At The National Association of Black Hotel Owners, Operators and Developers’ (NABHOOD) 25th annual International African-American Hotel Ownership & Investment Summit & Trade Show at the Miami Marriott Biscayne Bay, industry executives, members and students discussed important topics such as diversity, labor issues and the recovery.
Andy Ingraham, founder/president/CEO, NABHOOD, and a member of the Hotel Business Advisory Board, opened the three-day event with an encouraging statement: “Diversity is about ownership and ownership is the only defining ingredient where you have an opportunity to say to the people that you are with, ‘You are going to do this.’”
He added that his organization hopes to be for African-Americans what AAHOA is for Asian-Americans.
“The Asian-American hotel owners own [a majority]of all the hotels in the United States,” he said. “What they’ve done is they’ve developed a second generation of hotel owners. What we want to do at NABHOOD is emulate what the Asian-Americans have done, and that is create a whole new generation of hotel owners.”
CEOs speak about labor shortage
The following day, industry leaders, during a session called “CEO Executive Forum—A View From the Top,” provided their takes on the labor issue that is plaguing hospitality.
Heather McCrory, CEO, North & Central America, Accor, believes the industry has to take more of a sales and marketing approach to talent culture.
“The storytelling, the development opportunities, showcasing how you can start in dishwashing or housekeeping and move up through the ranks—these are all things that we had to do all along,” she said. “But now the effort has been ramped up significantly.”
She continued, “If you talk to housekeepers or banquet servers, they’re going to tell you phenomenal stories. It’s not just about the CEOs, it’s about all the people who put their children through university and who have done exceptionally well in the hotel industry. And we just need to get those stories out there.”
Pat Pacious, president/CEO, Choice Hotels International, noted that today’s workers have a mindset that they will work when they want to.
“When I talk to our owners, the average person who wants to come work in a hotel today wants to work three days a week,” he said. “So, what used to be two full-time positions will now be three part-time positions. There’s going to be more outsourced labor—contracting out your laundry and whatever else you can do. The difficulty for the contractors is they can’t find labor.”
Geoff Ballotti, president/CEO, Wyndham Hotels & Resorts, pointed out that many states are already paying a $15 living wage, adding, “We’re hearing stories week after week and month after month [of companies offering]much bigger incentives to get folks to understand that this is a great industry. It’s a great industry at the leadership level, but it is a tough industry at the line level, because if you could go work at Walmart, it is not as hard as making beds in our hotels. And housekeeping is our biggest shortage right now.”
The topic turned to the issue of the lack of women and people of color in the leadership ranks of the industry, and what is being done about it.
Pacious brought up that Choice has had a development team focused on minority hotel owners for almost 20 years now.
“During that time, we’ve awarded about 270 franchise agreements to minority owners,” he said. “So, we knew we were doing well on that front, and we wanted to step that up. Last year, despite the pandemic, we awarded another 24. So far this year, we’ve awarded 18. So, we knew we were doing OK on the development side. Internally, we looked at our workforce, and we decided we were going to create a partnership with the Executive Leadership Council. Just last month, we sent 27 of our African-American associates through a professional development program. I was looking for outcomes, not just a statement, and not just a partnership where we write a check. I want to see people being impacted.”
Accor hired a third party to get the pulse of its minority associates. “The third party had an opportunity to go to all of them and say, ‘How do you feel about this? What are the reasons why you have not moved up through the organization?’” McCrory said. “We got phenomenal feedback about things that were critical to actually making a difference.”
She added, “I feel very strongly now that we have the right programs that will allow us over the course of the next five years to get more and more to a situation where we have more people coming up through the ranks who are people of color, different races and ethnic backgrounds versus what we had previous to that.”
Wyndham, Ballotti noted, has started the Women Own the Room program. “We provide incentives and key money to women developers,” he said. “Just like we need more minority development, we need more female development in the hotel business. What’s really captured our imagination is how many of our investors have actually said. ‘How could we help in terms of providing not just Wyndham support, but financing support that’s out there for female development?”
Hyatt’s Hoplamazian shares insight
Later that day, as part of the 3rd Annual Thomas J. Baltimore Jr. Distinguished Speaker Series, Ingraham sat down with Mark Hoplamazian, president/CEO, Hyatt Hotels Corporation, to talk about a number of topics.
Hoplamazian described how he got his start in the hotel industry as a night auditor for a three-star hotel in London while going to school—“I didn’t realize that night auditor meant you do every job in a hotel overnight”—and then told the story of how he became a C-suite executive.
“Fifteen years ago, I had been working for the Pritzker Family, which founded Hyatt, and through a sequence of events, I was asked to step in as interim president,” he said. “I had no intention of staying; I was going to be there for a prescribed period of time while they hired a new CEO. But, I fell in love with the industry and the people, and I wanted to stay. Thankfully for me, I was blessed by a boss, Tom Pritzker, and a board that said, ‘That makes sense to us.’ So, that’s how it happened.”
