ENCINO, CA—OLS Hotels & Resorts doesn’t consider itself a typical management company. Skim the company’s website or speak to one of its executives and it’s clear: OLS is a technology and analytics firm—but it happens to know a lot about running hotels.
“We think it’s about being both, really,” explained CEO Ben Rafter, whose background includes being president/CEO of Aqua Hospitality and president of Aston Hotels & Resorts, as well as more than 15 years guiding technology start-ups. It’s this background that has enabled the C-suite executive to transform the hotel management company, a strategy he’s been working on since joining the company in July 2016.
“I came from the start-up side of tech, the emerging technology side, so the mindset was a bit of innovate or die,” he explained. “There’s constant change, and those who don’t change with it aren’t going to be around very long in the industry. We have to look at who we are as a management company, needing to constantly change, because our guests are changing, the industry is changing, technology is changing and if we’re not, our hotels are going to become fairly dated, fairly quickly, as are our marketing channels and everything else we do to bring guests into the hotels. Certainly, that’s understood by everybody, but when you come from an industry where the pace of change is fast to begin with, it gives us an advantage.”
Rafter saw an opportunity for OLS to use analytics to find the right guest for the right hotel, taking advantage of data the company has about guests’ interests and spending patterns. Additionally, the company uses that data to create customizable hotel experiences in real time.
“Ultimately, there are so many factors; if you take a hotel in Jackson Hole in May when we’re generally not very busy, the science goes out the window and we’re trying to get as many people in the hotel as possible at any reasonable price,” Rafter said. “In compressed markets, hopefully we have a product that lets us sell an experience. And then it’s about finding guests who want that experience and building channels out to find them.
“It annoys me a bit in this industry that we all know one guest who pays $300 per room is different than the next guest for $300 per room, but we still don’t do anything with it,” he continued. “On the back end, we’re trying to model heavily which one of those guests is ultimately contributing more to the bottom line—who is buying F&B, amenities, retail—and trying to build out the lifecycle value of each customer, instead of just saying, ‘Oh, both paid $299, so they must be great customers.’ Everybody conceptually understands the difference, but very few people are doing anything with it, and most industry metrics are still tied around ADR and RevPAR. We think it goes a lot deeper than that.”
Rafter compared it to the airline industry. “Our belief is a good hospitality company needs to know how to harness data and use it to heighten the experience and to increase the owner’s ultimate profit,” he said. “Twenty years ago, the airline industry was a bit of a laughingstock of some of the other analytics industries, and they’ve certainly changed where they’re harnessing every single piece of data available. Ultimately, in the airline industry, it’s a detriment to the guest; we’re trying to do it to the benefit of the guest.”
It’s a change that OLS Hotels & Resorts’ team was ready for. “For more than 30 years, the OLS team has clearly built an understanding of how to run a hotel; our team’s knowledge of how to drive flow through and efficiency at a hotel was so strong, that’s what made it appealing [to me],” Rafter said. “What I’m doing is fusing in tech and analytics, and they know how to turn it into reality at the hotel level.”
This technology strategy is especially important, given OLS Hotels & Resorts’ focus on boutique properties. Located mostly in western markets, most of the hotels are upscale and upper-upscale boutique properties. “We’re putting together a collection of hotels that are not necessarily bound by corporate and brand rules and, therefore, can provide an experience localized to that destination,” Rafter said. “Our growth plan is to continue finding—whether it’s a soft flag or a purely independent property—properties that offer that ability to create an experience.
“Our belief is you can’t just churn out another brand and develop that brand in three or six months and suddenly have a good experience,” he continued. “You have to fully customize it per hotel and offer that out to the guest; sometimes you can overthink it, trying to build a brand around an experience.”
The company’s newest project is the 72-room Hotel Renew on Waikiki Beach, which was just acquired by OLS this year. “Renew is interesting because I view it as the first true boutique that existed in Hawaii,” he said. “One of the mistakes people make about Hawaii is it may be 82 degrees and mostly leisure, but it’s not a market that responds well to the South Beach Miami hotels of the world. Renew is much more subtle with what it’s trying to do.”
This summer, three of OLS’ boutique properties in California will debut redesigns: The Chamberlain West Hollywood, Montrose West Hollywood and Harbor Court San Francisco. “These are properties with long, great histories. Take the West Hollywood properties,” Rafter said. “They’re all-suite hotels, and clearly the competition for all-suite products, particularly from alternatives like Airbnb, has increased, but we feel like within the hotel, we can offer an experience that a stand-alone apartment can’t. Chamberlain has always done well with the fashion industry. We are adding numerous fashion elements to the design, and making it a place where it’s comfortable to work at the hotel. Montrose does well with production companies and the music industry, so we’re pushing forward with a theme around that, adding to the creative spaces and lounge spaces to enhance the vibe.”
Reflecting on Airbnb, Rafter noted that the next few years will be interesting, particularly given the company’s increased focus on being a home for boutique and independent hotels. “We’re looking at Airbnb as an enabler and a disrupter. I think they could very well be one of the biggest distribution channels for our hotels in five years, vis-à-vis Expedia or someone else, particularly as they get pressured by government municipalities,” he said.
Putting his technology hat on, he added, “You can look at a lot of these technologies as a threat—and clearly there are threats with products like Airbnb—but there often are opportunities that go with them. It’ll be an interesting battle between OTAs and Airbnb, and to a great extent that benefits the hotel.
“Everyone views disruptive tech as a threat, when they should be viewing it as a need to enhance their own business model,” he added. “It’s there, it’s not going away and we need to change our business models to adapt to the fact that whether it’s Airbnb or something else, new things emerge every four or five years—or less—and our business models need to be adaptive enough to respond to them.”
For Rafter, though, the future looks bright. “Our roots are primarily West Coast, and we do think with all of the consolidation in the industry, particularly on the West Coast, there’s a lack of great independent management companies,” the CEO said. “Our primary focus is basically to fill that void. Good companies expand doing what they do best. A lot of the last generation of independent companies, the JdVs of the world, Kimptons, Aquas, have all been purchased and merged into much larger entities, and it’s time for some new great independent operators to emerge. Interestingly enough, the consumer demand for independent, localized properties and smaller companies that have a little more flexibility is growing rapidly. These two things are intersecting at the same time, creating opportunities.” HB