Fiscal cliff sidestepped, but industry still cautious about political environment
U.S. taxpayers breathed a sigh of relief when January’s fiscal cliff was avoided, and hoteliers were happy to have some increased clarity in order to plan for the future. However, worries over payroll tax increases, higher capital gains taxes and the uncertain debt ceiling continued to loom over hoteliers well into 2013, particularly those interested in buying and selling properties.
Wyndham, Choice, Aimbridge get in on Jameson Inn portfolio deal
The first significant portfolio deal of the year involved the distressed Jameson Inn portfolio of hotels. In December 2012 America’s Best Franchising purchased the brand name and 12 properties operating under the name from Argila Jameson Brand in an all-cash deal. In early January, owner Colony Capital tapped Aimbridge Hopsitality to manage 103 former Jameson Inns comprising the rest of the portfolio. Forty-nine of those became Baymont Inn & Suites hotels, six became Howard Johnsons and one became a Days Inn. Forty-two others became Quality Inns, two became Comfort Inns and two became Econo Lodges.
Hotels dive into ADA regulations
Feb. 1 marked the date for hotels with swimming pools fitting certain size guidelines to comply with updated Americans with Disabilities Act legislation requiring pool lifts. The industry fought these updates for a year and ended up winning an extension to the compliance date. While some organizations continue to push back, the pool lift issue is essentially a done deal, and hotel owners and operators continue to educate themselves on the best practices for choosing and installing lifts.
Katherine Lugar appointed president/CEO of AH&LA
In late February Katherine Lugar, former EVP of the Retail Industry Leaders Assn., was named to succeed longtime American Hotel & Lodging Assn. president and CEO Joe McInerney. Lugar, who officially took the seat in April, made government advocacy a primary mission. In the first months of her leadership the AH&LA would change its membership model and begin the transition to boost its advocacy activities.
The Hyatt House Minot in Minot, N.D. (shown here in a rendering) opened in late May to cater to the local oil and natural gas mining industry surrounding the Bakken Formation.
North Dakota’s hotel construction boom
The North Dakota Division of Tourism in March released data showing 80 new hotels sprung up primarily around the Bakken formation between 2002 and 2012, with slightly more than 50 percent constructed since 2011. The investment spotlight turned on oil- and natural gas-rich regions in North Dakota, Texas and Pennsylvania, among other states as fertile ground for ground-up hotel development to house long-term oil field workers and cater to the city growth surrounding the regions.
Frits van Paasschen, president and CEO, Starwood Hotels & Resorts Worldwide.
IHIF: Investment opportunities grow in Europe, Russia and Africa
The annual International Hotel Investment Forum in Berlin delved into Europe’s overall weak economic performance but showcased economists bullish on investment and development in the regions. In addition to opportunities in the eurozone, show speakers explored development in Russia and Africa.
Arne Sorenson, president and CEO, Marriott International.
Richard Solomons, CEO, InterContinental Hotels Group.
Cloud-based PMS gain momentum as industry streamlines technology
In 2013 “cloud” became a major buzzword in the hotel industry, referring to all sorts of data storage and communication strategies. Property-management systems proved to be advantageous systems to migrate to the cloud. Vendors and hoteliers lauded the advantages of cloud-based PMS, particularly to reduce stress on a hotel’s infrastructure.
Solid fundamentals push higher pricing
By April, the industry was experiencing continuing improved occupancy, average daily rate and revenue per available room, leading to improved hotel pricing, according to brokers. Brokers said pricing definitely was returning to peak levels and in some markets surpassing it. Markets like New York, San Francisco, Miami and Chicago showed strong pricing levels, and midscale hotel products with branded loyalty programs showed the most promise.
Legendary hotel industry trailblazer, developer Hammons dies at 94
John Q. Hammons, hotel developer and philanthropist, died in May at 94. Over the span of a 52-year career in the lodging industry, he developed 210 hotels in 40 states, having “introduced the hospitality industry to signature-style, full-service hotels featuring atrium lobbies, expansive meeting and convention space, large guestrooms, podium check-in stations and complete business traveler amenities that have become staples in a guest’s exceptional experience,” according to a statement from John Q. Hammons Hotels & Resorts. “Hammons was a giant in the hospitality industry and was unwavering in his commitment to exceptional quality and service and to giving back to the community,” said Jacqueline Dowdy, CEO of John Q Hammons Hotels & Resorts. “He was a great mentor and friend and will be missed by all who came to know him, but his legacy will live on forever.”
New York Hilton Midtown gives roomservice the red light
In late May Hilton Worldwide made news by announcing it would end roomservice at its huge New York Hilton Midtown in August. Instead, the brand opened an outpost of its new grab-and-go Herb n’ Kitchen F&B concept, saying the demand for roomservice at the midtown Manhattan property just wasn’t there, since the majority of guests preferred to sample neighborhood fare. The end result: Hotels around the world are taking a closer look at how the service pencils out at their own properties.
HITEC: It’s all about the cloud
This year’s annual hotel technology show addressed all facets of cloud computing, answering questions like: How can moving projects and systems to the cloud save money and create efficiency? What does it mean for security? How much do operators really need to know about the cloud and what vendors should they choose? The major takeaway: Hotel owners and operators migrate functions to the cloud so they don’t have to worry about technical minutiae, but the process still requires a good amount of planning.
HITEC attendees worked the trade show floor in between educational sessions.
