Originally appeared in Hotel News Now in August, 2019
Contract labor is now viewed as a necessary—but still costly—evil by many hoteliers, according to sources speaking at the Hotel Data Conference. But hotel companies can take some steps to mitigate the pain of that additional cost.
Speaking during the “Help wanted! Dealing with today and tomorrow’s labor issues” panel, Amanda Chivers, managing principal of asset management firm Crown Hospitality Consulting, said contract labor is less than ideal but also unavoidable, especially at large, full-service properties and resorts.
“It’s really creating more demand for contract labor,” she said. “Look at resorts; 70% have to rely on contract labor. Imagine how that impacts your bottom line and profitability.”
It’s not just a profitability issue, either, Chivers said. A constantly rotating cast of employees can make it difficult to maintain service levels.
Chris Cheney, VP of hotel performance and analytics for Stonebridge Companies, also noted contract labor agencies often have lower standards for employees than hotels, so hoteliers must be clear on who they feel is eligible to work on-property.
“They’re less stringent in vetting (employees), which is a scary area to be in because it only takes one Department of Labor ruling to tie us more closely to those employees,” he said. “So we contractually say they have to be eligible associates and people who are legal to work at our properties.”
Biran Patel, vice chairman of AAHOA and partner at BHP Investment Company, said the need for contract labor is equally acute at the low end of the spectrum in part because of the stigma of working at economy hotels.
“Where I live in Texas, with some economy hotels it’s harder to find line-level employees because (full-service hotels) pay more with better benefits and these are exterior-corridor properties, but (employees) would rather work (inside),” Patel said.
But companies like Patel’s are still better off paying the premium for labor during high-demand periods than giving up the ability to sell some rooms.
“While your revenue is doing well, you can’t cut corners,” he said.
Cheney said the cost and increased competition for contract labor is “a growing concern” for his company. He said the need for it at some properties has been reduced (or even eliminated) by making employees feel wanted.
“It hasn’t been through recruiting as much as grassroot efforts, putting the time and energy into talking with individual candidates,” he said.
He said success has been driven by providing “personal attention” to candidates.
“A lot of companies want to cast the broadest net, but where we find success is when a candidate walks through the door we don’t want them to leave,” Cheney said. “If they go down the street to retail or other industries, we’ll never see them again.”
One of the problems with contract labor’s availability and cost, panelists said, is hotels aren’t just competing with other hotels but with other large-scale employers like hospitals, and those businesses often have the benefits of being less seasonal.
To combat these issues, hoteliers need to find creative solutions. In addition to treating and paying employees well, Chivers said the resorts she works with cover food and housing for employees. She said those properties also rely heavily on family and friends referrals.
“That helps create an environment where it’s comfortable and cohesive for new employees, and they come in already almost pre-trained,” she said. “If their family is in the industry, then they already know about service culture.”
Cheney said hotel companies can take simple steps to open themselves up to more potential candidates. He noted having an application process that requires an email address could eliminate as much as 75% of the pool of potential housekeepers.
“We all assume everyone has an email address, but research has shown that is not the case,” he said.
He also noted his company has had some success recruiting J-1 visa workers, who are often students from other countries coming to the U.S. to work at large seasonal employers such as amusement parks. Partnering with their primary employer could give hotels a new pool of intelligent, eager employees.
“Most of those workers want to have a second job,” he said. “They want to work the whole time they’re here then take two weeks to travel and see the U.S. before they go home.”
Patel said his company has made the strategic decision to not drug test employees, which could further scale back the potential pool of workers.
“If you’re not bringing what you do at home to the workplace, then we don’t make that an issue,” he said.
Labor in a downturn
Labor costs are on the rise due to new minimum wage laws across the country, and profits might start to decline this year, which means it is time to start planning for a downturn, Joseph Rael, senior director of consulting and analytics at STR, said during the “Labor costs in a downturn” session at the recent Hotel Data Conference. STR is the parent company of HNN.
STR expects revenue-per-available-room growth of 1.6% for full-year 2019, which isn’t significant growth, so Rael said labor costs are expected to continue to outpace growth in room revenue.
Minimum wage has risen to $13.25 an hour in some states, and has reached $15 or more in cities such as San Francisco and Los Angeles.
In 2018, labor costs outpaced revenue growth across all chain scales except for the luxury class, which was the only segment to see significant profit growth, Rael said. The midscale and economy segments saw profit declines as a result of labor growth of 6.7% for those segments.
In the past few years, labor costs have accelerated while revenues “have slowed to a point where they are no longer able to keep up,” he said, adding that only nine of the top 25 U.S markets saw revenue outpace growth in labor costs in 2018.
Rising labor costs aren’t necessarily a bad thing for all markets, he said.
“Minneapolis and Miami were the top two markets in the top 25 in terms of profit growth in 2018, right around 11%,” he said. “So if you’re seeing growth in revenues, you’re seeing growth in occupancy and you’re having to staff more, you’re having people working more hours, then you’re going to get that growth in labor costs as well.”
