In one-on-one meetings this week at ALIS with senior executives of major management and brand companies, HOTELS Editor Jeff Weinstein learned how these companies are performing through the pandemic and planning for the months and years ahead. Here is a roundup from his notebook (read more on Friday):
PM Hotel Group
As consolidation continues in the third-party management space, Chevy Chase, Maryland-based management company PM Hotel Group is on the verge of merging with two other unnamed management companies to create a combined portfolio of 75 to 80 hotels. The news is supposed to break in about a month, according to PM’s president and CEO Joseph Bojanowski, who told HOTELS the deal will include a midsize lifestyle operator and a business class player with PM taking the lead role in the merger.
The new trio will also launch a new lifestyle brand, pulling from the independent rosters of the lifestyle management company, as well as PM’s current portfolio.
“We saw an opportunity to do this last year,” Bojanowski said, adding that one more management company is being courted to join the new group. “We have had stable, high-performing assets, so we could provide the platform to create greater efficiencies, which is what owners are going to continue to need for a while.”
Bojanowski pointed to the PM’s recent successes with a full New Jersey beachfront hotel generating ADR above $1,000 per night and US$65,000 in daily F&B revenue. Its Hotel DuPont in Wilmington, Delaware, producing six weddings per weekend and a 300-room Homewood Suites by Hilton running at 90% occupancy in July with a US$200-plus ADR.
Bojanowski said the new group will grow opportunistically and expects maybe a dozen new deals per year going forward.
Remington
The Dallas-based third-party manager is in recovery mode, bringing back property-level team, while dealing with staffing issues and wage inflation, according to President and CEO Sloan Dean.
Between June 2019 and June 2021, wages at the line level have increased 15% at the 80-plus properties in the Remington system, and it continues to grow, he said. “Wage inflation will remain at double-digits for several years and the industry generally is not budgeting for it,” Dean added.
Dean said Remington is growing and that another acquisition is possible, but not nearly at the magnitude of the Aimbridge-Interstate deal, for example. He cites smaller independent boutique players as potential targets, while one-off deals could include investment from Remington with institutional-grade, quality capital partners.
When asked about the state of industry affairs, Dean said there could be a potential pullback in fall after summer travel wanes, but he is encouraged by the pace of group bookings.
Dean is also becoming more bullish about new construction as revenues rebound. He predicts 2019 levels of development to return by next summer.
Commenting on the ongoing consolidation among third-party managers, Dean is a bit concerned about commoditization, adding as some of these merged companies seek a public offering it will put more pressure on the profitability levels of management contracts.
BWH Hotel Group
BWH President and CEO David Kong told HOTELS on Monday that he is heartened by the strong recovery in the U.S. with June and July showing a 67% RevPAR increase to the same time period in 2019. Year-to-date, Kong said Best Western is a little behind even with 2019 performance and by the end of the year expects to be net positive for the year.
Kong said business in Canada and Europe is starting to pick up steam for BWH member hotels, yet urban markets remain “comprised,” while Asia Pacific members have a “long haul” to reach a recovery.
Applications for BWH hotels are picking up with Kong suggesting a show like ALIS will generate 20 to 30 solid leads. He pointed to BWH’s Sure Stay Studio economy extended-stay brand gaining a lot of traction with older properties looking for a new home.
BHW has 300-plus deals in its North American pipeline, 600 to 700 worldwide, according to Kong, who is rumored to be stepping back from his role by the end of 2021. He said new deals right now tend to be a 50-50 mix of new brands like Aiden and Sadie compared to core Best Western brands. “Fair value gets our deals to the finish line,” he said.
BWH is also putting its own skin into the game to create some proof of concept, having acquired a more than 50% stake of a Vibe hotel in Denver, Colorado, and a 100% equity position in a Vibe for Tempe, Arizona. As both real estate projects have appreciated, Kong said that encouragement might lead them to invest more.
What Kong also wanted to brag about was the US$65 million in fees BWH gave back to owners since March 2020. Some may have waived fees, but he said BWH actually refunded fees to its member hotels.
Even with that give back, Kong said BWH has not tapped it reserves and remains profitable as a result of austerity plans during the pandemic. In 202, he said BWH will spend US$100 million in digital marketing.
Kong also pointed to an aggressive sales and marketing plan leading to recent sales successes, adding that bestwestern.com generated US$3 million in revenue each day during June and US$4 million days regularly during July.
Radisson Hotel Group Americas
CEO Jim Alderman and Chief Development Officer Phil Hugh have had a new development team on the ground since October and said they are up 40% on the execution with core Radisson deals.
Alderman said the company is more focused on core Radisson and wants the overarching brand name even more prevalent in the Gen 5 version of Country Inn & Suites.
Elsewhere, there is a new leader in Latin America, where expectations are growing for further development of the core Radisson and Park brands.
As for the upper upscale Blu brand, which has ongoing success in Europe, the Middle East and Africa, Alderman said the board in the U.S. doesn’t want to buy deals. However, he is hopeful for increase growth once more assets start transacting this fall. “There is a game of escalating key money and we have no desire to do marginally economic deals,” Alderman said. “We’d rather put dots on a map.”
Lastly, we talked about potential acquisitions with Alderman saying Radisson would love to consider it. He said what would make sense is a lower midscale, upper-end budget brand that it could take to Latin America and Canada.
Accor
In a meeting with Toronto-based CEO of North & Central America Heather McCrory, excitement was focused on the expected September 27 opening of the 400-room Fairmont coming to Century City in Los Angeles. It will become the brand flagship in the region and one cool feature is glass walls in the front and back of the building on the lobby level slide down into the ground to create an open-air environment.
Another US$1 billion has been spent on Fairmont property renovations in Canada so the brand is ready to shine throughout North America.
Mexico is a regional hot spot for development with two Novotels and Fairmonts under development, as well as a SO-branded property in Cabo San Lucas. Ibis Style is also coming to Mexico with about 85% of all deals strict management contracts.