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Next Generation Perspective

By Dennis Nessler | August 21, 2020

From ongoing performance to future development, a group of second-generation hoteliers all agreed that the lodging industry is going to continue to struggle for the foreseeable future but they all remain bullish on its long-term prospects.

These executives weighed in on their vision for the future during AAHOA’s Virtual Conference & Trade Show in a session entitled “A View From Young Professional Hoteliers: Driving The Future Of The Industry Beyond Covid-19.”

Harshil Patel, vp, Champion Hotels, acknowledged the large degree of uncertainty. “Honestly, I don’t think anybody has any clue. We’re all hoping for the best and occupancies to keep rising. From our standpoint we’re just trying to hold on until the middle to end of next year. Hopefully things are improved enough by then,” he said.

Raj Patel, chief development officer, Hawkeye Hotels, pointed out some of the existing issues, such as saturation, too many brands, an overabundance of operators and developers and cheap capital.

“We were already headed on a downhill slope, you tack COVID on top of it and the future is bleak. The bright side of that is there’s no country in the world that’s more resilient than the U.S., and even our [hospitality] industry is a very resilient industry, certainly it will come back. The time that it’s going to take to come back is what’s unknown. What I feel good about is operators and developers who are meant to stay in this industry they will grow stronger from this,” he said.

JR Patel, president & CEO, Helix Hotels, also noted there will be some winners who emerge from this in better position.

“I think a lot of the second-generation folks who are in the industry, who have good capital reserves and are not heavily levered and are patient and prudent [will be winners].  I think this is a contest of who can their hold breath the longest; we’ve got 18-24 really tough months ahead. Those who are opportunistic and well-capitalized I think are going to come out of it even stronger,” he said.

Jatin Desai, managing principal/CIO/CFO, Peachtree Hotel Group, provided a more optimistic outlook, at least for the long term.

“When and if a vaccine comes out that is effective and efficient travel will come back. The leisure population has already proven they will come back, now all we need is corporate. It’s relatively bleak for the short term but there is end date to all this,” he said.

Meanwhile, the panelists all acknowledged there is a bit of a pause on new development.

Raj Patel noted that conditions changed rapidly on the company’s current projects and that while the company plans to move forward, starting future projects is a different story.

“Any project that is not on the books and is in the planning phases we are certainly looking at the timing of it. We’re not looking to break ground on any projects in 2020, and most likely all the way through to second and third quarter of 2021. Once we can start seeing that recovery, once lending comes back around in a strong way, once we can feel 100 percent confident and comfortable with moving forward on those projects we will. We don’t have any plans to scrap the projects we’re just waiting for the right timing and how do we maximize value and costs,” he said.

Harshil Patel described the company as “lucky” not to have any projects currently under development. “We’re not looking to start construction on anything for at least 12 to 14 months. It’s hard with occupancies where they are and ADRs have dropped in a lot of markets. It’s just a guessing game and a waiting game. There will be nothing in 2020 and probably nothing in most of 2021. We’ll probably look at projects more in early 2022,” he said.

Raj Patel pointed out he does think it will become more economical to build eventually. “We feel that costs will come down, right now they are still stable. We haven’t seen costs coming down mostly due to the backlog of construction activity that’s still going forward. There’s a lot of public work going on, and a lot of private work that’s active. Once that slows down we do think that there will be a decrease in costs,” he said.

Dennis Nessler

Dennis Nessler is Editor-in-Chief of Hotel Interactive, parent company of Hotel Community Forum. Nessler brings more than 28 years of editorial experience to his position, including some 17 years in the hospitality industry. As part of his duties, Nessler not only covers the industry editorially but moderates various high-level panel sessions at hospitality events and frequently conducts one-on-one interviews with C-level executives.

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