By: Sean McCracken and Danielle Hess
Originally appeared in Hotel News Now in August, 2019
One of the most critical things a hotel can offer a guest is a quality night’s sleep, but according to a recent survey from JD Power, some hotels aren’t delivering satisfactory sleeping conditions.
According to results from JD Power’s 2019 North America Hotel Guest Satisfaction Index Study, just 29% of hotel guests surveyed said they had a “better-than-expected” quality of sleep. The majority of guests who had a good night’s sleep at a hotel said they would return to the property or brand.
Hoteliers investing in the sleep experience know the value it brings.
Chris Manley, COO at Stonebridge Companies, which manages a portfolio of hotels in the brand families of Hilton, Marriott International, InterContinental Hotels Group and Kimpton Hotels and Restaurants, said a good night’s stay is highly important.
Despite the costly expense, investing in products to support sleep is critical, he said.
Start with the bed
Ron Pohl, SVP and COO at Best Western Hotels & Resorts, said what customers really want is a clean and comfortable bed. He said mattresses have always been a key element for each of the company’s brands.
For Best Western Premier, which ranked highest in guest satisfaction for the upscale segment in JD Power’s 2019 study, Pohl said his team researches which mattresses people are buying the most for their homes, then will endorse vendors who can provide those preferred mattresses to hotels.
“We continue to evolve that mattress spec to ensure it’s the latest and greatest sleeping experience out there,” he said. “The minimum expectation of a customer is ‘I want as nice of a mattress as I have at home and if it exceeds that, we remember that.’”
When implementing new mattress specs, he said all new hotels coming into the brand or undergoing a renovation will have to purchase them, but other hotels will finish out current mattress warranties before replacement.
There are numerous new mattress manufacturers hitting the scene, he said, including many that haven’t entered the hotel space before. One of the determining factors when vetting vendors is looking at mattress warranties, he said.
“Some mattresses might have a five- or seven-year warranty on them. That to us means the mattress will need to be replaced relatively soon, so our basis is it’s got to have at least a 10-year warranty,” he said.
Pohl said using platform beds in place of traditional box springs is one way North American hotels have recently adopted European influences. In addition to design opportunities, platform beds can offer cost savings too, he said.
The Premier brand still uses box springs in its beds, he said, but Best Western’s newer Vib and Glo brands use a platform bed design. Having that design does not detract from the sleep experience, and it’s as good as having a box spring, he added.
Platform beds also make the furniture more multipurpose, he said. Designs include drawers as well as headboards that can double as desks.
“We’ve seen a lot more of the upscale and upper-midscale boutique hotels designing the room around a platform type bed,” he said.
Beds in the Vib brand also have zip-off pillow tops on the mattresses, which allows hotels to replace the pillow top without having to replace the entire mattress.
“The days of flipping and turning mattresses has evolved,” he said. “You still turn them to make sure you get the life span out of them, but mattresses are pretty well manufactured these days, so there’s not a lot of maintenance and upkeep required.”
Pohl noted it is difficult to determine the return on investment on mattress types because some people like hard mattresses while others like soft. Having a lack of complaints is a good indication that guests are satisfied, he said. At times, Best Western will even have guests who want to purchase its mattresses, he said.
“That’s always a really good indicator that you’re providing something that they like,” he said.
For Wyndham Hotels and Resorts’ Microtel brand, Keri Putera, VP of brand operations, said brand standards are constantly updated with the best linens, bedding, mattresses and pillows. Everything has to be top-notch, she said.
Microtel ranked highest for the economy segment in the JD Power survey.
Manley said most of his properties in the Stonebridge portfolio use two-sided mattresses, although many others in the industry are transitioning to one-sided mattress. Having two-sided mattress allows hotel staff to flip and rotate the mattresses quarterly to extend lifespan.
The rest of the sleep experience
Putera said comfort and convenience are the two main priorities for providing a satisfactory guest stay, especially when it comes to sleep.
“They really want that convenient room, that comfortable bed, but at a price that doesn’t make them feel like they’re paying for extras that they don’t need,” she said.
Microtel recently rolled out its new prototype, Moda, which is all about style and efficiency, she said. Microtel continues to use wall-hung beds and furniture, which gives guests more floor space, she added.
However, it’s not solely about the bed. She said some of the top factors behind a poor night’s sleep include jetlag, unfamiliar routines and stress. That’s why Microtel focuses on other aspects of a night’s stay such as 24-hour coffee in the lobby and a breakfast in the morning.
“It’s all about the things they need without muddling that message,” she said.
Pohl said Best Western will offer things like ear plugs on request, especially at properties near airports, but automatically giving them to guests at traditional properties can create a bad impression that the hotel is noisy.
Sources agreed that if a guest has a bad night’s stay, it could affect whether or not that guest will remain loyal and return the next time.
Manley said there are a lot of operational concerns to ensure guests have a quality night’s sleep. Stonebridge’s job as an operator is controlling the quality of linens, age of mattresses and where the company can and should invest capital, he said.
Linens are a big expense, he said, adding that he notices too many operators, especially newer managers, are trying to save expenses by not ordering enough linens. In return, that can cause issues when the hotel can’t maintain its linen par levels.
