Executives from CHMWarnick, Grace Bay Resorts and LW Hospitality Advisors talked about how hotel brands and owners are finding growth and savings opportunities at this point in the lodging cycle at the NYU International Hospitality Industry Investment Conference.
NEW YORK—At the current point in the hotel industry cycle, brands and owners all are looking for an upside. In a series of one-on-one interviews at the NYU International Hospitality Industry Investment Conference, executives from CHMWarnick, Grace Bay Resorts and LW Hospitality Advisors spoke to Hotel News Now about how their companies and clients are maximizing the hotel operating environment to build their businesses before the next downturn.
Hotel asset management and advisory firm CHMWarnick promoted Chad Sorensen to chief operating officer in early June, a move that caps off a period of big internal investment for the company. The company in the last year made several new additions to its senior team, launched a new technology platform and expanded its accounting services to offer full owner-entity accounting capabilities.
“My vision is to work closely with (CEO and Managing Director Chad Crandell) and take the firm to the next level,” Sorensen said. “It’s time to put more horsepower behind the company to take care of people and our clients.”
He said the company is poised to leverage what it considers its best asset—its people—to make a difference.
“We have more than 70 hotels now and more than 40 people, and we’re all committed to investing for the long-term,” he said. “Asset management is a relatively young discipline, and it’s our goal to continue to redefine what third-party asset management is.”
Kristie Dickinson, EVP at CHMWarnick, said the company’s recent addition of full accounting services for clients has enhanced its asset-management capabilities.
“Our asset managers are very in-tune with cash flow, so to transition into accounting is pretty seamless and we can find things on both sides,” she said.
When it comes to trends, Sorensen and Dickinson said technology plays an increasingly larger role in hotel success.
“We talk a lot about labor issues, and we as an industry made headway on how to address a lot of that through technology—through infrastructure and on-property systems,” Sorensen said. “There’s a whole world of technology that helps operators be more efficient and smart, but there are risks too, like data breaches. We have to be able to prioritize the dollars because there’s not enough capital to deal with everything.”
They also touched on cycle dynamics and what that means for asset management, calling for a refocus on quality management and a second look at management agreements.
“The explosion of brands in this cycle and how that will shake out is interesting to see,” Sorensen said. “Because of all this growth, brands and third-party management companies are stretched thin with resources, and good operators are stretched. Management companies that can focus on quality over quantity will shake out better long-term.”
Grace Bay Resorts
Turks and Caicos-based Grace Bay Resorts saw a massive bounce back in 2018, with COO and Principal Nikheel Advani describing it as “the best year ever.”
The ultra-luxury resort company has six properties spread across the archipelago, which is a British Territory. Advani said Turks and Caicos was impacted heavily by the late 2017 wave of hurricanes in the Caribbean, although the area usually avoids hurricane damage.
He said a strong combination of business and governmental support has helped his company and the territory in general bounce back successfully.
“There was lots of coordination between hotels and the government,” he said of the storms. “We’ve been working together (with government) for years. It’s important to know you can’t start working together during a crisis.”
He said his company has built its properties to the same building codes as properties in Miami-Dade County, which is a significantly higher standard than many other resorts across the Caribbean.
He said he was initially skeptical of internal projections calling for 2019 to continue the strong momentum. He was glad to be proven wrong, so far.
“We fought hard in those budget meetings, and I asked them to give me reasons why we would be 15% better, but we’re having another bumper year,” he said.
The company’s owned and operated portfolio includes its flagship Grace Bay Club, which opened in 1993 as its first property and the first luxury all-suites resort in Turks and Caicos, along with West Bay Club, The Private Villa Collection, the still unopened Rock House, and Point Grace, which was acquired in 2018.
Those properties blend luxury residential components with resort hotels, and Advani said the essence of Grace Bay’s approach is to key in on being the highest of high-end luxury. He believes hid company has the team and track records to back that up.
“We’ve hired the best of the best, with people who’ve worked at places like Mandarin Oriental, Raffles and Four Seasons,” he said.
LW Hospitality Advisors
Gary Isenberg, president, asset and property management services for LW Hospitality Advisors, said he’s seeing that current cycle conditions are warranting deep operations reviews for owners.
“We’ve had a great run, there’s still positive (revenue per available room) growth, but rising revenues can hide a lot of sins,” he said. “There’s always expense creep, so owners are looking to find the low-hanging fruit on how to tighten up operations.”
Isenberg talked about the pros and cons of spending on technology that many hotel owners face.
“Technology must be harnessed for the right reasons; not just to be en vogue,” he said. “Tech has to make the customer experience better. It’s not about eliminating staff, but about repurposing staff.”
He pointed to housekeeping and in-room entertainment as areas where technology really can enhance the guest experience.
On the in-room entertainment side, he said “the key is understanding that customers now will always bring their own technology and content and that isn’t going to change. So owners must find ways to harness that and not try to implement their own technology.”
He also addressed the latest brand-growth wave, acknowledging that as long as growth is feasible and franchise companies want new avenues for loyalty, brand launches will continue.
“Ten or 20 years ago, brands sold reservations systems, and now they sell and control loyalty,” he said. “The biggest question is what happens in a downturn. Will we see consolidation then, or is a downturn a time for brands to de-consolidate and sell off brands?”
At the end of the day, he said it’s important for hotel owners to understand the intricacies of each brand and their own markets.
“As owners look to select a brand, they have to look at what’s feasible. Look at what the local market can do. Know the chain scale that fits, and identify the brand that can generate you the most business.”