BOSTON—On the first day of the Hotel Equity & Lender Perspectives Conference (HELP), Thayer Lodging's Lee Pillsbury took brands to task; the day after, it was the brands turn for rebuttal.
"Lee likes to be controversial, provocative," said Liam Brown, president, U.S. & Canada select-service & extended-stay lodging and owner & franchise services The Americas, Marriott International. "Brands continue to be relevant. Owners care about cash flow and cap rates at exit. We own the stay and have a deep understanding of the customer."
Panelists on the brands session all made the case that brands are still compelling. "To say brands are irrelevant, I question that," said Colleen Keating, SVP of franchise operations-North America, full-service brands, Starwood Hotels & Resorts Worldwide.
In another panel on lending, Adrienne Kautzman, managing director-national indirect hotel originations, GE Capital, had this to say about the relevance of brands. "Brand are still critical," she said. "They are a predictability of revenue that gets us paid back. As hotel loses flag, the value changes. Brands still drive a ton of revenue and still will."
Added Keith Wentzel, MD for mortgage banking firm Fantini & Gorga, "Lenders like brands and the better brand, the lender might get more aggressive on it."
Managing Your Asset
Meanwhile, an asset management panel, also touched on the value of brands and their impact on assets.
Rich Warnick, president and founder of Warnick + Company, discussed intermediaries, placing blame on the brands for losing control of their inventory to them. "Brands handed it over," he said. "It's kind of shameful, but the new reality. The push back should be on brands to get direct business back."
Marc Dober, VP of asset management, hospitality, for the Lightstone Group, questioned the brands' impact on the overall management of the asset, specifically in regard to cost control. "I have four hotels in Manhattan," he said. "It's a big concern. Marriott was like a deer in headlights. They don’t even understand how to control. Customer acquisition on the sales side is a vertical curve. It's eating in. Rates down and costs up."
"Brands aren’t developers or architects," Warnick said. "The best brands need the best developer. They are good at operating, but not thinking through some core issues."
Warnick added that brands and owners have misaligned interests. "If brand puts up 20 percent they are still making good investment. Key money is buying a management contract. They don’t think about things in same way," he said.
The future of brands was also up for debate, particularly as independent hotels gain favor. "Brands should be worried by independents," said Maxine Taylor, EVP of asset management, Chartres Lodging Group. "When REITs go with them, [brands] should be worried. Everyone can advertise the same way now."