Brands, operators speak out on the challenges of 2017

HOTEL MANAGEMENT polled operators on their thoughts regarding 2017, particularly focusing on challenges, concerns and concrete plans for the year to come. Operators are cautiously optimistic, and are shy of going full steam into 2017 for fear of risking too much. This is the second part in its series on industry leaders and their forecasts for next year, and the first can be found here.

David Kong

David Kong, president and CEO of Best Western Hotels & Resorts

HOTEL MANAGEMENT: What steps are hoteliers taking now to drive revenue and maximize asset ROI, and is it on the top line or bottom line?
David Kong: Anyone who wants to be successful in business needs to focus on the top line. This is as good a time as any to grow market share and optimize rates. Most industry veterans have learned difficult lessons during the past downturns and are already operating more efficiently and effectively. Smart operators should think about investing and growing their revenue, not reducing expenses.

David Pepper

David Pepper, CDO of Choice Hotels International

HM: What do you see as your biggest obstacle in 2017 and what steps are you taking now to overcome it?
David Pepper: One obstacle we continue to face as an industry is that too many customers still don’t realize they can get the best hotel deal by going directly to the brand’s proprietary website, like choicehotels.com, versus an online travel agency. We’re working on changing these perceptions by providing more value to customers who book directly with Choice, which is not only more profitable for us and our franchisees, but is critical to building stronger brand loyalty.

Virtual Roundtable

Post COVID-19: The New Guest Experience

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Brian McSherry

Brian M. McSherry, COO of M&R Hotel Management

HM: The hospitality industry has reached the proverbial peak. How do you think this will play out in 2017?
Brian McSherry: Various factors, many out of the industry’s control, come into play when trying to forecast how 2017 will unfold. With a new administration in Washington, the economy—we hope—will start to grow at a faster clip, boosted by stronger consumer confidence. International travel has been very robust in many markets, including New York, where we have considerable inventory. This segment may be affected by proposed changes to the U.S. visa program. What do you see as your biggest obstacle in 2017 and what steps are you taking now to overcome it? Since we do business primarily in the New York market, it’s mission-critical for us to compete with increasing supply while balancing our rates and leveraging the perceived value that our franchised brands bring to the table. This is where the strength of the brands comes into play and customer loyalty and preferences shine through. A focused sales, revenue-management and employee-engagement culture captures the customers and helps retain them in both good and difficult times.

Thomas Magnuson

Thomas Magnuson, CEO and co-founder of Magnuson Hotels

HM: In discussions with owners, what are their biggest concerns for 2017?
Thomas Magnuson: Hotel owners’ biggest concern is being left behind, and how to make more money when supply is rising and pricing is flat. Just as there is a growing wage gap, there is also an occupancy gap between major cities and outlying areas. While the U.S. occupancy average for 2016 is estimated to be 65 percent, the rest of the U.S. comes in at 56 percent when you take out the luxury segment and the top 26 markets.

Rajiv Trivedi

Rajiv Trivedi, VP and CDO: loyalty programs at La Quinta Inns & Suites

HM: What steps are hoteliers taking now to drive revenue and maximize asset ROI, and is it on the top line or bottom line?
Rajiv Trivedi: Today, business and leisure travelers are increasingly focused on value and that’s what select-service hotels offer— affordable prices combined with the basic amenities that most travelers want in a hotel stay. Strong developer and franchise interest is also driving the demand for select-service hotels, which are typically less costly and time consuming to build than full-service properties. At La Quinta, we are in the process of advancing three strategic priorities: to drive consistency in our product, to consistently deliver an outstanding guest experience and build engagement with our brand by investing in points of differentiation. By focusing on the brand and our guest, we are confident La Quinta will continue to grow and take market share.

William A. Meyer

William A. Meyer, chairman of Meyer Jabara Hotels

HM: As labor and other costs continue to mount, what tactics will you take in 2017 to operate more efficiently?
William Meyer: Labor is one of our top expenses. For 2017 we will be diligent in our scheduling and utilization of work hours to ensure that every dollar spent is a productive one. We have also focused on our insurance costs—health, comp, property and liability with the intent of reducing these 10 percent. We are confident the new president will make changes in the [National Labor Relations Board] that will benefit the hospitality industry.

John Hamilton

John Hamilton, SVP business development at Pyramid Hotel Group

HM: In discussions with owners, what are their biggest concerns for 2017?
John Hamilton: Our owners also worry about employment regulations and how their management company will respond; however, there are additional concerns for 2017: What will be the cost of debt? Will the capital markets and cap rates hold up if it’s time to sell a hotel? What is going to happen to the cost of construction? Will my market be oversupplied in the near future? What does the new administration have in store?

Ryan Rivett

Ryan Rivett, president and COO of My Place Hotels of America

HM: As labor and other costs continue to mount, what tactics will you take in 2017 to operate more efficiently?
Ryan Rivett: I believe the impact of mounting labor and other costs is fairly subjective. Location, segment and scale always have and will continue to be significant variables for U.S. hotel markets. Relative to our brand, franchise and hotel operations, I don’t expect to make many if any tactical changes in our collective approach at managing efficiencies. We will stay focused on our core values and competencies and remain dedicated to ongoing training at every level.

John Edwards

John Edwards, CIO of Red Lion Hotels Corporation

HM: What emerging technology will have a place in hotels in 2017, and why?
John Edwards: Beacons, Wi-Fi positioning, indoor navigation and similar technologies. This will be driven through both marketing initiatives and guest services. As mobile solutions continue to grow, using positioning to deliver better customer service is the next step. Why do guest service staff need to run extra towels to a guest if a room attendant is nearby and the systems are intelligent enough to know that room attendant is there and available to deliver towels right now?

Paul Sacco

Paul J. Sacco, president, CDO of TPG Hotels & Resorts

HM: What do you see as your biggest obstacle in 2017 and what steps are you taking now to overcome it?
Paul Sacco: We believe that recruiting, hiring, training and retaining top talent will be key in the coming year. Rising minimum wages could hamper margin growth some and as new supply hits the market, it will be increasingly important to maintain leadership talent on property, including GMs, revenue, sales & marketing and human-resource managers. We must closely monitor employee opinion surveys and continue to treat our human capital as the key assets to the operation.

Steve Belmonte

Steve Belmonte, CEO of Vimana Franchise Systems

HM: In discussions with owners, what are their biggest concerns for 2017? 
Steve Belmonte Their biggest concern is the unknown, the economy and whether there will be an act of terrorism on American soil that will send our tourism dollars plummeting and put occupancies in the single digits. They also have concerns about new trade agreements that could potentially have certain countries boycotting America as a tourist destination.

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