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Impact Of Independents

BITAC® Panel Examines Leading Catalysts For Sector’s Growth

Friday, September 20, 2019
Dennis Nessler
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A handful of executives at the recently concluded BITAC® Independent event dissected the increasingly popular hotel segment with a heavy focus on the lifestyle concept, soft brands and food & beverage strategies.

The event and the panel, entitled “Independent Impact: Burgeoning Segment Continues To Gain Momentum,” took place at Trump National Doral in Miami.

The panelists acknowledged any discussion about the emergence of independent hotels has to be centered around the ongoing ‘lifestyle’ or ‘boutique’ movement.

Brett Magnan, executive director/principal, CherryTree Hospitality Management, commented.
“People are looking for something that’s different and more unique...It’s here to stay. We thought it was going to be a little bit of a fad. Boutique hotels would traditionally say ‘we’re not really lifestyle properties,’ but now they are,” he said.

“The coolest part about lifestyle is you get to express something unique and different. If you can really understand what the customer is looking for you can develop your services around that. Don’t try to be everything to them. Try to be who you are and be real special and unique and then build on that,” said Paul Breslin, managing director, Horwath HTL, which asset manages a portfolio of properties, in addition to its other services.

Gavin Philipp, vp, operations, Charlestowne Hotels, noted the company operates independent hotels for a lot of individual or high-net worth owners looking to make a lasting impact.
“We are very owner-centric and I think that’s a big thing in the lifestyle space. That hotel has so much meaning to that owner that we are with them through that process,” he said, later adding, “experiential is a word you hear thrown around a lot so that’s a big part of it too.”

Meanwhile, there have been scores of soft brands introduced in recent years, which has dramatically impacted the independent segment while also generating some debate.

“I love these soft brands. They give you a perfect combination where your hotel can be unique, local and creative. It can have the stamp of the owner and the power of something behind it,” said Breslin. “I think they’re here to stay and I think they’re going to grow exponentially. They save you money on the top end.”

However, William Darrah, vp, reservation solutions, North America, TravelClick, offered a contrasting viewpoint from the perspective of a technology provider which works with owners to maximize revenue.

“We actually don’t believe in soft brands. We believe in the independent hotel sector and there’s a lot of reasons for that. A lot of owners come to us today and say ‘hey I’m in an Autograph [Collection] and I’m paying all these fees to Marriott but I don’t feel like I’m getting the services that I deserve so I think I’m going to go independent to save money,” he said.

Breslin acknowledged a soft brand isn’t right for all circumstances, but added there are times when “you need that soft brand” while emphasizing the value of “having that choice.”

Philipp agreed. “I think sometimes it depends on the market too. Markets where the mix of business is highly corporate centric it [a soft brand] can be beneficial. I think they’re [large brand companies] still figuring it out quite frankly when it comes to operational policies and protocols,” he stated.

Magnan, meanwhile, touted the benefits of soft brands like Preferred Hotels & Resorts and Small Luxury Hotels of the World for those owners who may be reluctant to make the long-term commitment with some of the large brand companies but want some of the marketing benefits.

“They say, ‘you get the flag, brand standards, GDS code and the CRS so that’ll kick-start your business and you should join with us for the next 25 years.’ But nobody makes decisions for 25 years anymore and it’s very difficult to get out of those relationships once you start,” he said.

Several of the panelists detailed their respective approaches when it comes to identifying the ideal markets for independent hotels.

Jeff Truhlar, regional vp, Shaner Hotel Group--a State College, PA-based hotel management company--acknowledged the firm has a heavy presence in college markets but pointed out there are a number of factors considered.

“We try to find markets that are hard to penetrate, which are very limited. We try not to go to markets that are overly populated with a lot of opportunity for growth. It takes us years to plan a market and analyze,” he noted.

“A lot of the owners and developers we’re working with are trying to do independent boutique hotels in secondary and tertiary markets and we feel like we’ve had a lot great success there. They want to do it because it’s their home or there’s some connection to that town or a it’s secondary city where they want to have something cool for the community and all that’s there is a Hampton and a Holiday Inn Express,” said Philipp.

Magnan countered, “I’ve actually seen equally the opposite where people are going into key markets in the small boutique areas,” he said, specifically citing major markets like Boston and Chicago and the adaptive re-use of historic properties.

When it comes to food & beverage, independent hotels generally have more freedom than their branded counterparts but panelists urged owners to proceed with caution.

“I think people associate food & beverage with many hotels as sort of being a required amenity, but not really great. I do find that the trend is to partner with outside companies, pick a celebrity of the day, put their restaurant on your property and allow them to run and then take something off the top. But I don’t see lot of success with food & beverage,” said Magnan.

Breslin reinforced the point.
“There are some exceptions, but generally speaking if you really want to be in food and beverage I think you have to really understand the customers and know how to design the menus to meet their needs and bring in the expertise. We’re seeing a lot more f&b experts help with f&b operations,” he said.

Philipp acknowledged the challenge involved for hotel companies.
“Often times we’re willing to forego fees around food & beverage for somebody that’s a lot better at operating. Putting on your owner hat sometimes the best solution is to lease it out and collect a check,” said Philipp.

Truhlar maintained there can be different approaches. “You can be the best restaurant or the most profitable restaurant. You have to make that decision what you want that restaurant to be. We have some of our largest volume hotel F&B operations make 5 percent [of NOI], but it’s the experience that brings them [guests] to the resort as well,” he concluded.

Dennis Nessler    Dennis Nessler
Hotel Interactive®, Inc.
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