During one-on-one interviews during the NYU hotel investment conference, HOTELS learned of new development news. Here is a summary from those meetings. Part I of the notebook was published earlier this week.
Embassy Suites focused on atrium. As one of the original all-suites brands approaches its 30th birthday, the big challenge is re-imaging the atrium style lobby into something more contemporary, according to brand leader Alan Roberts.
As part of the process, the Hilton team is working on a new Happy Hour evening reception and recently conducted a breakfast “line-buster” study, which could include more fresh yet operator friendly options. They are also looking at room delivery options.
The brand has 49 hotels in the pipelines, including one in the Middle East and China and is rolling out its Design Option 3 program with a tower that sits behind the reception area and atrium. Roberts added that through 2016, there have been 45 design refreshes completed with another 40 in process for 2017. By 2019, 70% of interiors will be six years old or less. “If we get F&B refreshes right, we will have momentum to bring back small meetings and business travelers who stopped staying with us,” Roberts said.
Montage’s Pendry rolling. The big news for the father and son team of Alan and Michael Fuerstman surrounds the development of the fledgling Pendry brand, a casual luxury brand with a point of view – maybe even a bit of a swagger – and zeroed in on niche F&B. Michael also indicated a new-build is coming to New York City. A Pendry with residences in La Quinta, California, has broken ground near Coachella, and a sibling Montage will soon sit nearby. Pendry West Hollywood, California, again with residences, is now capitalized and should be starting construction within a month or two. Another three to five Pendrys are in various stages of development, Michael said.
A Montage in Los Cabos, Mexico, is scheduled for Q1 2018 and an announcement about another property in northern California is forthcoming.
The father-son outlook on trends: Multi-generational travel is growing stronger than ever.
ESA new franchisor. The extended-stay/real estate giant Extended Stay America is finally turning to franchising for growth and within five years plans to reach 700 hotels (629 today), of which 30% will be franchised, President and CEO Gerry Lopez told HOTELS.
The company will also adopt an asset merchant approach to its large real estate holdings – buying, selling, developing and improving real estate one site at a time. Lopez said the company will transact between 100 and 300 property deals within a few years, ranging from two to 100 properties at a time. At the same time ESA expects to add 30 to 60 of its own hotels over the next five years, including new-builds and conversions.
After spending just under US$1 billion over the past five years to upgrade the system, the order of the day is franchising (some via sale of owned assets), a return to new-build growth, as well as organic RevPAR growth. Lopez said the system is already growing and sustaining higher rates as a result of the re-investment, beating guidance on both revenue and EBITDA.
“As we begin franchising at ESA for the first time, we’re seeking partnerships with well- capitalized franchisees capable of developing their market areas, which might include buying the existing corporate-owned ESA hotels and converting them to franchised units. We would like to see our prospective owners ‘cluster’ operations for better efficiency and pricing power within their markets and match their local development and ownership expertise with the advantages of Extended Stay America’s scale,” said Extended Stay America EVP and Chief Asset Merchant Jim Alderman.
Zoku tries to grow. The hip extended-stay brand that launched in Amsterdam has its sites set on Paris and is even looking to the U.S. for opportunities. More deals in Europe are forthcoming.
The Zoku mantra: Get back to human relations. Don’t generalize as every customer does not fit a mold.
So far, the initial Zoku is running at around 86% occupancy, according to co-founder Marc Jongerius, and average stay is five to six nights at a rate around €140-145.
Looking ahead, finding sites has caused a bit of a bottleneck as the company looks only to creative cities. In the U.S., for example, Zoku’s eyeing Seattle, Miami, and Los Angeles.