In order to maintain years of satisfaction, Pohl said it is crucial that a brand not only listens to its customers but also solicits feedback from its owners and GMs.
“We meet with that focus group twice a year to understand what are the guests telling you, how can we move the brand forward, what types of enhancements can we make,” he said. “Not only do we get great feedback, but when you take that approach, they are 100% committed to making it happen within the brand themselves because they are the owners of those hotels and the costs is theirs to bear.”
By: Dana Miller
Originally appeared in Hotel Management in July, 2019
Denver-based hotel owner, operator and developer Stonebridge Companies made two high-level appointments recently, naming Rob Hazard VP of real estate and John Davis VP of asset management. The two additions to the company’s leadership will support the company as it targets further growth. Currently, Stonebridge’s portfolio consists of 62 hotels with more than 10,500 guestrooms nationwide.
As VP of real estate, Hazard will oversee the firm’s development portfolio. During his more than 25 years in the hospitality industry he has supported the development teams at Starwood Hotels & Resorts, Westin Hotels & Resorts and Interstate Hotels & Resorts. Most recently, he oversaw Hersha Hospitality Trust’s acquisitions and development platform as SVP.
Davis now oversees asset management on a large portion of Stonebridge’s portfolio with a focus on maximizing hotel operating performance and capital investments. Previously, he served as VP of asset management for Woodbine Development Corp., asset manager for Broadreach Capital Partners and director of finance and accounting for four Marriott International properties.
“We couldn’t be more pleased to welcome such talent to our leadership team at Stonebridge Companies,” COO Chris Manley said in a statement. “Not only will these seasoned professionals further enhance our company’s continued growth, but they will also support our team of dedicated associates as we expand our commitment to providing distinguished hospitality to our guests.”
By: Chuck Dobrosielski
Originally appeared in RED MSU Denver in July, 2019
Bryson Cayaban brings the Hawaiian tradition of treating guests like family to his career in hospitality.
Growing up on the island of Kaua’i, Bryson Cayaban received an early introduction to the Hawaiian tradition of treating others like ‘Ohana’ – family.
“My family is deeply involved in the hospitality and food-service industries on Kaua’i – from engineering to housekeeping,” he said. “Both of my grandfathers also worked on sugar plantations for most of their lives.”
In addition to a family history of hospitality, Cayaban’s grandparents were determined to give their children and grandchildren access to higher education. “My grandfather called education ‘the golden key’ – the key to success,” he said. “It is important for me to continue my family’s legacy of education and honor their sacrifices.”
After graduating from high school in 2013, Cayaban searched for a city on the mainland where he could attend college and build a life. Denver’s diverse population, active city life and weather proved a perfect fit for the Hawaii native. Originally a political-science major at the University of Colorado Denver, Cayaban got involved in student government, which gave him the chance to plan events around campus.
“My interest in hospitality was becoming an undeniable passion,” he said. “I even started working in guest services at a private country club when I returned home on break.”
During a trip home for Thanksgiving break in 2015, Cayaban spent time considering the possibility of turning his passion into a career. After returning to Denver and meeting with Chad Gruhl, Ph.D., professor of hotel management with the School of Hospitality, Events and Tourism (HEaT), he chose to transfer to the Metropolitan State University of Denver hotel-management program the following spring.
“The School of HEaT faculty hooked me on MSU Denver,” he said. “They have years of real-world experience to share, and they want you to succeed.”
Two years later, talking to a classmate about their experience as a Dimond Fellow alerted Cayaban to an unexpected opportunity. He had enough credits to graduate in December 2018, and his family was flying from Kaua’i to join him, but he was tempted to apply for the Rita and Navin Dimond Fellows Program.
In 2014, a generous gift made by Rita and Navin Dimond – founders of Stonebridge Companies, a Denver-based, privately owned, innovative hotel owner, operator and developer – established the Rita and Navin Dimond Fellows Program. The program allows recipients to gain hands-on experience at select Stonebridge Companies properties across Denver. The Dimond Fellows Program accepts students twice a year, selecting among applicants who have completed a minimum of 60 credits toward any School of HEaT degree program.
With a fast-approaching deadline, Cayaban quickly completed the application. “I was not confident I’d be selected,” he said, “but a voice in the back of my mind told me to apply.”
While waiting to learn his fellowship fate, Cayaban continued his daily routine of attending classes, followed by walking to his job in guest services at the Four Seasons Hotel Denver. Right before graduation he was invited to become a Dimond Fellow. Acceptance meant taking one more class and staying at MSU Denver for an additional semester.
“It was a personal decision to extend my academic program,” he said. “I felt like I wasn’t done.”
As planned, Cayaban’s family joined him in December to watch him achieve his dream of earning his degree – five years after dropping him off at a dorm room over 3,000 miles from home.
“I was proud to bring my family to MSU Denver,” he said. “They were in awe of Commencement and President (Janine) Davidson’s speech, and amazed by my fellowship site and the HLC facilities.”
