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Lodging Conference notebook: Bulls still running

The bulls were still running strong at the 21st annual Lodging Conference last week in Phoenix with economists, number crunchers and brand leaders predicting strong performance and fundamentals with further room to grow rates in 2016.

Even with supply growth ticking up, yet still below historical levels, panelists said growth should even bleed into 2017, barring any Black Swan events. That being said, challenges surrounding channel management, data security, rising costs both for labor and construction and the impact of Airbnb continued to loom large.

Capital and debt market volatility appears to have muted sales and negatively impacted values in the near term, but the continued influx of foreign capital to U.S. markets is filling the gap.

The other hiccup uttered at the conference was increased cost of construction (20% to 25% in some instances) has slowed development projects. Nonetheless, the brands remained bullish about their pipelines for legacy brands like Sheraton and new brands like Hilton’s canopy.

Opening session at the 21st Lodging Conference
Opening session at the 21st Lodging Conference

HOTELS spoke to some of the players in attendance at the Lodging Conference, and here is a brief summary:

Canopy by Hilton. At the one-year mark, more than 20 hotels are at various stages of development with the first property in Reykjavík, Iceland, set to open Q1 2016. About 80% of the projects are new builds and all deals to date are franchises. “Late 2016 and early 2017 will be great time for owners breaking ground,” said Gary Steffen, vice president of brand management for Canopy.

Steffen added that the brand team has been busy validating its breakfast concept, evolving its small plate menu for the bar and explaining its locally influenced retail space at reception.

Curio. Hilton’s soft brand Curio has 15 hotels open today and 50 either open or under development, representing some 13,000 rooms, according to global brand head Dianna Vaughan. The brand stands at about 40% adaptive re-use or new-build and six hotels are opening during Q3 2015 – with London now coming to give the brand a big gateway boost.

WoodSpring Hotels. Formerly known as Value Place, the emerging WoodSprings Suites brand has 10 hotels under active construction, eight of which are franchises, with a total of 70 under development with costs ranging from US$40,000-$45,000 per key.

A new interior design packagewas revealed at the conference for the extended-stay concept, created in collaboration with Gensler, incorporating elements of nature with bright accent colors and clean white bedding.

The new brand launched in the spring hit a key milestone in July when first WoodSpring Suites opened in Oklahoma City.

Choice Hotels International. With US$250 million being invested into its upscale Cambria Hotels & Resorts brand, Senior Vice President of Global Development David Peppers was happy to report big moment with the 25th Cambria soon open in Times Square (the second in Manhattan), ground being broken near Los Angeles International Airport, at Brickell in Miami and in Nashville, and another deal coming to Philadelphia. In total 12 Cambria’s are under construction and 75 are expected to be open by 2018.

Peppers said the first conversion of what has been a new-build brand is coming at the former Mile North hotel in Chicago with office redevelopments coming to downtown Los Angeles and Chicago’s Loop. “With its success, Cambria is now getting recognized by institutional investors,” Peppers said, adding that it is performing like Hilton Garden Inn and Courtyard by Marriott with quick ramp-ups to a 100% index.

Elsewhere, Choice’s soft brand Ascend has hit the 150-hotel mark with 45 projects under development, including new-builds in Brooklyn and Flushing in New York City.

The Comfort brand is getting a complete refresh with hundreds of terminations (many converting to Quality) and some US$40 million being invested to aid the franchise community. Peppers said the positive momentum has the brand competing with Holiday Inn Express and Hampton on ADR due to mid-week business travel growth.

Red Lion Hotels Corp. Perhaps one of the company’s making the biggest news as of late is Red Lion Hotels Corp., whose share price has increased some 60% in the last 20 months and has reported nine consecutive quarters of double-digit RevPAR growth and increased market share, according to CEO Greg Mount.

“We are looking at things differently – more pragmatically,” Mount said. “Different options coupled with technology are providing meaningful growth.”

Because of what Mount said is greater rate elasticity, more developers compared to previous years, he said, are saying, “I want to know more.”

Mount also cites RLHC’s different retail approach to e-commerce, including “perpetual merchandising” (addressing different consumer behaviors on different channels), as making a difference in sales.

RLHC has 25 to 30 deals planned for 2015 (19 already done) and, again, Mount cites a different approach – flat fees – as making a difference in growing the pipeline, as well as fewer layers of management between franchisor and owner.

Carlson Rezidor Hotel Group. Carlson is gaining traction with its new Red brand, announcing four deals at the Lodging Conference – three franchised and one managed in its home town of Minneapolis. The franchise deals include two in Colombia and one in Brazil. The other locations currently under development include Brussels, Capetown, Glasgow and Shenyang Hunnan, China, which brings the brand total to eight properties.

COO for the Americas Javier Rosenberg said there are 12 LOI’s in North America soon to be announced, some of which Carlson will manage with an equity position.

Rosenberg added that Carlson’s upscale Blu brand will soon be adding a few properties in Latin America.

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