NEW YORK— Brands were the focus of this year’s NYU International Hospitality Industry Investment Conference as more than 1,800 attendees came together at the Marriott Marquis here. As the conference addressed issues such as branding, condo-hotels and the economy, the outlook was overwhelmingly positive that the good times for the industry will continue. The conference got started with a CEO “Check-In” that allowed a panel of industry experts to discuss plans for their brands and weigh in on the forecast for the industry. Lalia Rach, associate dean, Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, New York University moderated a panel comprised of Jack S. Adler, president/ COO Loews Hotels; Raymond N. Bickson, managing director/CEO Taj Hotels Resorts & Palaces; Mark Harmon, principal/CEO Auberge Resorts; Matthew J. Hart, president/COO Hilton Hotels Corp.; and Charles A. Ledsinger, Jr., president/CEO Choice Hotels International. Adler discussed what’s behind his company’s new branding initiatives and its plans for expansion. “Our core is to have distinct hotels in great destinations…we’ve studied what our customers love and what customers who choose our competitors like about them.” As far as growth is concerned, Adler reported the company is planning to open two to four properties per year and will take advantage of the pent-up demand in gateway cities. “We’re going to add value as we grow…and each hotel will be ‘uniquely local.’” Bicksen discussed Taj Hotels & Resorts’ plans for its lease of The Pierre hotel here. “It is a unique chance to re-enter the North American market and an opportunity for us to hit the ground running,” he said. Bicksen also discussed plans to expand some of Taj’s brands into markets such as China and Sub-Saharan Africa over the next two years. “We’re going to move outside our current boundaries and invest in key international gateway markets to take us from an $800-million company to a $2-billion company over the next two years.” Harmon reported the Auberge brand is planning for lots of growth, but noted rising construction costs are certainly a factor. He also elaborated on plans for the company’s new brand, Solage, which is a “more affordable” version of Auberge. He speculated having five to 10 Solage properties by the end of the decade, but explained, “It depends on availability. We need to find great locations and it’s tough to predict when building from the ground up.” Hiltons Hart noted plans are progressing for the new Waldorf=Astoria brand with a new build property in Orlando in the works. He added that “the world is big enough for both the Waldorf=Astoria Collection and for Conrad,” Hilton’s other luxury brand and that Conrad will maintain an “edgier look” than the Waldorf=Astoria brand. Hart also noted the recent Hilton/ Hilton International merger is “going great” and that the company is looking to sell some of the 40 assets acquired by the merger as well as take advantage of some rebranding opportunities. Choice’s Ledsinger commented on the importance of strong relationships with its franchisees. “We spent a lot of time building one-on-one relationships to build credibility and it’s important to keep nurturing those relationships.” Ledsinger noted he was particularly optimistic about Choice’s new Cambria brand, saying it’s “off to a great start” and that he’d “love to have 100 hotels” by the end of the decade. Industry movers and shakers looking to gain insight as to what matters most— land or brand— also got lessons in some tart humor and quiet diplomacy as the dirt was dished during a panel moderated by Laurence Geller, president/CEO, Strategic Hotels and Resorts. Following a panel on branding filled with executives from major companies, Geller made his preference known immediately. “I am concerned genuinely that there are too many brands in the future and that oversupply is out there. Thank God for construction costs, I guess,” said Geller by way of an introduction. He then made a bee-line for Jonathan Gray, senior managing director and co-head of the Real Estate Group for The Blackstone Group, demanding to know “what the hell is the strategy” the private equity firm has for the stable of lodging assets it’s been scooping up during the past several years. Gray, who hoped a partner’s description of the firm as “drunken sailors” in terms of its acquisition binge didn’t ring true, indicated Blackstone basically was betting on the strength of the U.S. recovery. “The bet we’re making— a pretty big size here— is that you’ll see, both on the hotel side in terms of RevPAR growth and on the office side in terms of rental rates and occupancy, cash flow grow faster than you’ll see interest rates rise, and the result of that is that