LOS ANGELES—Attendees at last week’s Americas Lodging Investment Summit overwhelmingly shared their optimism for 2023 while acknowledging that there are some factors in play that bear watching.
During the event at the JW Marriott and Ritz-Carlton LA Live, which attracted more than 2,600 attendees, Hotel Management met with a number of company executives to check in on what their companies have been up to and what they expect for the year ahead.
In today’s round-up we catch up with GF Hotels & Resorts and Davidson Hospitality Group.
GF Hotels & Resorts
Philadelphia-based GF Hotels & Resorts has made great strides in growing its third-party management business, according to John Rubino, president and COO, managed. In fact, it has more than doubled its portfolio since the beginning of the pandemic, for a total of around 130 hotels.
“We found that one of our strengths is we're able to turn hotels around, so we go into hotels that are struggling or maybe distressed financially and we just have this this business acumen to be able to make changes to turn hotels around and drive more revenue and drive more profits,” Rubino said. “We've had the opportunity to do that for several owners and we're proud of what we do in that aspect. That's been key.”
This is a year of accountability for everyone, according to Ryan Alpert, EVP, sales and commercial strategy.
“We're looking at our fundamental expectations but also really digging in as we always have; when you're looking at the nuances of transactions and the way that we're able to bring hotels on, a lot of them have been in a distressed environment for the past two to three years,” he said. “There's no better company than us because we've been able to go through that and speed to market matters now. We have the game plan and the strategy and we've been able to replicate that time and time again and at a very successful rate.”
While performance fundamentals have been improving, Rubino said labor costs and inflation are playing a part to depress overall results.
“What we've seen is great [average daily rate] increase and we continue to see that at most of our properties depending on the location, and the ADR helps contribute to profitability. Occupancy isn't back to where we want it yet, but when the return of the business transient guest comes and the groups start building, we'll see the return of that,” he said. “But what's acting against that is the higher cost of labor—it's paying higher wages, it’s paying contract labor, which is higher—and the cost of goods. We've got to find that that sweet spot where the higher rate can flow to the bottom line, where we can start to control costs [and] combat inflation.”
Alpert said GF’s success has a lot to do with the hard work of the teams in the field, which led it to create a hospitality mentorship program nearly a year ago. Nearly 200 team members enrolled in the program when it was launched, and the 12-month leadership-development program will graduate its first class this spring.
“We felt that there was so much value in training our team members, helping them get to the next level,” Rubino said. “[Alpert] called me one day he’s like, ‘I got it, I know how we're going to do it.’ He had this great idea. So we partnered to create what we call GF CAP, which is the GF Career Advancement Program, and we developed it for every level of our hotels. We want room attendants to be able to train to become inspectors or supervisors or a leader within the department. But we also want sales managers to become directors of sales, AGMs to become general managers and so forth, and we want it for every level.”
GF CAP is not meant to be simply a training program, Rubino said.
“It's a journey: You're trained to be able to do your job better [and] to advance because it's so hard to find good leaders,” he said. “We want to create the leaders with the talent that we have … instead of going out and finding leaders. We have this talent; let's give them the opportunity to advance their careers while they advance us as a company.”
While he won’t have complete data until the first class is complete, Alpert said the high scores participants have been earning have translated into positive benefits.
“That's now directly correlating into guest service scores that are increasing, more efficiency at the bottom line, mental health ... because the leaders that are going through this are able to articulate and communicate differently on property,” he said. “It's turning into this whole evolution. ... This one person's impact now has an impact on 10, 15, 20, 100 people on property.”
Davidson Hospitality Group
Just about two years after rebranding from Davidson Hotels & Resorts to Davidson Hospitality Group and reorganizing into four verticals—Davidson Hotels, Davidson Resorts, Pivot and Davidson Restaurant Group—the company's operating model is working just like it was planned to, according to CEO and President Thom Geshay.
“You can't operate every hotel exactly the same—a lifestyle hotel with a heavy orientation towards food and beverage versus a convention-center hotel versus a destination resort—you're operating very differently and it takes different skills to do that,” he said. “As our as our company has grown, we've tried to refine our skills in those areas to make sure we can hit all the right things that are right for that consumer, that are right for that owner, that are right for that asset.”
Since launching, the resort division has doubled in size, with the overall company adding about 49 hotels in the past three years to bring its portfolio to 84 properties.
“When you break it down into verticals … if you're an owner and you have a lifestyle hotel, you're really one of 35 hotels and our team is deployed against that,” Geshay said. “That allows us to get really hands on, face to face and quality time with all our owners and associates and allows us to deploy and make sure that our core values are pulled through everything we do. We can deploy in a more manageable level.”
Geshay said the company has stayed focus on upper-upscale to near-luxury hotels, full-service with a lot of food and beverage—by design.
“It’s been on purpose,” he said. “We want to be thoughtful and we want to grow with the right owners, the right assets, and make sure every asset coming in fits well with our portfolio.”
In September, Davidson ranked highest in overall customer satisfaction in the J.D. Power 2022 North America Third-Party Hotel Management Guest Satisfaction Benchmark, which Geshay said the company is still very excited about.
“The best thing about it is that it’s the guests that are [ranking Davidson high],” he said. “We can't stuff the ballot box. As a third-party operator, [we] have something we're really proud of and that's the team members. It's really the people that are checking people in, cleaning the rooms and making the breakfast and serving the food.”
Geshay said the company has recovered its 2019 revenue per available room portfoliowide and at nearly 100 percent booking pace going into 2023, and he’s bullish on where it can go this year.
“One of the nice things is to for us as a private company is we don't have to add X units a year,” he said. “Growth is not an imperative for us. We grow with assets that we like in markets that we like with owners that makes sense. We're fortunate to have a lot of incredible partners that are always active. I think we have 48 different partners today out of our 84 hotels. So we have a very diversified partner base and that allows us to be patient and grow and pick our opportunities to do well.”
As for the overall economy and its effect on hotels: “All we can do is plan for that. In every cycle, there [are] opportunities. Sometimes you have to work harder to find the opportunities, but there [are] always opportunities in every cycle. So I feel good about 2023. I feel good about our industry. I think it's coming back.”