It’s been nearly a year since Alan Roberts was named VP and global head of Embassy Suites by Hilton and in that time, he hasn’t slowed down. The brand continues its “Atrium Refresh” initiative, renovating properties that have been with Embassy for 20 years or more, as it opens more properties throughout the U.S. and signs new deals for domestic and international growth. As Roberts attends this week’s 39th annual NYU International Hospitality Industry Investment Conference, he discusses how a brand that is more than 30 years old is evolving and where it’s headed in the future.
What prompted Embassy to launch its Atrium Refresh initiative now?
The brand celebrated its 30th anniversary in 2014. Now, we’re infusing the new-generation prototype into existing buildings that have been with Embassy for 20 years or more and want to stay in the system. But as we add more new-build hotels, we also need a unified vision so guests still have a ‘wow’ experience at every Embassy property. We worked with our interior design teams to create concepts, but we also still work with our ownership groups and their design teams to allow for localization within their market and to co-create a finished product that’s timeless. Hard surfaces are neutral colors, but there’s more color in softgoods so they can easy be replaced in five to 10 years without completely renovating the hotel again.
Some of these hotels were built with rock waterfalls in the atriums and on the weekends that space is used for breakfast for up to 1,000 guests. The space wasn’t flexible. Now we’re reconfiguring it to anchor it with the bar, centrally located in the atrium, adding more comfortable seating and serving [food and beverages] to increase customer service as well as the owner’s [return on investment]. The former restaurant space is now additional meeting space that can activate additional revenue or additional guestrooms. A subset of 18 hotels that completed renovations in 2015 saw [revenue per available room] index improvements of 12.5 percent. RevPAR was up $12.80 post-renovation and [average daily rate] was also up nearly $8.
Embassy Suites’ portfolio currently has 236 hotels. About 40 were built to the new Design Option III prototype. We completed 45 Refresh programs by year-end 2016 and we’ll finish another 40 this year, with another 20 percent of that 200 slated for completion by end 2019. The balance we hope to have completed by end 2022.
Has Embassy’s new look changed its guest demographic?
We’re not attracting new guests; we’re winning small business meetings back to the brand. At the Embassy Suites Portland Washington Square in Oregon, the GM told us that after their renovation, they had a local business return to the hotel after it had stopped coming two years ago because they wanted clients to associate a more modern hotel with the company’s brand. The brand still performs well with business travelers during the week and leisure travelers on weekends, but this investment is bringing back that local small group business that can contribute to base occupancy.
Embassy’s recent spate of openings appears to be focused on secondary cities. Is that part of a greater strategy or simply opportunistic?
Our strategy is to identify markets where we have opportunity and that can support Embassy Suites as a full-service brand. With the new Design Option III prototype, there’s more flexibility for new builds than there was in the past. So the complimentary breakfast and reception element can be added to work in a way for the property’s location and footprint. We have 50 hotels in our pipeline and that includes major metropolitan cities. We have a new hotel being built in Seattle and we have new conversions opening at the Toronto and Montreal airports in 2018 and a hotel opening in Oahu later this year. We’re in major markets, but it’s a combination of where there’s opportunity and where our owners can get a return on investment.
Embassy exited NYC in 2010 when the property in the Financial District was converted into a luxury Conrad Hotel. What prompted the return now?
It was about finding the right hotel and the right partner. We also had a Homewood Suites open in Midtown Manhattan in 2014 and that hotel’s performance made it clear that there was an appetite in the market for more all-suites hotels. In fact, the developers of that property are the same for the Embassy hotel and we’ve worked closely with them because this Embassy’s vertical build gives it a one-of-a-kind design. It will still offer signature amenities like complimentary breakfast and evening receptions, but it will also attract locals from an F&B perspective. The Heist, the lobby bar that plays on the hotel’s proximity to the Diamond District, will have uniquely crafted cocktails and a small plates menu. There will also be an outdoor rooftop space where lunch, dinner and cocktails will also be served.
What’s next for the brand?
We continue to focus on our growth as well as the Atrium Refresh and where we’re headed with F&B. We want to keep growing the Embassy Suites pipeline in North America, where we have the largest pipeline for a full-service brand. Both the Toronto and Montreal airport hotels are conversions. We also have hotels in the pipeline in St. Kitts, St. Thomas [US. Virgin Islands] and Aruba and we’d like to see more growth across Latin America in resort destinations like Cancun [Mexico], and Cabo [San Lucas, Mexico]. We’re also interested in Mexico City, which like downtown San Francisco, is very expensive land and needs to be the perfect deal. We’re trying to find a developer to grow the brand across Latin America.
We also have hotels opening in Saudi Arabia and we’re working with a development team to find other viable markets in the Middle East. We think there might be opportunity in resort locations in Southeast Asia and we would like to grow in Shanghai and Beijing. We’re also working with North American developers on multibrand developments, partnering with other Hilton brands.
We’re also overhauling our off-the-shelf F&B offerings and these prototypes are available if developers want to use them. So we’re redoing our complimentary evening reception to bring more upscale offerings to it. So guests can still order a complimentary well drink, but for an additional fee, they can upgrade the brand of alcohol. We also want to make our complimentary breakfast easier to operate without reducing the offerings and we feel this is where we can learn from the cruise industry.