Source: CoStar Group
By Terence Baker
January 28, 2021
On the far side of COVID-19, guests will look for hotels that feel normal but offer something different, and how hoteliers and hotels change and adapt to the pandemic will be a major selling point to future investors and lenders.
Hoteliers who make the right investment decisions in regard to debt and repositioning will benefit from historic consumer spending power, according to speakers on a panel titled “Stick or Twist” at the online Hotel Optimization Conference.
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Brands
Biran Patel, partner at BHP Investments and chairman of the Asian American Hotel Owners Association, said the presence of a brand now is less of a selling point than the relationships between an asset’s players. The need for differentiation will be more marked when the pandemic is over.
He said when brands such as Tru by Hilton and InterContinental Hotels Group’s Avid were launched, “clients were very quick and busy to sign up, so that leads the brands to think they are making the right decisions, but there are no real differentiations [between these brands].”
“We will see more impact from COVID-19 on this,” he said.
Waldman said owners will be looking hard at the material benefits and costs of joining a brand.
He added that lenders still look for a brand, but now there is more value in the brand family. “It is about finding the right platform for the destination any hotel is in,” he said.
HEI’s Moniz said from an acquisitions strategy perspective, limited-service hotels in secondary markets hold better value. Most customers remain interested in the hotel segments that have always interested them, she added.
“There are still customers buying into their lanes, so brands, yes, but it is all leisure, and currently [guests]are attracted to destinations where [COVID-19] restrictions are not so rigid,” she said.
Reinvention
Oxford‘s Peruri said he is becoming more analytical in looking at the real benefits and costs of reservation systems, loyalty programs and the like.
“In many cases, [brand]fees are justified. The case against is that the added costs do add a risk, and you have more operational leverage if you do not have those costs dragging you down,” he said.
“Right now, the case is for leisure, although that will change. The world we are in now will not last forever,” he said.
Waldman said that however large a brand family is, its various reservation and loyalty systems are still only so large. While supply currently is not a problem, and there is a lack of construction financing, if there are eight hotels in a city, probably all demand is coming through the same platforms.
Hotel supply also will start to creep up when COVID-19 is over, panelists said.
Patel said opportunity exists where it is possible to downscale an asset to attract the current demand, most likely to a high-end economy segment from a mid-class one.
