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Valor’s McGlashan ready to rip off bandage

Euan McGlashan grew up in a working-class family in Edinburgh, Scotland, with a father who was always filling him up with great nuggets of advice about life. One thing he always told Euan: “People should feel better about who they are after they’ve met you than before they did.” That became McGlashan’s mantra for his hotel career.

The co-founder and CEO of Atlanta-based Valor Hospitality Partners left home at 16, working in hospitality to support himself and embarking on a career with rapid promotions and entrance into hotel school.

“Focus on what recovery looks like for your guests, for your staff and for your properties. And by that, I mean nobody should be left behind. Recognize the fact that everybody’s suffering mentally from this, keep your teams massively focused and task-driven, and make them think creatively.” – Euan McGlashan
“Focus on what recovery looks like for your guests, for your staff and for your properties. And by that, I mean nobody should be left behind. Recognize the fact that everybody’s suffering mentally from this, keep your teams massively focused and task-driven, and make them think creatively.” – Euan McGlashan

Upon graduation, he bought and operated a contract catering business before emigrating to South Africa, where he held several positions in the F&B world – both standalone and inside hotels. By 1995 he was afforded an opportunity to develop and open what would become the very successful Cape Grace hotel on Cape Town’s waterfront.

He was recruited to other opportunities in the United States, the U.K. and back in Scotland before going to the U.S. to join startup management company Wischermann Partners and open seven Starwood properties.

By 2010, he ventured out on his own, launching a management firm, McGlashan Hospitality, and developing relationships with investment firms that needed an experienced operator to take over distressed acquisitions and implement turnaround strategies. Valor was founded in 2012 with longtime friend and former colleague Steve Cesinger to offer management, acquisition and development services with a focus on distressed assets.

Today, Valor has some 60 hotels in its global portfolio, predominantly in the U.S. (East Coast and Sun Belt), as well as the U.K., South Africa and the Middle East. It has more than a dozen properties in various stages of development and has set up shop in Thailand with former IHG executive Clarence Tan running the business out of Singapore.

In 2018, Kemmons Wilson Hospitality Partners took a small stake in Valor, which was named to reflect the concepts of strength, courage and commitment. “Our logo is the thistle, which is the national flower of Scotland, a hardy wee bugger that survives all seasons and all weather,” McGlashan said proudly.

Today, he is keeping close tabs on New York and New Jersey for new opportunities and thinks more distressed opportunities will present themselves during Q1 2021. He also points to the U.K. and mainland Europe in a similar time frame, adding that Valor could easily consume another 20 hotels in the U.K. alone. Its deal for a dual-branded hotel in Ras al Khaimah, UAE, has been switched to a tented camp plan; the opening of an IHG Voco-branded hotel in South Africa has been pushed back to February of next year. Just yesterday, it announced the early 2021 opening of the Kimpton Banneker Hotel in Washington, D.C.

As Valor represents private equity firms and is doing some underwriting, McGlashan said he is not seeing heavy discounting just yet, with everyone still trying to sell based on the assumption that the industry will quickly recover to 2019 performance levels.

“Owners are trying to hang on for dear life, and I think as long as there’s government stimulus, to some extent they will. I think the bigger problems that we’re seeing right now are U.K. and Europe, because there’s not the same government stimulus there, and lenders are getting squeezed.”

McGlashan does expect blood in the water soon, but added that nobody can really predict when. “We think by the end of Q1 next year, but who knows?”

He also believes the industry might see re-branding, up-branding and owners flipping from brand and brand-managed to franchising because it probably represents a better overall economic outcome for them.

Valor properties are building big discounts into operating performance and projections, so annual EBITDAs and NOIs are way down.

“Our bigger concern is getting into price wars as business starts to come back. We suddenly start to see recovery, but ADRs are down 20%, 30%, and RevPARs are tanking,” he said. “We’ve been trying very, very hard to maintain rate integrity, and I hope everybody else does the same because that will certainly help recovery. If that starts, boy oh boy, ’21 will be a mess.”

