Hotel ownership at different stages

What to expect with your first hotel vs. your tenth

by Sandy Smith

Nick Zaver, president and CEO of Insignia Hotel Management in Lake Charles, LA, remembers the days when he and his wife managed two hotel properties.

They were located 30 miles apart and he managed one and she managed the other. “We saw each other late in the evenings and we would go to sleep and off to work in the morning,” Zaver said.

Juggling those two properties was challenging, but the couple kept it up for three years before selling one location. By then, they had begun construction on their third and fourth hotels.

“That’s when I started putting general managers in to oversee the daily operation,” Zaver said.

Taking the hands off the controls a bit – and trusting others – is at the basis of any company’s growth, said David J. Sangree, president of Hotel & Leisure Advisors in Cleveland, OH.

“The main issue for growth is how many people do you want to supervise?” Sangree said. “When you have a single hotel, that person is the general manager in addition to the owner. When you have 10 hotels, you have to be willing to step away from your hotel and into managing your management company. It’s a very different focus.”

At that point, growth becomes a bit of a snowball, Sangree said. “People who manage management companies are always thinking, ‘That’s too few hotels.’ You might have two regional managers, a director of sales, and a construction manager. You have all this payroll that is not chargeable to a hotel. You’re in this constant search for additional properties.”

Growing into multi-property ownership requires finding just the right speed – and there is no one right answer.

DEPENDING ON OTHERS
Nimisha Patel, partner of Vue Hotels in San Antonio, TX, married into a family that managed multiple hotels. When she and her husband became owners themselves, it was a step backward into managing a single property. “When you’re only running one property, your mindset is solely on that one,” she said. Their second property required a change in their structure and vision.

“We had to rely more on others and really trust in their ability to do so,” Patel said. “And that means training everyone to know what the expectations are in each role and holding them accountable for the position that they are in.”

That doesn’t mean that she and her husband are totally hands-off. With six properties – all in the San Antonio area – they visit each location at least once a week. “We engage a lot and every person – whether manager or employee – knows that they’re able to pick up the phone and call.”

Zaver also is a frequent presence at the eight hotels owned by Insignia. A handful are three hours away and he makes a goal to visit those at least once a month. The others are local. “I typically visit every day,” he said. And when he isn’t able to be onsite, he is monitoring the point-of-sale systems frequently.

“I can typically go in at any time of day through my smartphone and actually dig in more detail into the properties,” Zaver said. “Any hotel that has a cloud-based system, I can log in and see, ‘So and so hasn’t been checked in. Can you authorize their credit card?’ Those are things that I can communicate late at night where we’re not losing any revenue for that night.”

BENEFITS OF BIGGER
Growing larger brings some obvious benefits, not the least of which is income, Sangree said. But there are other advantages, too.

“Every hotel has something unique that they do,” Sangree said. “The reason hotel managers get transferred around the country is they bring the good things from one hotel to another and they learn something at that property that they can take to the next. You keep growing and improving. When you have multiple hotels, you should be doing the same. Your management company will be expanding their knowledge base.”

Patel said expansion is an opportunity. “If you’re able to handle it, you should go for it,” she said. “Your eyes open so much more when you’re looking from different perspectives. If you stick to one, you tend to have tunnel vision.”

Both Zaver and Patel are invested in multiple franchise brands. That brings an additional benefit, Sangree said. “It definitely makes sense to diversify, although it is more time consuming,” he said. “There are more franchise conferences to attend and more memos. But the different brands have different marketing strategies and things they teach you. By having hotels from multiple brands, you are able to expand the knowledge base.”

That doesn’t mean opening a hotel with every franchise brand out there, Sangree said. He recommends limiting to two or three, though exploring different sub-brands can be beneficial.

Patel’s company recently added its first Marriott hotel. “We’ve always been hardcore Best Western,” she said. “That was easy for us to know inside and out. When we added Marriott, standards, trainings, and culture were different and had to be learned. It’s been really nice to be able to embrace both and take the best pieces to help us in our daily operations. It not only helps service-wise, we gain economies of scale, are able to broaden of vision, and really provide quality service and experiences.”

Expansion into a new market can bring added complexity, especially with laws and regulations. “None of that is rocket science, but there is an extra degree of working through those rules and regulations,” Sangree said.

Remaining in the same market allows more involvement in things like the convention and visitors bureau or the city’s economic council. According to Sangree, “When you have multiple hotels in the same area, one staff person can represent the entire company.”

WHEN TO SAY WHEN
Zaver got into the hotel business by default. His parents owned an independent hotel and needed his help. He still owns one independent hotel in his portfolio, which also includes Hilton, IHG, Marriott, Best Western, and Choice. He purchased the 20-room independent hotel the year after developing a 100-room Hilton-branded hotel.

“People said, ‘Why have you gone back to basics?’ Never forget the basics on how we succeed in life. Going back to that independent hotel brought a lot of memories back to me,” Zaver said. “The basics are what’s going to get you to step two or step three. There are people out there who want to get rich overnight. There’s no such thing. You have to learn how to crawl before you learn how to walk.”

But after walking into multiple-property ownership, there is no limit on how far one can go.

Tips on how hoteliers can manage multiple properties with a growing team:

• Be available. Make sure you engage with employees,
• Visit your properties. Even if you can’t be onsite, a hotel’s cloud-based system will allow you to see guest status.
• Say no to tunnel vision. Find what makes your properties unique. See where you can implement effective practices across your portfolio, or where some practices may only be beneficial in one area.
• Know your business. Different areas have different laws and regulations. Keep yourself up to date on the local economy and regulations.
• Don’t be afraid to go back to the basics. Invest in continued training for your employees and yourself.