In its 35th year of business, The Hotel Group continues to be opportunistic with deals while emphasizing an importance of culture in a tough labor environment.
PHOENIX—The Hotel Group, an Edmonds, Washington-based development and asset management company, is celebrating its 35th year of business.
President and CEO Doug Dreher said it’s been a solid year for his company, with highlights including the openings of its first Tapestry Collection, The Sound Hotel Seattle Belltown, and its first Home2 Suites in Central Washington State. To celebrate 35 years, THG will open its 50th property in January, a 177-room Hilton Garden Inn in Redmond, Washington, home to Microsoft.
He said his company has always been opportunistic on where an acquisition could be.
“(Openings) are always exciting, it’s kind of like they’re your own babies. It takes a lot of time and energy at the pre-development stage … in some cases, it takes five years or more,” he said.
Not only is it exciting to see the finished product, it’s also great to add new team members, he said. In addition to development, THG is completing renovations, he said.
“We’re excited as we look ahead,” he said.
THG’s labor strategy
Dreher said labor is a big issue with everyone right now, and the two key things for his company are recruitment and retention. He doesn’t want to lose valuable team members, so THG is partnering with the American Hotel Lodging Association board of directors to do an apprenticeship program at each of his hotels.
In addition to the training program, Dreher said THG does a lot of internal transfers and promotions.
Being “open for business” is also key, he said, when looking to recruit. It’s about not being afraid to refer friends and family, he added.
“We say sales is everybody’s job, but so is recruiting,” he said. “Everybody knows somebody that might want to work in a hotel; could be a friend, could be a cousin, could be a nephew.”
A lot also comes down to culture, too, because the wrong culture or no culture at all will cause a company to lose its people, he said.
“We would say we have the right culture,” he said. “We’re very mission, vision, values focused. Our mission is to serve for people and properties, inspire a culture of hospitality greatness … and deliver maximum investment value for our partners.”
He came up with an acronym using the vowels a, e, i, o and u to help staff remember the company values. “A is ‘and then some,’ e is ‘ego-free,’ i is ‘inspire,’ o is ‘open for business’ and u is ‘unbroken,’” he said.
The acronym also comes into play for staff reviews, which he recently revamped and made it more conversational, he said.
Everyone at corporate is hands-on at each property, which helps take away any stigma that could suggest a company is “corporate tight,” he said. He also encourages his team members to be present and engaged by putting phones away.
“Live in the moment, be where you are and really help the properties,” he said.
Cutting cost to prepare for a downturn
When looking at ways to cut costs, Dreher said to look at every line item and get creative. For example, he’s looking at the housekeeping program and beta testing a system at some of its Marriott International and Hilton hotels where they won’t clean a guest’s room during their stay unless they tell housekeeping otherwise.
For his larger full-service properties, THG has contracted an energy management company to supply best practices.
“It could be on the electrical front, could be waste management, there’s a lot of things you can do,” he said.
Outlook on investment
Debt is cheap, and it’s an “epic financing market” right now, Dreher said. When deciding if an owner should buy or sell, he said now is the best time to refinance.
“We’re talking about fixed rates, 10 years at 3.5%¬¬--that’s phenomenal,” he said. “Haven’t seen it (before) in my lifetime, it’s not going to last forever.”
There’s also a lot of capital entering the market that’s “good and bad,” some of which are from investors who haven’t had any previous experience, he said.
For THG, Dreher said they have pivoted more toward investing in new-builds. In addition to the Tapestry and Home2 Suites that opened, he said he has four more new-builds under construction and another five in the pipeline.