That spring, Cayaban began his fellowship at Stonebridge Companies’ Renaissance Hotel – Denver Downtown City Center, housed in Denver’s historic Colorado National Bank building. Stonebridge Companies purchased the space, which had been slated for demolition, in 2011 and renovated it in a way that honors the history and architecture of the original building – keeping murals from 1925 in the lobby and bank vaults in meeting spaces.
“Every Stonebridge Companies property is unique,” Cayaban said. “The Dimonds do an amazing job of honoring the past while building the future.”
The fellowship taught Cayaban how to run a successful hotel. He built relationships with hotel staff and came to understand the ins and outs of the hotel’s major departments – including engineering, housekeeping, guest services, marketing, operations and more.
“It is a privilege to provide guests with a sense of home while they are away,” he said. “In Hawaii, we refer to that as ‘ohana.’ Ohana means family.”
With his fellowship complete, Cayaban continues to work at the Four Seasons, with plans to attend graduate school. He is proud to have been able to connect his family’s commitment to education with the missions of MSU Denver and Stonebridge Companies.
“When I got to Denver, I was all alone – I am grateful for the warm welcome I received,” he said. “The cherry on top was my Stonebridge experience. I will always be an ambassador for my MSU Denver and Stonebridge families.”
By: Lynne Winter
Originally appeared in Hotel News Now in July, 2019
By: Danielle Hess
Executives at the recent HSMAI Chief Revenue Officer Executive Roundtable in Minneapolis discussed how they’re thinking about rates at a late point in the hotel industry cycle and the possibility of a profit recession. They also talk on video about the transition from revenue management to revenue strategy.
As the hotel industry cycle continues to show signs of age, raising rates has been more of a challenge for hoteliers, but revenue experts said they’re not ready to throw in the towel just yet.
During an HSMAI Chief Revenue Officer Executive Roundtable in Minneapolis, Raul Moronta, SVP of revenue strategy at Crescent Hotels & Resorts, said the industry is close to a “profit recession.”
“We’re probably about a month away from having a profit recession, meaning there’s a number of hotels that would actually have two consecutive quarters of negative growth on the GOP line,” he said. “So when you’re sitting at a 2% growth in the revenue mark, no average rate growth and every other expense is growing faster, you’re going to have a hard time making your profit grow on a year-over-year basis.”
To overcome rate struggles, hoteliers should focus on total profitability and find ways to grow ancillary revenue, said Priya Chandnani, VP of revenue management at Benchmark.
“We still have a hotel and we still have a space that we can (use) to generate revenue,” she said. “Now (we can) push our boundaries and say, ‘How do we leverage function space? How do we leverage food and beverage? How do we invest in spa?’ to be able to bring up that ancillary revenue that we would have otherwise liked to get from robust rates.”
Planning for a downturn
The Great Recession took many by surprise, but revenue experts said their teams are more prepared for a downturn this time around.
“We are a lot smarter than we were 11 years ago when things went south,” said Kerry Mack, EVP of revenue and distribution at Highgate Hotels. “There are a lot more revenue executives and professionals and staff and analysts, so I think we’re in a better foundation to deal with that and to not panic.”
Chandnani added that her company has its “fences in place” to get through a recession.
“We know that we’re not going to drive demand through some of the high-cost distribution channels,” she said. “We put fences in place to be able to drive demand through some of those low-cost channels, and we’re starting to think about that already and we’re implementing strategies now, which will help us in the future, so I think we’re definitely better prepared at this point.”
While many revenue managers experienced the last recession and know what they would do differently the next time around, Chris Cheney, VP of hotel performance and analytics at Stonebridge Companies, said he’s not sure how revenue technology will react.
“We don’t know what the AI is going to do differently … and a major concern I have is what’s going to happen with pricing strategy when a system is geared toward driving every dollar of (revenue per available room) it can realizes the fastest way to get RevPAR is to sell another room, even if it’s at a garbage rate,” he said. “That’s not the approach we would take, but currently, that’s the approach the system would take. I don’t know how fast they can get it to evolve before it starts spiraling out of control.”
Originally appeared in Hotel News Now in June, 2019
A laundry list of issues have combined to erode hoteliers’ abilities to increase rates even while the industry fundamentals have remained strong.
By many measures, the current U.S. hotel cycle has been a great one, in part because of its exceptional length and durability.
But if there’s one area where the current cycle has fallen short, it’s been hoteliers’ continued inability to increase rates even as they’ve enjoyed record high occupancies, sources said.
The rate issue has been the subject of serious study, said Carter Wilson, SVP of consulting and analytics for Hotel News Now’s parent company STR.
“There has been some pretty comprehensive analysis of why we’ve seen record-high occupancies and rate has effectively stayed at zero when you take away inflation,” he said. “That’s in stark contrast to the late ’90s when there might have been high occupancies, but it wasn’t as high as it is now.”
So what was the broad takeaway for that analysis?
“There’s no silver bullet to what the problem is,” Wilson said. “It’s a combination of many different things.”
And there is no one type of hotel or segment in the industry that has been immune to the phenomenon, he noted.
A crisis of confidence
To raise rates, hoteliers have to believe they have the power to do so. For most of the current cycle, that belief has been in short supply, sources said.
