While major urban markets continue to struggle, pent-up consumer travel demand is the primary catalyst for a recovery when it comes to the vast majority of markets throughout the U.S., according to a trio of leading brand and management executives.
Speaking on a BITAC Virtual Symposium 2021 panel entitled “Ripe For Recovery? Hotel Leaders Weigh In On Industry’s Future Prospects,” the executives also addressed some of the key challenges the major franchise companies face in the wake of the pandemic and subsequent downturn.
Mike McGeehan, chief development officer, G6 Hospitality, provided some “good positive indicators” of pent-up travel demand citing a recent survey commissioned by the company’s economy Motel 6 brand. Among the findings were that 69 percent of Americans have already planned one or more trips for this year. In addition, 56 percent that haven’t typically traveled are wanting to travel the second half of this year.
McGeehan acknowledged “a lot of uncertainty moving forward” but explained why he feels the company’s budget brands are well-positioned.
“A lot of our locations are in secondary and tertiary markets and they had less of an impact from COVID than the primary and suburban markets. So that was a little bit of an added plus for us,” he said.
Brian Wogernese, President/CEO, Cobblestone Hotels, pointed out that the midscale brand company has a similar advantage while adding that somewhat surprisingly its development plans have been largely unaffected by the downturn of the past 12 months.
“We have a lot of projects in the pipeline, but a lot of our markets are rural so that helps. We did have a few metro locations that we’ve kind of put on hold for now, but small town USA is still doing their thing. It’s not to say they weren’t hurt by the pandemic, but I think they’re holding their own right now so that’s a plus,” he said.
Mike Marshall, President/CEO, Marshall Hotels & Resorts–who noted the third-party management company is celebrating its 40th anniversary this year—offered a slightly more bearish perspective.
“We’ve weathered the storm before and we’ll weather the storm again. I am not as optimistic as some other people are mainly because we have hotels in certain markets that just are not going to come back anytime soon. Those are more urban-oriented and a lot of it is political in nature,” he said.
Furthermore, Marshall emphasized that the company has retained its corporate staff throughout the pandemic while expressing some frustration with some of the large franchise companies who have laid off and/or furloughed “80 to 85 percent” of their staff making it difficult “to get an answer.”
Marshall also took issue with a number of large brand companies selling future loyalty points to major corporations like American Express, in exchange for cash, and wondered about the long-term impact of such deals.
“What’s that going to do to the value of that frequent stay program? If you went out with your family and you spent 50,000 points to stay at a hotel of your choice because you’ve amassed these points and the next thing you know that costs 75,000 points to do the same thing as a consumer you’re going to start thinking twice. Do I really need to stay at these big branded hotels? What’s it worth to me? I just think the future is going to push us back into more independence of some properties,” he said.
McGeehan—who noted his company is not just a franchisor but has ownership in roughly 140 properties—agreed that there are some areas that need to be addressed by the large mega chains.
“I think franchisors as a whole need to re-evaluate their model. What services are they providing? Are they value-added services? Is it helping those owners and franchisees drive more business and drive more revenue, as well as helping them operate more efficiently?” he said.
McGeehan continued, “What are you doing as a franchisor on the technology front to assist, whether it’s an app or contactless check-in?
Wogernese, for his part, emphasized that “it’s time to get back out there” as he also took issue with how some of the large franchise companies have handled the pandemic in terms of personnel. Wogernese specifically referenced a virtual ribbon cutting for a major branded property in the early days of the pandemic where the executives weren’t on hand, but the line-level workers were.
“What that told me was the pandemic was so scary that they couldn’t leave their office, they’re still going to collect their fees but the frontline worker that’s making $10 an hour could stand at the front desk. That just kind of hit a spot with us and we started traveling,” he said.
Meanwhile, a couple of the panelists praised the AH&LA (American Hotel & Lodging Association) for its work on behalf on the industry and highlighted the importance of some of the legislative issues.
“I think we just need to be very cognizant of the industry as a whole and not maybe be so laser focused all the time on our brands or our individual business. We don’t want to be sitting back and realize that laws are passing that are making it more difficult to operate as a franchisee or a business owner or a management company or a brand,” said McGeehan.
“The PPP [Payroll Protection Plan] money certainly helped. I think the AHLA did a pretty stand-up job pushing for legislation to help our industry, but the fact of the matter is a lot of people just didn’t care and it became a political football in a lot of ways. The bottom line is we are as an industry very resilient, we will come out of this, but it’s going to be painful coming out and it’s going to take some time,” concluded Marshall.