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Published on : Friday, June 17, 2022
New York – a pioneer in the hotel industry NYU International Conference on Investment in the Hospitality Industry Emphasize growth, not only from a portfolio standpoint, but also in terms of inclusivity and social responsibility.
For Best Western, much of the portfolio’s growth over the past 11 to 12 years has been organic, according to Larry Kokolik, President and CEO of BWH Hotels Group.
The company started as a single brand and has grown to 18 brands as it segments its portfolio.
Kukulich said that many of the company’s developers are now children or grandchildren of developers who have worked in the hotel industry for a long time.
Young developers want to chart their own course and develop the hotels they want to stay in, which are often boutique and lifestyle hotels.
They want to be able to prove they can do that, and they can really chart a new course in terms of development, he said.
Kokolic said Best Western has grown by recognizing the demand from both consumers and developers for these types of hotels, adding that he hesitates to consider what would have happened had the company not gone in that direction.
President and CEO Pat Pachos said Choice Hotels International has 13 brands, half of which have been launched organically.
Four years ago, the company acquired its WoodSpring brand, providing the opportunity to revitalize the extended residence segment.
The company had 100 extended-stay hotels in 2018, and now it will open its 500th hotel this year. It has also since launched another long-stay brand, Everhome Suites.
He said organic growth can come in three flavors. It could be a brand launch, a new prototype that sets the brand in a new direction – like its Cambria brand that tracks secondary entertainment markets – or derivatives, like Clarion and Clarion Pointe.
Choice announced this week Acquisition of the Radisson Hotel Group’s Americas business including nine of its brands.
Bachos said that with organic growth through large scale businesses, the returns are endless due to the power of the full engine behind them.
He said organic growth always generates the highest return for shareholders, but inorganic growth through the right segment creates an opportunity to reach new types of consumers.
Historically, Hilton has grown through mergers and acquisitions, said Kevin Jacobs, Hilton’s chief financial officer and global head of development. If there is white space in a strategic matter, it may make sense to have a brand.
Hilton has been in this situation before, like when she bought DoubleTree.
He said that these kinds of deals should be put in place through a strategic lens and then through a financial one, and ultimately they should be financially cumulative.
He said the organic growth model is 100% profitable with unlimited return and high returns on investment.
This doesn’t mean that Hilton will never take over another brand, but given its strategic preparation and experience creating new brands, it is very likely that its growth will come quite naturally.
Stephanie Lenaarts, president of Marriott International, said how companies grow their customer base is just as important as the question of brand growth.
Marriott is growing rapidly and needs more loyal customers for hotels being added to the pipeline.
Part of that, she said, comes from Marriott’s loyalty program, Bonvoy, and growing that platform with new offerings outside of complementary hotel brands. The company’s home and villa platform, Ritz-Carlton Yacht Collection and travel insurance offerings help with that.
It’s relatively small compared to the core hotel business, Lennartz said, but it helps the loyalty program and grows the customer base.
When thinking about brand development, there are two customers: the owners and the guests, said Elie Maalouf, CEO of the Americas for IHG Hotels & Resorts. This requires knowing if there is something the guests want that the company does not offer.
He said IHG has grown into 17 brands by realizing wide-ranging opportunities to meet the needs of owners and guests.
Guests’ flavors and desires expand and they want different kinds, Maalouf said.
To succeed, though, this consumer demand must meet the desire of capital and owners to invest, he said. The Holiday Inn Express brand has gone from zero hotels to 3,000 hotels in 30 years.
For me, that’s the model, Maalouf said.
Whoever did it at the time genius nailed this intersection between guest preference and owner desire and did an average of 100 a year.
Research shows that consumers prefer hotels that have sustainable practices over hotels that don’t, said Jeff Baluti, president and CEO of Wyndham Hotels and Resorts.
The challenge, he said, is letting guests know what hotels are doing to be more environmentally friendly.
He said the hotel industry has come together during the COVID-19 pandemic to educate guests about hygiene protocols, and they can apply the same strategy to sustainability initiatives.
He said competitors can share best practices with each other without trying to outdo each other.
Balotti said Wyndham has accreditation requirements for its franchisees and is active in water conservation efforts, maximizing energy-efficient towel and linen reuse programs and lighting. The next step is to track these efforts.
By the end of the year, they will not only certify that they are following every one of these standards, they are tracking every single one of these standards, and will inform consumers of that, he said.
Lennarts said the hotel industry needs to keep working on diversity. Those who work in hospitality tend to be female, minorities and young adults, and those are the jobs that have disappeared during the pandemic.
A study by McKinsey and Co. found. The pandemic has put women back nearly a decade in terms of wages and fair representation, calling it their “compromise.
She said that while there is a great deal of diversity in the hotel industry, there is not enough at the highest levels and in senior leadership roles.
There is not enough diversity among hotel owners, which is why Marriott Launched the $50 Million Bridge the Gap Program To encourage more female owners, Black, Native American, Hispanic and Hispanic.
She said the industry has made progress, but there is more work to be done. Hospitality provides individuals with opportunities to begin hourly employment and advance to a general manager, regional manager, or executive position.
Fifty percent of Marriott’s general managers started as hourly employees.
Maalouf said diversification efforts require a level of intent. Not every career path will make someone at the top, so it’s important to learn about some key experiences in finance, development, and other aspects of growth.
Having development experience in particular tends to be important, Maalouf said, adding that he’s proud that IHG’s development group is led by a woman, Julian Smith, and nearly half of the team members are women. He said it wasn’t like that when he started.
Another challenge in the industry, Bachos said, is engaging the lenders and the equity community to allow access. Entrepreneurs first questions about their experience and net worth, and if they don’t have enough of either, it’s hard to move forward.
He said the Asian American community has done a great job creating personal networks that connect them with local lenders. This is what should happen to other minorities and women entrepreneurs.
He said that they have to get the equity players and lenders to open up a little bit more, and change what their investment committees are really thinking when they make those decisions about whether to finance a project or not.