Wilson noted the Great Recession of 2008 and 2009 took a mental and emotional toll on hoteliers.
“People were still freaked out by 2009 and more hesitant to push rate,” he said.
Helga Buszta, VP of revenue management for Filament Hospitality, said at least part of the issue is a generally young and inexperienced workforce that didn’t recognize exactly how much pricing power it should have had.
“Revenue management is not in its infancy, but we’re cycling through so many individuals who have been minimally exposed to past events,” she said. “Some lack that confidence.”
While lack of confidence or inexperience wouldn’t be universal, one hotel’s ability to drive rate is dependent on whether its competitors are also driving rate.
Buszta noted this underscores the importance of industrywide education.
However, the problem isn’t simply that the industry isn’t sophisticated enough with revenue management, Wilson said.
“You can easily find many instances of effective revenue and yield management all the time, especially around special events and markets with high compression nights,” he said.
Sources agreed that many instances during this cycle highlighted the fact hoteliers have prioritized driving occupancy over rate.
“There are many theories on why operators are incentivized to sell out properties at the expense of cutting rates,” Wilson said.
Chris Cheney, VP of hotel performance and analytics for Stonebridge Companies, said one of the drivers of this has been the structure of loyalty program reimbursements for properties, which often made big jumps if hotels could achieve certain occupancy thresholds.
“So that put you in a position where you had to focus on that occupancy to get that reimbursement rate,” he said.
He noted hoteliers are often able to rebound more easily when missing on rate targets than with occupancy.
Both Cheney and Buszta noted many of the automated revenue-management systems being deployed by brands or third parties have the impact of de-emphasizing rate as they’re more driven by revenue per available room.
“Those tools, depending on how much we can influence them and rely on them to be in autopilot, also have the potential to hurt us,” Buszta said.
Cheney noted they are “entirely RevPAR-focused,” which often can be out of line with what owners really want.
“They’re not (ADR-), GOP- or NOI-focused,” he said. “If the system can find more RevPAR by selling to groups you wouldn’t normally, that’s exactly what it’ll do.”
Wilson noted some hoteliers seem to have de-emphasized rate, believing higher occupancies can more than make up for a lack of rate growth in some circumstances due to increases in things like food and beverage revenue.
Like so many other issues in the hotel industry, the lack of rate growth can be somewhat attributed to supply growth, at least in some areas. That’s becoming an increasing issue as the cycle ages, Cheney said.
“We’re seeing supply growth match demand growth, which puts a damper on pricing power a bit,” he said.
This has been largely an individual market issue, sources said, but Cheney noted some markets have been hit by the opening of especially large properties that can considerably shift dynamics within a market or submarket.
“Some markets have seen large chunks of supply come online with big boxes opening, and that has a ripple effect on group composition and rates,” he said. “Some hotels (sacrifice rate) to try to gobble up as much business as they can get before those big boxes get there. And after they open, there’s much more competition for large groups.”
Distribution and transparency
One of the clearest differences between the current cycle and previous ones is the prevalence and dominance of online third parties in the booking process, particularly the online travel agencies.
Wilson said this leads to an overall more complicated landscape for hoteliers managing rates.
“There are so many more channels now in general that property managers have to understand the right balance of,” he said. “If you’re trying to think about all the potential combinations that can drive rate the most, that’s a lot to learn and understand.”
Buszta said one of the problems is the OTAs—while great at assisting in customer acquisition—are often built around the idea of luring in travelers with promises of deals and discounts, and that’s only become more popular with the rise of sites with last-minute bookings and flash sales.
“That’s what drives that audience now; they’re going out there to search for a deal,” she said. “In my opinion, many of the OTAS have changed guests’ mentality.”
Buszta noted it’s driven many travelers to be less brand loyal, which presents opportunities for hotel companies with wholly independent portfolios.
Cheney said the effects of rate transparency “can’t be ignored.”
“I fully support what the brands are doing to make sure guests have awareness and see the value in booking the most direct channels,” he said.
The rise of alternatives
Cheney noted the rise of alternative-accommodations platforms such as Airbnb can’t be ignored when piecing together the puzzle of tepid rate growth.
“You don’t want to overemphasize alternative lodging, but if you go back three or four years, you see a lot of studies saying things like Airbnb are not having an impact on the hotel sector,” he said. “And I think today, broadly speaking, there’s more of a recognition that there’s an impact.”
Quantifying that impact can still be difficult, but he noted at his company it’s clear it has a corrosive effect on rates around events with a massive spike in leisure demand, pointing specifically at New Year’s Eve in New York City, spring break in Florida and South by Southwest in Austin, Texas.
“At South by Southwest specifically, prior to the rise of that alternative supply, hotels had immense pricing power because there was more demand than the market could accommodate,” he said. “That really let you drive price, but now there’s a demand release valve since it lets you ratchet up supply. That’s really reduced pricing power in key markets.”
What’s the solution?
Hoteliers hoping to hear there is a simple fix to all of these problems are set up for disappointment, sources said.
Buszta said one of the most important things hoteliers have to do is educate themselves and communicate across the industry.
