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Hotel Interactive® One-On-One - Jim Abrahamson, CEO of Interstate Hotels & Resorts'

Here we go deep to learn about the company and its plans for the future and also give some advice to maximize your career too.

Monday, August 04, 2014
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Jim Abrahamson is on a roll. They’re signing new deals and expanding their footprint globally. Just a couple of weeks back they announced a deal to buy Rim Hospitality. That acquisition adds nearly 70 hotels with more than 10,600 room to their portfolio. (Our interview took place before this announcement.)

The company is in the middle of hiring more than 1,400 people and looks to give people a career track rather than a job and operates more than 440 hotels with more than 81,000 rooms spanning North America; the UK and Ireland; Europe; Russia; India; and China.

So today we talked one-on-one with this industry leader to better understand their strategy, potential growth opportunities and the state of hospitality.

What is your growth strategy?

We have a terrific opportunity with this platform at Interstate. We were underutilized when [I came aboard] and we have grown in size. But that is not a strategy, it is tactic. The world is heading to a place where scale matters and the way we will succeed is if our owners make money.

Today we think the advantages of scale give us those opportunities.

How do you see the state of the company?

We are in 12 countries now and stretch pretty far. We really have seen robust opportunities in Europe and grown from nothing there to approximately 75-80 hotels in greater Europe and we think that market will be very strong for our business model.

We are seeing hotels trade and that creates options for other companies and gives that opportunity where there isn’t an Interstate in Europe. We have the opportunity to be very dominant there with our model because they need an institutional company to do business with and there isn’t a real pan European company [doing this.] If you are a public market vehicle you want a partner and a limited management solution.

What about soft brands overseas?

These collection brands will do very well in Europe. Autograph is a good opportunity for footprint and there is good movement in that market for branded boutique hotels. Also, the customer experience lends to that and brands are understanding that. Secondarily we will see some of these hotels that are not brandable go this route.

Are hotel brands still important and relevant to today’s consumer?

We have 42 brands so we are very much in the brand world. The brands we think are important, however there is some cognizant shifts in the industry. OTA strength and other channels have diluted brand importance. For example I was on a plane next to a young lady who always uses Priceline, TripAdvisor and Booking.com. She is 30 and travels globally a lot.

There are some shifts, so we see brands as vitally important as they represent something and talk about the personality of the hotel and have a stamp of quality. You get that same info from going to alternative sites. Real critical brands work hard to establish the next generation of travelers and what they are looking for.

Do you agree we have shifted from a more materialistic based economy to an experience economy?

Yes, we see that is critical to travelers, not just Gen X, Gen Y and Millennials. It is not just generational, I think it is evolutionary. So our tactic is we need to ensure that we win with high quality operations with best management and also be in a position when technology evolves to be more efficient.

What is your best asset then?

Our best asset is our employees. Training programs and development are crucial as is attracting high quality associates. You have to have the resources to have those best quality associates so they can make sure one customer at a time is treated well.

Also, we have not only the scale but big management scale. We develop a large talent community. When I first started in this business recruiting was putting an ad in the paper. Now we attract people through networked job searching with meta-search to scan the thousands of resumes we receive and find and characterize best employees.

Additionally, people have dual incomes, houses underwater and can’t move like they used toespecially if they have kids in private schools. We have the ability compared to other management companies to have the scale in inner markets where we have plenty of places to grow careers. For example, an employee can go from a Hilton to a Marriott to a Starwood. There is career progression, which is something that people really want. Everyone just wants a better life for their kids and we all want to grow and aspire to new things.

How do you see the hotel industry as a smart job choice for younger people?

As an industry we are characterized as not having good jobs. So what we sell today is careers. We are seeing bursting enrollments at hospitality schools and see industry progress in that area.
Tourism is a vital global industry and we see in the future people looking more and more at this career path.

Also, we are in two businesses actually. The hotel business with smiling people and happy faces
And the business of buying, selling and trading hotels. Today’s youngsters can work in both industries.

The hotel industry seems to be going gangbusters. How do you see it?

We’re in the third or fourth year of economic recovery and we see that as all positive. I go back to enough cycles and the risks in horizon are usually externally generated such as the recession in the 1980s, which was kicked off by the savings and loan crisis.

The greatest threat to our existence is the unknown. Absent that we see wide spread global economic recovery and see it continue for some time. Owners are doing better this year and the financial pressures seem to be off though refinancing would be tough. The other challenges in the business are on the sidelines and the greatest issue is taking advantage of this time.

But there are other issues such as minimum wage issues and the definition of a full time work week at stake that could affect the health of the industry. How do you see it?

Extreme minimum wage issues are getting passed. This is a huge value inhibitor. The additional cost in healthcare and huge regulatory concerns are issue too. More changes and charges coming this way to escalate costs.

Individually one or more may be challenging but add them up they are devastating. Across the world there are salaried employees with fixed monthly payments across the world. We don’t want that model. These insidious changes to overtime rules and fixed payment systems are job inhibitors. Let’s look to Europe and see how that worked for them.

The only thing that works is job creation and when you have job inhibiting regulations in play they are bad for individuals and the US economy period.

What advice do you have for young professionals or anyone looking to climb the corporate ladder in hospitality?

Take advantage of the resources to learn train and grow and look laterally to see opportunities in other depts. This business is very collegial in how you can help out in other areas so get to know your industry early and don’t wait to later periods. Be involved, understand early on and you will be much more valuable and always take advantage of education opportunities.

It’s also smart to think about going global and look beyond the United States.

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