MIAMI – The National Association of Black Hotel Owners, Operators and Developers, known better as NABHOOD, has been around for more than 20 years, but only recently have hotel brands formulated programs to encourage and nurture Black hotel ownership.
At the organization’s 2022 summit, at the Hilton Miami Airport Blue Lagoon, Wyndham Hotels & Resorts announced BOLD by Wyndham, which not only aims to expand awareness for the challenges faced by Black entrepreneurs, but also uses Wyndham resources to help fix those challenges and, ultimately, increase the number of Black hotel owners. Wyndham is not the only lodging company addressing the scarcity of Black hotel ownership. In June, Marriott International launched “Bridging The Gap,” a $50-million development program that, like Wyndham, aims to address the barriers to entry faced by Black entrepreneurs and other underrepresented groups.
“We can’t do it alone,” said Andy Ingraham, president and CEO of NABHOOD, whose mission is centered around three core pillars: ownership, executive-level employment and supplier diversity. “That’s how we change the game,” he said.
With DEI, which stands for Diversity, Equity and Inclusion, a bellwether topic in the hospitality industry today, programs like these are timely and served as a backdrop for the summit, which had the theme: “Riding the Wave of Change.”
The wave, depending on whom you ask, is already crashing down hard on the U.S. economy and, by extension, the hospitality industry. Get-togethers these days typically steer toward conversation around imminent recession, the result of high inflation that the Federal Reserve is trying to tamp down by slowing the economy through levers such as raising interest rates.
Despite recession talk, some believe that beneath the waves is opportunity that will wash ashore. One of those is Rachael Rothman, head of hotels research and data analytics at CBRE, who, during the statistics panel, said: “Cycles come and go. Don’t be afraid of a recession. It’s the best time to buy. You can capitalize on pain.”
It doesn’t mean there isn’t already suffering. Slowing gross domestic product, all-time-high inflation and labor woes are just a few of the headwinds. Rothman concluded that there will be higher revenue per available room in the near term, coupled with lower profit margins.
A CEO panel echoed similar themes and was equally optimistic, especially when put in context, as laid out by Frank Nardozza, chairman and CEO of REH Capital Partners. “It’s an interesting time,” he said, noting the 9 percent inflation rate and escalating interest rates. “This is terrible,” but it’s not unprecedented, as Nardozza said. When he started his career in the 1970s, inflation was at similar levels and interest rates were 18 percent. “We are in child’s play area right now versus where it was,” he said.
The ever-optimistic Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts, did not linger too long over the economic questions posed by moderator Jeanelle Johnson, principal and lead hospitality practice leader at PwC. “Let’s not just look at negative indicators,” he said. Consider labor, which is more expensive now because there are fewer workers to fill roles. “Maybe they are not showing up because they are continuing education,” Ballotti said, before pivoting and heralding the credibility that working in hotel operations offers.
On COVID-19, Ballotti believes that a lot of the changes made to deal with the pandemic are permanent, like daily housekeeping. He even conceded that brands may have been too prescriptive and controlling. “There is the issue of brand creep,” he said, “and the ability to remove brand standards that should have never existed,” like, for instance, a full hot breakfast in the midscale and economy segments. “I don’t see it coming back,” he concluded.
Build or Buy
An ensuing development session parked panelists into two camps—the optimistic and the not as optimistic. Falling into the latter category was Bill Fortier, senior VP of development, Americas, for Hilton, who said, “There is going to be a recession for who knows how long, but interest rates have to go up a lot to pull this thing off.” Still, he said, Hilton development approvals have eclipsed 2019 levels; the obstacle is getting the projects off the ground. “The problem is they aren’t getting under construction like they should be in a normal year,” he said. “Interest rates are high, construction costs are high, lenders are skittish.”
David Wilner, SVP of franchise development for Wyndham Hotels & Resorts, is a bit more positive on the overall development landscape. “I don't think any one of us here would think that we would be at the stage of recovery that we are today, right?” he told the audience, encouraged by the seemingly unfettered demand that is amplified by the new remote work culture, which frees up more time for travel.
“Hotel owners are making money and they’re feeling positive, so they want to go out and build more hotels. The question is do we see it more on the conversion side versus the construction side? There's a lot of money chasing new projects,” Wilner said.
Matt Hostetler, chief development officer for Red Roof, took a middle-ground approach. “The experts talk about sacrificing a recession to reduce inflation,” he said. “The key is to pick up on the positives. Take a look at something that can allow you to drive forward. If the acquisition costs are higher, take a look at a [new] project because that's going to take some time. I can tell you that the cost of supplies, including raw materials, they will come down—that’s inevitable.”