Ingraham asked the Hyatt CEO if the hospitality industry is still a great opportunity for young people considering it for a career.
He replied, “There’s no question” and added, “If you think about our industry, it’s one of the biggest opportunities into the future career pathing you can imagine in any business because you can start off with really no experience, like me, and continue to grow, continue to learn and have opportunities to continue to advance.”
Travel will always be vibrant, he said, “because there’s a human dimension of discovery of exploration that is going to be with us forevermore. Travel in every developing country has always grown at a faster rate than GDP because as soon as people have the means they hit the road.”
On the topic of international travel and how it will be done safely, Hoplamazian, who is a member of the Brand USA board, said that it is critical that international travel is reopened.
“We have good procedures for people who’ve been tested and can validate that they are not currently infectious,” he said. “But, there’s no question that most countries are focusing on vaccinated people as the first step, and then potentially growing it from there.”
On the labor front, he has seen some positives in recent months in the filling of open positions, and explained why.
“If I traced back a couple of months, we had about 5,000 positions open in the U.S.; today [Oct. 7], we have about 2,200 positions open,” he said. “Before anyone gets excited, it has improved, but also in the summer months, we just had a lot more positions that we needed to fill because the leisure business was so vibrant.”
He said he doesn’t believe the labor shortage will last a long period of time, adding, “It doesn’t make sense to me that it would. The basic laws of supply and demand will take hold, and we’ll end up getting something back into equilibrium.”
He applauded the fact that entry-level team members are earning more. “Wage rates are going up and I think that’s fantastic,” the Hyatt executive said. “Real wages for entry-level positions have been stuck—basically flat—for a long time. So, it makes sense to me that would happen.
One issue that persists, however, is that hospitality employees are moving to other industries.
“We are seeing companies that are not in our industry going to our industry and hiring people,” Homplamazian said. “I was with the CEO of Discover Financial Services, and he told me that they are hiring people who have hospitality backgrounds for their call center and for some shared service centers. It’s one example of many that we all hear about where people who were in our industry are going elsewhere.”
Execs discuss buying, conversions
During the “Executive Development Forum — Where Is the Market Going?” session, Bill Fortier, SVP development, Americas, Hilton; Chip Ohlsson, EVP/chief development officer, Wyndham Hotel Group: and Julienne Smith, SVP, luxury & upscale development and transactions & asset management, IHG Hotels & Resorts, discussed the costs and thought processes associated with buying and converting a hotel.
The hotel industry, Smith noted, looks at cost per key when purchasing a property, rather than cost per square foot like other industries.
“So, per key, you’re looking at anywhere from, for a soft brand, $7,000 a key to a more luxury-minded brand, like InterContinental, $70,000 a key,” she said. “It depends on what you have, what the age is and when the last renovation was. We’re working on a repositioning of a hotel in San Antonio and it was really due for a renovation. So, they’re gutting it and spending about $70,000 a key to bring it into the InterContinental system.”
The math needs to make sense relative to the ADR and occupancy that you can expect in the market, she said, adding, “If you spend $50,000 a key to buy a hotel, and then $50,000 a key renovating it, you’re going to have to have the right ADR and occupancy to make it make sense.”
Ohlsson noted that the most important thing to an owner, whether buying, renovating or rebranding a property, is ROI, and gave an example of Wyndham looking out for an owner to make sure the largest return on investment was possible.
“We had an owner that had built a hotel and wanted to make it a luxury,” he said. “We said to him, ‘Pump the brakes. Luxury travel may not come back for another year or two. But why don’t you start out with a Ramada or Wyndham and then get up to a [Wyndham] Grand level.’ So it allows them to follow the market really, and grow that way.”
He continued, “That’s something that we’re seeing more and more of: people getting in and saying, ‘I want to get in the economy segment that’s hot right now. So, I’m gonna do a Days Inn, but I’m going to line up all my contractors, and get all my financing together. And then I’m going to upgrade to a Wingate and get into the mid-market at that point.’ Buying a conversion hotel is where you want to be right now. It’s easy to get financing on it, but always have that plan and say, ‘Is this where I want to be forever, or is this where I want to be for the next few years?
Fortier advised prospective hotel owners to do their homework to make sure the hotel will remain with the same brand down the road, adding, “Just because that building has a Hampton on it, [you may say,]‘It’s got a great price, I’m going to go buy it and make it work.’ You have got to talk to the teams internally and say, ‘Alright, I’m thinking about buying this. Is it still going to be a Hampton Inn? Can I re-license this hotel for another 15 years,’ because we might come back and say, ‘This thing’s been around a little bit too long. It can’t be in the Hampton family anymore. If you can come in and buy this thing, we’ll give you an opportunity to build a new one. But this one is going to cycle out in 2025, at the end of its existing term.’ We don’t like that. We don’t want to lead anybody on. Talk to the brands and find out if it can be the brand it is today or is it going to have to go somewhere else.”