” he said. “The fundamentals are still very strong for the hotel sector, and from our forward bookings and the kinds of things that we see in terms of looking at the visibility of what we can do with our group pace, (it’s) very strong. We continue to see a lot of third-party data that’s just as strong, intent to travel with all segmentation. But I think, also, we’ve seen some fairly robust pricing and underwriting, and so I expect there will be a little bit of softening as we go forward.”
Group bookings—the core business for the Loews Hotels & Resorts brand—are favorable going forward, and 2016 looks stronger than 2015 for group bookings, Kinsell said.
“Not just in pace but also in the kinds of groups that are coming in,” he said. “… You see a little more of a shorter length of stay in terms of some of the groups, but they’re just being efficient with their time.”
Kinsell said the strong sponsorship of the Loews Corporation provides the hotel company with many growth opportunities going forward.
“We have a long-term view, so we can pause and have an assessment of the marketplace,” he said. “The opportunity more so is the relationship with guests and personalization and delivery of a connected experience, of the use of technology. We can move much quicker than a lot of other people, so we’re looking at every opportunity to take advantage of that.”