“It’s about communicating (across the industry) in general so we all know what’s plaguing and benefiting us,” she said. “Industry and (chamber of commerce) events are great for bringing in information and expanding your information base.”
Cheney said one of the more positive recent changes from at least some of the major brands is a de-emphasis of occupancy tiers in their loyalty redemption formulas.
“There’s less of a push now to get over that ledge,” he said.
The current environment also underscores the need to establish base business, such as groups, early in the process, Buszta said.
“You should do whatever you can to build that base further out,” she said.
But that doesn’t have to only mean groups. Buszta noted she’s a big fan of using advanced purchase rates to layer in base business.
“There some argument about whether advance purchase should be considered discounting, but I really don’t think it is,” she said.
By: Sean McCracken
Originally appeared in Hotel News Now in June, 2019
Getting the highest possible rates from various booking channels still requires some human interaction, as well as continuing to educate a hotel’s revenue-management team and its front office, sources said.
What’s your strategy for getting the highest possible rates?
Chris Cheney, VP of hotel performance and analytics, Stonebridge Companies:
“Really focus on the booking window and the pricing power you have within each booking window. Thirty days out, you don’t have the same price elasticity as three days out. There are very different purchasing behaviors and different strategies deployed. Often consumer behavior is ignored when making pricing decisions and instead (revenue managers) look at how other hotels are priced.”
Eric Gravelle, VP of revenue management, North America, Diamond Resorts:
“Working with the various OTAs is a partnership. We have found the best way to maximize revenue potential is by building an individual relationship with the market managers. With this in place, it is easier to be remembered and included in targeted promotions and initiatives. This will then help increase your placement and exposure. My team knows that OTA does not mean cheap.”
Tina Meredith, VP of portfolio revenue strategies, PM Hotel Group:
“It is crucial for our front-office teams to be part of the revenue-management process when it comes to property-direct bookings. In today’s world, even though most hotels do not have on-site reservation departments … education for the front-desk team about upgraded room types, different package offerings and how to resist price-fading all play an important role in ensuring we consistently achieve the highest possible rates. How our hotels set their rate strategies, whether it be for day of or advance bookings, will always be based on demand in the market, among other factors. However, converting those property-direct calls to actual reservations at quality rates is directly linked to ongoing education and communication with our associates.”
Meredith: “Group rate strategy needs to encompass several key factors to support achieving the highest possible rates. Our sales and revenue-management leaders use a multi-prolonged approach to accomplish this. It starts with being knowledgeable about the compression and demand periods in the market, which allows us to set retail, and therefore, group strategies appropriately. … Our hotels are also focused on selling retail and group rates by room type. This allows for higher group rates on the most demand room types. Additionally, minimal accepted group rates are adjusted on a regular basis in the sales system, adjusted for changes in group pace and evolving market conditions.”
Helga Buszta, VP of revenue management, Filament Hospitality:
“Wholesale is very relationship-heavy. It’s very much old-school sales. For me, a lot of this comes down to knowledge. Speak to your partners to get to know their customers and stay on top of how their customers mix and (how) feeder markets are changing.”
Monte Gardiner, managing director, revenue management services, Best Western Hotels & Resorts:
“A strong brand ambassador who can guide the transaction is key. Consumers are more likely to buy and spend more when dealing with an individual who is considerate, empathetic and personable—making the human connection and customer relationship a critical element. Beyond that, the representative must be able to present our product in the best possible light. It is essential that they are well-versed on the value proposition of each brand, individual properties and key amenities. The most important asset in driving the highest possible rates from voice channel bookings is a well-informed brand ambassador who can connect with the customer.”
Originally appeared in Denver Business Journal in May, 2019
In Denver’s quickly growing hotel market, where some 7,000 new rooms have opened over the past two-and-a-half years, it’s no longer good enough to just offer a quality lodging facility to attract and retain guests.
As three prominent hotels in and around downtown Denver — each of whom has gained national attention — reach milestone anniversaries this year, their operators each have stories to tell about how they have swerved, adapted and put forth their unique properties to get there. And their leaders all sat down with the Denver Business Journal over the past three weeks to offer some insight into their success.
Hotel Teatro — 20 years
In a city now teeming with boutique hotels, Hotel Teatro was the original — the former Denver Tramway Co. headquarters turned into an independently owned 110-room facility that quickly grew into a lodging spot for celebrities playing concerts or getting their time on stage in the Denver Center for the Performing Arts that sits across the street. At the white-tablecloth restaurant, Chef Kevin Taylor served up high-end meals, and locals and out-of-towners alike were drawn to this unbranded experience in the heart of a booming city.
But as independent boutiques became closer to the norm than an outlier in the Denver market over the past five years especially — think The Crawford, The Maven, Halcyon – A Hotel at Cherry Creek — leaders at the Teatro knew they couldn’t rest on their original laurels or unique situation. Taylor closed his eponymous restaurant five years ago and the Teatro brought its food service in-house, opening The Nickel, a high-end restaurant known for experimental seasonal dishes and barrel-aged spirits. In early 2018, San Francisco-based owners Dinapoli Capital Partners funded a $2.5 million renovation that added amenities like 50-inch TVs in the largest makeover in hotel history.
