Development Advice To Hotel Companies

I spent the better part of a recent week with a client entertaining brand representatives to discuss the client’s large development project. This project will have multiple hotels – all new development – over the next 10 years, and, at least two of those have more of a near-term time horizon.

We were, of course, interested in what the brand representatives had to say, without expectation that they (or any of them) would be prepared to buy land for development or, even, participate in development as a partner. We had sent a substantial amount of information about planning and identified both the client and its parent company. 

After sitting with the brands’ development and franchise representatives, a very enlightening and informative exercise, I have concluded that the brands should be sure that their development team comes to meetings prepared.  Here is some – as always, unsolicited – advice:

„X Study any materials provided, look at Web sites and know as much as you can about the party with which you are meeting (and the party’s project).

„X Bring enthusiasm for the developer’s project (one hopes that it is not feigned); be prepared to be collaborative; don’t offer more than you can provide, but eagerly offer that which you can

„X Know your own presence in the marketplace and the status and performance levels of your branded properties. Don’t – we know you can’t – provide any proprietary information, but ranges of rates and occupancies can be quite useful to a developer considering one brand family as opposed to another and trying to gauge where a hotel might fit and what NOI it might produce. If you can offer projections (even if only rates and occupancies), please do so, with whatever caveats are appropriate. At an early stage, you should not have to worry about “inducement” concerns, particularly in dealing with a master plan developer.

„X Be prepared to talk about your willingness to provide capital, even if you cannot do so.  Say so; be forthright. Don’t wait to be asked if it is programmatic within your company. If you can recommend partners (developers/operators) who can finance a property if they are involved, that’s pure gold and may differentiate your brand.

„X Be prepared to talk about why your brand is different (reservations system production; frequent traveler program production; sales and marketing; operating margins, etc.); these may be determinative in a selection from among competing brands.

„X If one or more of your brands does not seem to be a “fit” for the developer or the development, please say so; no one wants to waste your time, and you should not waste the developer’s time.

„X Do not denigrate any other brands or companies; the developer can do his homework on comparative performance issues. The fact is, at some levels, competing brands in the same market segment are somewhat commoditized, so one extended-stay brand, generally speaking, would operate in a very narrow band with another competitive extended-stay brand, all things being equal.

„X A bonus: Send a “thank you” note to the developer when you’re gone. (Thanks to my mom for that one.)

By the way, virtually all brand representatives with whom we spoke would have made high grades under this bit of advice.

And, please, no nasty comments that I don’t understand branding or families of brands; I do, and I have my personal and professional thoughts on the good and bad of most of those brands. I am speaking generally here, and I recognize that general comments are sometimes the ones that get us all, especially me, in trouble. Even still, I thought this advice was worth putting out here.