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Executives Say Hotel Industry’s Future Hinges on Improved Relationships Between Developers and Brands

Pacifica Hotels' Matt Marquis and NewcrestImage's Mehul Patel speak at the Meet the Money conference in Los Angeles. (Trevor Simpson)

LOS ANGELES — Among a host of challenges facing hotel developers and investors, improving brand relationships often falls under the radar, but executives said the industry is at an inflection point when that work becomes even more important.

On the “C-Suite” panel at the 2023 Meet the Money national hotel finance and investment conference, Mehul Patel, managing partner and CEO of NewcrestImage, said there’s a new challenge facing the hotel industry every six months.

“The new norm is very volatile,” he said. “You have to stay in front of it and manage your business in a very clear thinking that you are going to navigate those challenges as they come up one at a time and prepare your balance sheet based on those challenges.”

Still, opportunities to improve relationships with the hotel brands and developer can’t be overlooked, Patel said.

“We have to find a way to work with our brand partner and really improve that relationship over time, and I hope we can all collectively educate the brand partner to say they have to invest in their business,” he said. “That would ultimately benefit our entire industry.”

Greg Friedman, CEO of Peachtree Hotel Group, said the biggest risk of the hospitality industry being disrupted is the lack of investment in technology from brands. He said other industries increase productivity through these investments, and it increases the efficiency of the business.

“When you look five to 10 years down the road, [brands] need to get ahead of the curve because historically we’ve just underspent on technology,” he said.

Striking the right balance between technological efficiencies and guest interaction needs to be taken into consideration as well, Friedman said.

Francis Lively, president and CEO of The LCP Group, said it’s interesting to see the operational efficiencies from increased technology, but it will never fully overtake the need for human staffing.

“Something we’ve learned over the last few years — human connection and interaction is pretty valuable to all of us and I don’t think you’re going to replace that,” he said. “I don’t think that’s necessarily a good thing for our industry.”

Global hotel brands such as Wyndham Hotels & Resorts, Hyatt Hotels Corp. and Marriott International have either unveiled or teased new brands over the past year. The new brands have added to the skepticism from some developers that there are too many of them.

Matt Marquis, CEO of Pacifica Hotels, said the brand companies need to consider the similarities between their own brands and if collapsing some into one makes sense from an operating standpoint.

“Our industry comes with a bit of ego,” he said. “It’s easy to get in our own heads and think we know exactly what we’re supposed to do.”

Another issue with the constant unveiling of new brands is the risk of neglecting improvements to legacy brands. Patel said NewcrestImage has decided to not sign some legacy brands due to a lack of focus from the brand company.

“If they’re investing equal amount of dollars on a new brand, they should have a fiduciary [responsibility] on their part to invest on the legacy brand because every owner made the same equal investment,” he said.

A new staffing issue is the inconsistency of occupancy on weekdays versus weekends, Patel said. Hotels may be overstaffed or understaffed depending on the occupancy on any given day, and preparing for that is a challenge.

Friedman said his properties are about 85% staffed after furloughing workers in 2020. In efforts to both recruit new employees and retain current ones, Peachtree offers a vacation reimbursement to encourage employees to take time off and avoid burnout.

“It comes back to just creating a work environment that people want to come work for you from a cultural perspective,” he said.

Patel said offering benefits such as vacation reimbursements helps, but there needs to be more of an emphasis on the career growth opportunities within the industry.

“From the corporate office to the hotel level, I think the messaging isn’t right,” he said. “If we forget to take care of their passion or their career or what’s important to them in their life, I think we’re always going to be lagging behind other industries.”

Greg Kennealey, CEO of Mission Hill Hospitality, said these stories get lost in the day-to-day operations but need to be elevated.

“We’re doing ourselves a disservice as an industry by not promoting that more,” he said.

Read more news on Hotel News Now.

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