First movers

All Valor hotels are up and running today after some pandemic-related closures earlier in the year. McGlashan said their experience with distressed assets has given them a first-mover lead in recovering.

“We called this early and got our protocols – I hate that word – quickly established,” he said. “We communicated, we implemented and got our clients comfortable that we were on our A game. Then we shifted our focus to figure out how are we going to hit the leisure markets and get some of that drive-to traffic… All of this just reconfirmed why I always sleep with one eye open. It’s just another scar on my back.”

Valor's Lodge at Gulf State Park lobby
Valor’s Lodge at Gulf State Park lobby

McGlashan said Valor has spent a lot of time and effort on HR and training. It is writing programs now on emotional intelligence and creating support systems for mental health, wellbeing, physical health and wellness. “We’re always looking for new ways to innovate and build the business.”

While he doesn’t think COVID has changed him, McGlashan admitted he has never worked this hard to keep teams task-focused and not allow fear and malaise to slip in. “When you’ve been in this industry like I have for 35 years, the only thing that I would say is be nimble and aware, always, because hospitality always gets hit the hardest and the next big crisis is always around the corner. It’s a sad way to live, but I’ve never allowed myself to relax and think, we’re in a great period.”

He does miss business travel, previously being gone three weeks a month. “I love my teams. I’m a big culture guy. My trips are everything to me, both at corporate and hotel level, and I’ve missed being out in the field,” McGlashan said. “I love international travel because for me it’s such an R&D thing.”

Without the travel, McGlashan said he is reading more books and magazines and is admittedly more relaxed. “At some point I just said, ‘Well, look, I’ll do what I can do, and if I’m not traveling, then maybe that’ll be good on my body.’ I like cycling and I like to stay fit… I keep telling people, though, I’ve got a COVID liver, probably drinking more. I think there is such a thing as a COVID liver.”

Willing a recovery

Optimistic McGlashan believes that once 2021 reaches the halfway point, a more earnest recovery will begin.

“As social beings, we’re going to want to get back out there quickly. But again, who knows?… I do think that once we get past this, whether it’s a vaccine, therapeutics, whatever it is, there’s going to be this huge pent-up demand for people to get out and travel. And again, it comes back to that maturity point earlier. I think masks are here to stay for a long time, and I think people that feel threatened will wear the masks. But I don’t think there’s going to be as much of a shift as people would ordinarily think.”

"There’s only so long that you can have plexiglass in front of a reception desk and blue tape on a floor. Make your properties feel welcoming, make them feel the way they’re meant to feel, so that when guests walk in you create this sense of calm.” – Euan McGlashan
“There’s only so long that you can have plexiglass in front of a reception desk and blue tape on a floor. Make your properties feel welcoming, make them feel the way they’re meant to feel, so that when guests walk in you create this sense of calm.” – Euan McGlashan

In the meantime, Valor is working on driving all aspects of its business. McGlashan said group business is starting to rebook for the second quarter of next. “Wedding business is coming back strong. We have a lot of business on the books… We’re pacing really well from April.”

He is also hoping corporate transient starts to come back during the second half of 2021 and has no doubt leisure destinations will be sold out next summer. “I think and I hope people will be back on planes,” McGlashan said.

Keep the faith, he implored, that the pandemic is a once-in-a-hundred-year event. “I hope there aren’t a lot of these, and if there are anymore, that we’ll be well-equipped to deal with it,” he said. “But keep the faith because it will pass and we will get back. Focus on what recovery looks like for your guests, for your staff and for your properties. And by that, I mean nobody should be left behind. Recognize the fact that everybody’s suffering mentally from this, keep your teams massively focused and task-driven, and make them think creatively…

“At what point will you rip off the bandage?” he continued. “Because there’s only so long that you can have plexiglass in front of a reception desk and blue tape on a floor. Make your properties feel welcoming, make them feel the way they’re meant to feel, so that when guests walk in you create this sense of calm. At some point, we will have to get back there. Someone’s going to have to be the first.”

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