the value of these assets will go up— hopefully— pretty quick. It is a fundamental bet, it’s a cycle bet and at the end of the day, it’s really about buying physical assets below replacement cost,” said Gray. Robert Alter, president/CEO of 62-property Sunstone Hotel Investors, Inc., which has been both private and public during the past decade, felt it was good to be in the latter position. “Today, the access to public capital is very strong, with a lot of investors wanting to get to the type of cyclical play Jon Gray spoke of. We’re seeing the third year of some very robust RevPAR numbers. We believe that will continue for a number of years, due to the supply and demand imbalance and the quality of the assets that we continue to buy we believe will give the company long-term, sustained ability of its cash flow,” he said. Geller also looked for strategy from Gary Mendell, chairman/CEO, HEI Hospitality, LLC, whom he characterized as “raising funds, buying assets and running around like a bluenose fly,” in terms of activity, such as its development of the W Hollywood in Los Angeles. “Sure, we have a strategy,” deadpanned Mendell, squelching the audience laughter. “We just raised our second discretionary fund,” he said, noting investors were looking for longer-term plays. “Our strategy is to buy more in the core markets, better locations— more urban in nature, markets with more barriers to entry.” He added HEI is likely to hold assets in the six- to 10-year range while it applies its operating ability to produce a good return for its investors. Geller also inquired where the panelists are concentrating their efforts for the future. “We’re most interested in upper-upscale, upscale and, to a lesser extent, luxury and midscale without food and beverage…we think as new supply comes on, it’s going to come on first in the lower segments and start moving up, so the higher up the chain you are, the longer you’ve got before new supply starts to impact you,” said Ashford Hospitality Trust’s president/CEO Monty Bennett. Alter said Sunstone is focusing on the 25 U.S. MSAs and looking at more urban assets and branded full-service hotels that have very high replacement costs that can be improved through capital infusion. Meanwhile, Mendell said HEI would continue to target 200- to 500-room, full-service, first-class branded hotels in more high-barrier-to-entry markets. The company’s new development group, meanwhile, will go after select-service hotels. Blackstone’s Gray reported that his group would like to add to its resorts holdings, i.e. LXR, and its La Quinta business. The full service arena was the focus of a discussion moderated by HOTEL BUSINESS® group publisher/hospitality group Stacy Silver, who led John A. Griswold, president/COO, CNL Hotels & Resorts; Stevan Porter, president, the Americas, InterContinental Hotels Group; Samuel C. Winterbottom, executive vp, development, Carlson Hotels Worldwide and Ernest Wooden, Jr., senior vp, Hilton/Doubletree operations, Hilton Hotels Corp. in a session dealing with the future of the segment. When posed with the question of the likelihood of a six-star brand, Wooden mused that it may be “more of a marketing ploy” than an actual defining of goods and services. Porter agreed, saying, “I don’t think there is one [six-star]. As brands develop, experience becomes much more important. To chase another star may mean a great deal of unnecessary costs.” The issue of brand clarity was top of mind for the panelists, as they noted it is a formidable challenge to make sure their brands are clearly defined. “We own 19 different brands and I don’t think travelers can tell you the difference between brands or understand it as well as you’d like them to,” said Griswold to the brand representatives on the panel. “It’s the number one challenge for every brander,” said Wooden. “For a brand like Embassy Suites, the definitions are very clear. For Waldorf=Astoria and Conrad, they’re not as clear. It’s very hard to do and if you do it best, you win.” Construction costs were also a hot topic with the panel reporting they were definitely feeling the impact, but were not overly concerned. “We’ve seen no slow down,” said Porter, noting IHG is still on pace for ground-breakings and is planning for approximately 240 new hotel openings this year. “I think they’re going to keep going up,” said Griswold, “and that is good because it will help to keep the supply in check. Very seldom do construction prices go down, so it will certainly delay some projects.” Winterbottom added its not just construction costs that pose potential obstacles in the coming months. “The cost pressures of operating a business properly and fuel and labor— that’s going to be a recurring theme.”