Still, the Teatro has no loyalty-rewards program affiliation, and its event space is much smaller than many other downtown hotels, leaving it at a disadvantage for attracting group events. It doesn’t have the marketing budget of competitors and, at 85 employees, is one of the smaller-staffed hotels in the Denver area.
General manager David Coonan, who took over day-to-day operations four years ago, has used the small size and the lack of corporate oversight policies to stay nimble and to experiment with draws that many name brands couldn’t turn around so quickly. For example, when his food-and-beverage staff began seeing the rising popularity of CBD, a non-intoxicating compound extracted from cannabis, it quickly developed two alcoholic-drink recipes using CBD for The Nickel and saw them become wildly popular as the first such drinks available in the downtown bar scene.
“There was no chance we could have done that” if owned by a publicly traded company, said Coonan, who spent 22 years with Hyatt Hotels Corp. (NYSE: H) before coming to the Teatro. “If there’s a trend in the market, we can get out ahead of it. … We have that freedom to operate here completely independently.”
And while the sales team continues to pitch the historic nature of the hotel when they attend national conferences — it’s on the National Register of Historic Places — they also seek out targeted smaller group business, selling organizations on the individual attention offered by the staff. Education and legal groups continue to frequent the space, and at a time when occupancy is on the decline at most downtown hotels because of the increase in rooms available, the occupancy percentage at the Teatro is actually on pace for growth this year.
“We have to work hard at it every day,” Coonan said. “But just being a really engaged hotel is what gives us our advantage.”
Renaissance Denver Downtown City Center Hotel — 5 years
While Stonebridge Companies’ plan to open a Renaissance hotel downtown in 2014 wasn’t even unique to Denver, its decision to convert the 98-year-old Colorado National Bank building into travel lodging drew all sorts of gawking attention. For several years, general manager Michael Damion said, the unique structure — lined with the historic work of muralist Allen Tupper True depicting Native American life at the turn of the 20th century — generated traffic almost by itself, whether from guests seeking a true Denver experience or tourists wanting to stop inside for a drink and meal.
But even as the hotel’s revenue, profits and market share has grown every year of its existence — its revenue per available room (RevPAR) has been escalating at a steady pace of 2 to 2.5% and projects to continue doing so for the next few years — the leadership team knew they had to do something to keep the experience fresh. So, in addition to diving into some renovations before the usual seven-year window hit (they just added 55-inch TVs to all 230 guest rooms this month, Damion noted), they sought ways to accentuate far more than the overnight-stay experience.
Michael Gayle — the hotel’s “lead navigator” or concierge — offers guided tours of the property, both for drop-in visitors and as part of deals that guests can purchase along with drink and food packages. The extensive lobby that features the murals now hosts weekly entertainment, a monthly artist series and a monthly “Learning Chef” event where cooks from the hotel’s restaurant, Range, demonstrate their modern-western techniques.
And, as such, the Renaissance becomes more than just a hotel, offering non-monetary incentives for leisure travelers to choose it over nearby unique lifestyle hotels or to book it for a business trip.
To spread the word about such amenities, Damion has hired on a public-relations firm that provides the hotel an active presence on social media. And it’s developed relationships with local businesses and even the Denver Center for the Performing Arts to bring in the lunch and dinner crowds — Range has no problem pulling in 100 to 120 covers for a mid-week lunch — and emphasize its service aspect.
Damion, who spent many years in the Washington D.C. market, is not hedging on his hotel’s growth potential, even as the downtown market becomes fuller and national economists warn of a looming recession. He believes cultivating a unique place will help it weather any storms ahead, just as it has for the past half-decade.
“This market is exploding, and it’s becoming a first-tier city,” he said. “We don’t really see that stopping for the next couple of years.”
The Ramble Hotel — 1 year
In time, people may say it was a no-brainer that developer Ryan Diggins open a 50-room boutique hotel on the edge of the River North Art District neighborhood that had exploded with restaurants and breweries but never been home to a full-service lodging facility as of May 2018. But at the time he decided to move forward with The Ramble Hotel at 1280 25th St., he faced so many skeptics that the atmosphere practically dictated that he run the upscale hotel himself, so that he could put into place the details he believed would make the hotel stand out.
A big part of that came in the design of the building, allowing for it to reflect the urban-chic sensibilities of the neighborhood without being so spartan that people felt they were staying in one of the converted warehouses that surrounded it. While he thought the independent facility would be leisure-heavy because of this — and it nears 100 percent occupancy on most weekends — he’s found a surprisingly robust mix of business clients that have taken to the technology and feel of The Ramble.
He also refused to drop room rates in order to attract guests in the early going, believing that he would not be able to create the long-term reputation of the hotel if he engaged in the same “race to the bottom” in which he sees other downtown-area hotels participating when their occupancy rates appear poised to dip. The average daily rate has remained around $259 even during leaner weekdays, and by the end of the second month of operations, revenues had stabilized to the point where management felt comfortable with the model.
