2016 offers more opportunities for indies
 
2016 offers more opportunities for indies
17 DECEMBER 2015 10:21 AM

Independent hoteliers talk about what’s on tap for them heading into 2016, including distribution, financing and labor.

REPORT FROM THE U.S.—Distribution. Financing. Labor. These are just some of the topics that are top of mind for independent hoteliers as they head into 2016. 
 
In this virtual roundtable, Hotel News Now via email asked three hoteliers whose portfolios include a mix of independent hotels how they are preparing for these issues as the New Year approaches.
 
Meet the hoteliers
 
Robert A. Rauch, president and founder of R.A. Rauch & Associates
As president and founder of hotel management and consulting firm R.A. Rauch & Associates, Rauch is an internationally acclaimed hotelier with more than 35 years of industry experience.

R.A. Rauch & Associates has four independent hotels in its portfolio with an additional property under development. 
   
Matt Marquis, CEO and president of Pacifica Hotel Company
Marquis began his business career on Wall Street with Dean Witter Realty, where he was an analyst and asset manager on a diversified real estate portfolio. In 1997 he joined Pacifica Real Estate Group as an asset manager responsible for the commercial real estate portfolio. In 2000, Marquis, along with his father Dale Marquis, activated Invest West Financial Corporation as the family's primary business and acquired Pacifica Hotel Company from their partners.

Pacifica has 20 independent hotels in its portfolio. 
   
Greg Champion, president and COO of Benchmark Hospitality International
 
As president and COO, Champion has overall responsibility for the operations of all Benchmark Hospitality International projects in North America. He also provides oversight for the field staff support functions as well as for the home office staff functions of sales and marketing and human resources.

Benchmark has 27 independent hotels in its portfolio.
   

1. Explain what your biggest distribution opportunity will be in 2016.

Robert A. Rauch, president and founder of R.A. Rauch & Associates
“The corporate market is the biggest distribution opportunity for independent hotels. Corporate spend is up and business travelers are moving away from (online travel agencies). This is witnessed by our huge growth in direct reservations in 2015 over 2014. Certainly this does not happen by osmosis. To attain the shift from OTA to direct we are targeting GDS users who are largely corporate.”
 
Matt Marquis, CEO and president of Pacifica Hotel Company
“We will continue to drive traffic to our direct channels, with the most importance on our hotel websites. We plan to continue to reinvest in our Web channels to ensure our customers have the most informed and efficient experience when booking direct.”
 
Greg Champion, president and COO of Benchmark Hospitality International
“This remains the same … how to effectively drive as much business as possible to our own websites and booking engine, lowering transaction costs, allowing our teams to upsell and building direct guest loyalty.”
 

2. Are you noticing any challenges with getting financing these days for new hotel acquisitions, ground-up development or renovations for your hotel? Do you anticipate funding these types of activities will be easier in 2016 or tougher?
 
Robert A. Rauch, president and founder of R.A. Rauch & Associates
“We are not noticing challenges in financing for our hotels. To the contrary, we anticipate capital to continue to be available as we are moving through the mature phase of the economic cycle. As such, we expect lending to stay strong until the next recession. Further, while interest rates have inched up, more lenders are in the game now so lending will likely be easier in 2016. Having said that, it is encouraging that lender discipline is intact, something that is different from 2006-7.”
 
Matt Marquis, CEO and president of Pacifica Hotel Company
“Financing of acquisitions and development opportunities should continue to get better in 2016. There's a big difference between acquisition financing and development financing, though. Acquisition financing is primarily non-recourse, while development and redevelopment financing could and most likely will require recourse or guarantee provisions.”
 
Greg Champion, president and COO of Benchmark Hospitality International
“At this moment we have more ground-up development in our pipeline than we have seen in years. I don’t see funding as a major issue at this point; however, acquisition costs are steadily increasing and new supply if not reasonable will dictate more difficult underwriting hurdles.”
 

3. In 2016, what big initiative(s) do you plan to invest in?
 
Robert A. Rauch, president and founder of R.A. Rauch & Associates
“2016 is the time for capital improvements. While the times are good, money is flowing and this is the best time to invest in your properties. You want to set yourself up for success before the next economic downturn and potentially get a quick return in average rate with the improvements, as 2016 will arguably be the best year we have ever seen for hotel profits.”
 
Matt Marquis, CEO and president of Pacifica Hotel Company
“We will continue to expand our Wayfarer brand, which is focused on the shared economy and millennial travel. We are finding this type of product is appealing to all demographics and we believe it will become the expected norm in hospitality travel. The communal activities at hotels are becoming more desired by guests and at a depth and authenticity to the experiences that travelers are responding to positively.”
 
Greg Champion, president and COO of Benchmark Hospitality International
“We are currently investing in a company-wide (human resource information system) … that will improve our technology platform exponentially. This is a tremendous undertaking for our entire company, and we have high expectations for the value it will produce.”
 

4. Labor shortage seems to be top of mind for hoteliers. How do you plan to hire and retain quality employees throughout the coming year?
 
Robert A. Rauch, president and founder of R.A. Rauch & Associates
“On the contrary, we’re finding that there is still an abundant workforce out there with top-tier talent among them. This topic has been around for decades and clearly has been identified as a problem for many hoteliers. Staying attuned to our company culture, we offer competitive wages and a chance to grow within our company among the ways to attract good talent. By creating a place in which employees are offered all the tools they need to succeed we mitigate turnover.”
 
Matt Marquis, CEO and President of Pacifica Hotel Company
“This continues to be a challenge for us with increased wages mandated at the federal level and even greater minimum wage at the local municipalities in California. We think there will become more parity in minimum wage positions; therefore, potential employees will look to the company and the product for the best working environment. We believe the people, while always having compensation first and foremost in your mind, will start to look at added benefits such as continued education, flexible time off and upward mobility within the company.”
 
Greg Champion, president and COO of Benchmark Hospitality International
“People are Benchmark Hospitality’s single biggest asset and we treat our team that way. We are diligent ensuring that our wage and benefit packages are considered to be at or leading the market among our competitors. We take great pride in providing a work environment that is second to none, and our turnover ratio is extremely low as a result of the time we spend on our people. We have been recognized consistently as one the best places to work throughout the country.”
 

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