J.D. Power study shows overall guest satisfaction hits seven-year high
After two years of consistent declines in hotel guest satisfaction, a report from J.D. Power shows that guest satisfaction is finally on the rise. Not only is this the first year where guest satisfaction is posting gains, satisfaction also reached its highest levels of the past seven years, according to J.D. Power’s 2013 North America Hotel Guest Satisfaction Index Study. Of a possible 1,000 points, guest satisfaction is averaging 777 points, up 20 points from 2012. This is the highest score on the satisfaction index since 2006. The largest increases in satisfaction were found in the areas of reservations, costs and fees and check-in/check-out.
Hotel valuations point upward According to HVS International data, hotel values had returned to their 2006 levels by summer, which helped jump-start a significant boost in hotel transactions by the middle of the year. Looking back to 2006, the value that year of $99,000 per room dropped dramatically by 50 percent during the following three years to $56,000 per room, according to the HVS Hotel Valuation Index, compiled in conjunction with STR. However, once the industry recovery got under way in 2010, values increased roughly 20 percent a year through 2012. HVS and STR have projected that this value growth will continue at an average of 12 percent for each of the next three years. “In 2016, valuations will probably reach their stabilization point and start to plateau,” said HVS President and CEO Stephen Rushmore Jr. “As in any cycle, you reach a high point, which then starts to moderate. All things being equal, the industry therefore should have at least two to two-and-a-half more good years.”
Hilton Worldwide preps for IPO
In mid September, Blackstone Group made known its intention to take Hilton Worldwide public through an initial public offering of up to $1.25 billion. While trading is expected to begin in early 2014, sources are reporting Blackstone will retain ownership of a majority of voting shares. The New York Times estimated the company’s value could approximate $30 billion before trading. Hilton was taken private by Blackstone in 2007 during a $26.7 billion deal, counted among one of the largest leveraged buyouts to take place before the 2008 financial crash.
Lodging Conference: It’s a sellers’ market
It’s a sellers’ market, and by September’s Lodging Conference, hotel owners were taking advantage of that—or at least preparing to—while operators continued to contribute to the overall transactions climate with strong operating fundamentals. The general feeling was optimistic, as industry executives shared examples of pricing near peak, operating fundamentals at or surpassing peak levels, and transaction volume on pace. High demand for undervalued assets in a favorable pricing environment among various types of buyers (whether private equity investors, real estate investment trusts, foreign investors or others) makes 2013 “a great opportunity to acquire, rebrand and relaunch properties,” said Joel Eisemann, chief development officer, the Americas, for IHG. In order to optimize those opportunities, all parties—franchisor, owner, developer and manager—are working to make deals pencil out while time is on the industry’s side.
Midscale development hits a sweet spot
The midscale and upper-midscale segments got a lot of love from investors and developers in 2013, thanks to manageable construction and labor costs and higher profit margins. According to PKF Hospitality Research, in 2012 midscale hotels had the highest percentage gains in net operating income and total revenue. According to Lodging Econometrics, the upper-midscale and upscale segments accounted for 76 percent of all hotel projects in the pipeline at year’s end 2012. Hotel Management gathered a roundtable of midscale franchisors in September to discuss the value propositions behind this hot segment.
Raj Trivedi, EVP franchise and CDO at La Quinta Inns & Suites (middle), says that while U.S. brands historically have expanded overseas, brands that are more recognized in other parts of the world may soon expand to the U.S. He is flanked by Jessica Junker, CIO of Cobblestone Hotels, right, and Ron Burgett, EVP, lodging and brand development, Red Lion Hotels.
The changing face of group travel
While 2013 was characterized by general optimism across the board, one segment felt the pinch—group business. Today’s group performance troubles stem from the recession-era shunning of perceived bloated, corporate-subsidized pleasure trips in the name of business. Over the past few years the overall group segment of hotel business has struggled to return to profitability, and while groups are coming back, most agree they often look a little bit different than they did before. On the demand side, STR’s SVP of strategic development Jan Freitag said that despite selling more rooms than ever, “our data shows that indeed group demand has not recovered.” According to STR, total group demand in 2013 so far is 2 percent lower than it was in 2007. Despite the changing metrics, industry experts agree that group business isn’t going away—it is changing and today’s operator needs to recognize that.
Recovery momentum picks up outside major gateway markets
According to the September 2013 edition of Hotel Horizons, PKF Hospitality Research forecast in the Oct. 21 issue of Hotel Management that properties located outside the nation’s major lodging markets will achieve superior growth in performance in 2014. During the year, PKF-HR predicts hotels operating in secondary, tertiary and rural markets will enjoy an aggregate revenue per available room gain of 8.5 percent in 2014. This is the result of a 2.8-percent increase in occupancy and a 5.5-percent boost in average daily rate. While larger markets will continue to lead the recovery, secondary and tertiary markets will enjoy improved operating fundamentals in 2014, according to PKF-HR.
Government shutdown puts squeeze on national park lodgings
When the U.S. federal government shut down from Oct. 1 to Oct. 16, many lodgings felt the loss, particularly those within federally funded national parks and those catering to government travel. Park lodging operators reported losses in the millions per day during the shutdown. Midway through the shutdown some states stepped up to strike deals with their federal counterparts to get parks and park operations open again on the condition that they would be reimbursed later. This move helped some lodgings through the worst part, but year-end operating results will show the after-effects of this legislative measure.
GMs earning more, spending more and getting more social
According to the results of this year’s Hotel Management Voice of the GM survey, now is a good time to be a hotel general manager. Salaries showed upward movement this year, as 58 percent of GMs reported earning $60,000 or more per year. The majority of this year’s respondents said their operating and purchasing budgets were up this year, and they made the most of it. Technology was a big spending focus in 2013, most notably in wireless infrastructure. But even more than technology, bedding and softgoods spending topped GMs’ lists this year. Finally, more and more GMs are getting involved in social media efforts to boost their property’s profile. The fastest-growing social channel in popularity? Pinterest.