Diggins also bet heavily the food and beverage amenities in the small hotel not only would be needed to add non-guest revenues to its bottom line but that they could be done in such a way that The Ramble would attract both local and national attention.
After convincing legendary New York bar Death & Co. to open just its second location in its facility, he invested in a press tour of New York City, generating articles about the hotel that have helped to bring in significant numbers out-of-state guests. And then he turned around and waited several months for the opening of Super Mega Bien, a pan-Latin dim-sum eatery from attention-attracting chef Dana Rodriguez that has solidified a local crowd while also giving visitors to the area a location that is attached to the hotel at a time he estimates that two-thirds of the incoming traffic to Denver is based around eating or drinking somewhere in particular.
“I have no doubt that’s what’s driving our weekends. People want to come and check this out. The hotel is just a part of the whole thing in Denver,” Diggins said. “When you walk through the doors, there is a sanctuary of escapism.”
Finally, rather than looking to grow partnerships or license the name of the hotel, Diggins has spent the first 12 months of its existence focusing on keeping the facility running at top shape. He paid attention to the website to make sure it is working, limited events at the facility (including its Vauxhall event space) in order to let the catering team get up to speed in the first few months and made sure the service and maintenance functions of the hotel worked perfectly before taking on new areas of growth.
As a result, The Ramble made it to U.S. News’ annual Denver rankings during its maiden voyage. And it’s primed for even more success in the years ahead — even as it keeps its focus local, despite calls to expand.
“All over, there’s people now approaching us. But until we can say we’re the best hotel in Colorado, why would I go learn another city?” he asked. “For now, we just want to water the garden that’s here. There’s no need to go plant elsewhere.”
By: Ed Sealover – Reporter, Denver Business Journal
Originally appeared in Denver Business Journal in May, 2019
Navin Dimond wasn’t supposed to be here — physically or professionally.
The son of blue-collar immigrant parents who worked as a bus driver and factory worker in London, Dimond viewed education as his way to move up in life, and he received three college degrees in his quest to do so. But it was only by chance that he came to Denver after receiving his undergraduate degree from Washington State University in 1985, choosing to sleep on a friend’s couch as he looked for jobs and eventually ended up working as an intern in the University of Denver’s executive MBA program while he used the tuition break from that job to get his master’s degree.
Thirty-four years later, Dimond’s Stonebridge Companies operates 60 hotels across the United States — two-thirds of which he owns — while managing more than 11,500 rooms and employing more than 4,000 associates. Roughly half that stock is in Denver, where he’s transformed an old bank into the Renaissance Denver Downtown City Center Hotel and is getting ready to renovate the old Emily Griffith school across from the Colorado Convention Center into the city’s first Tapestry Collection by Hilton facility, among other projects.
Dimond can talk at length about how to spot a good opportunity to develop or manage a hotel from New Orleans to Seattle — he says he probably accepts only 1% of the deals he is offered — and about why Denver is such a booming market. He also is willing to continue to bet big on the Mile High City, believing its attractiveness for both business and leisure travelers will continue to foment growth in the market despite a boom cycle that has lasted nearly a decade now.
But in addition to being known as one of the state’s biggest hotel magnates, Dimond is growing a reputation as one of its most significant philanthropists as well. In 2014, he donated $1.5 million to Metropolitan State University of Denver to help it launch a hospitality fellowship program in which students compete for the chance to do intensive professional-development work in the industry for one year. Earlier this year, he broadened his university giving, offering $5 million from the Dimond Family Foundation to University of Denver to build a freshman residential hall.
Dimond and his foundation focus their giving on two areas: education and children’s organizations, particularly those that help impoverished children who may have drug-addicted parents or who may need early-childhood education in third-world countries. The reason is simple: The 57-year-old married husband of two daughters understands what it’s like to grow up poor, and he understands how education can change such a life.
“Between those two causes, I think you touch everyone in the world,” Dimond said. “When you’re born, you don’t get to vote ‘I want to be Bill Gates’ child.’ You are the most innocent human you can be. And you can be in tough places.”
While Dimond has been a pace-setter for the local hotel industry with his historic renovations and wide range of investments, he would like to have more sway when it comes to corporate giving. Not only does he believe that more leaders in the Denver business community should be willing to donate time and money to charitable causes, but he believes there needs to be more collaboration among nonprofits to make more efficient use of community philanthropy and ensure that organizations are not overlapping in unhelpful ways.
“I think the notion of giving can take courage,” he said. “I’d like to give more people the courage to give. There’s plenty of wealth in this town.”
That will become even more true as more people and companies move to Denver — a migration that is happening because people understand the town more than they ever have on a national level, he said. It took a bit of circumstance and luck for Dimond to get here and to make that connection, but he’s using the love he’s found for this place to employ people and to give them the hand-up they need to maybe do the same one day.
“I didn’t think I’d be here. Sometimes I look and say ‘Why am I sitting in this seat getting interviewed by you? I’m a kid who was born to two immigrant parents,'” he said from his company’s Denver Tech Center headquarters. “No, I didn’t expect this. But I’m happy it was here.”
By: Ed Sealover
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