What's Going On With Hotels Now - David Eisen, Hotels Magazine

NYU Hospitality Investment Conference Trends

Speaker 1 0:00

What's going on in the world of hotels and hospitality . Today , you're going to hear from one of the best journalists in the industry . This is Hospitality Dealey , the show that helps you stay informed and inspired each day by the most interesting people in hospitality . My name is Josiah McKenzie and my goal is to help you reconnect with why you work in this industry and get fired up to go out there , delight others and reach your goals . Let's get started . Today is Sunday , june 4th , and one of the largest investment conferences in our industry , the NYU International Hospitality Industry Investment Conference is kicking off now here in New York .

Speaker 1 0:38

To better understand what's going on in the world of hotels and hospitality today , david Eisen is joining us . He's the editor-in-chief of Hotels Magazine and has a unique perspective to share with us . In this episode we'll cover the trends he's watching , what he'll be listening for , how to work with media to get coverage and much more . One note before we get into it we recorded this a couple of days ago and we're dealing with a little bit of construction noise in the background . I tried to remove it during the production process , but David's voice ended up sounding not quite as great as it usually does , but I wanted to share our conversation with you anyway , because I think you'll get a lot of value from what David shares . So without further ado , let's jump into it . We have the NYU conference coming up next week and I want to talk a little bit about your thoughts going into that . I've been the editor-in-chief for Hotels Magazine . You see a lot of ideas . You see a lot of people talking about a lot of stuff . What's on your mind ?

Speaker 2 1:28

Well , first of all , it's always . I don't care what the economy is like , what the market's like , what the hotel she's doing . For me , going back to New York is always just a pleasure in itself . I lived there for 20 plus years , moved out of there pre-pandemic , which I guess would be a good thing or a bad thing , i'm not so sure . But first of all , it's always great to get back to that conference .

Speaker 2 1:50

This is a year of change . Actually It's interesting . As you probably know , this is the last year , i think , at NYU . The conference itself , not the college , the university was acquired by my former employer , questex . They just actually acquired the conference . I think they announced that just a few weeks ago . So this will be the last kind of iteration of NYU under the I guess you could call it the John Tish regime . I don't know what they're going to do to the conference of the whole , if there's going to be many changes to it , the look and feel , the content , the way that it kind of operates , but anyway , so that's one big thing that this will be the last kind of year for that .

Speaker 2 2:29

But I mean as a whole , i mean every one of these conferences you go to . I mean you go to the Alice conference in LA , nyu , hunter , it's always everyone's like optimistic , but it's cautiously optimistic . I mean literally . That's like the tone of every one of our industry conferences every single year . It's the same thing . Oh , we're consciously optimistic And , to be honest with you , i mean conferences are great , but I you know the end and you know the panel sessions are great .

Speaker 2 2:54

You don't get too much real frankness or candidness on stage , which you always hope for . A lot of times panelists on stage , they get into this habit of wanting to basically just market , especially the brands which God love them . They're a part of the industry , they're a huge part of the industry . The brands kind of make the industry go in terms of what they bring to the table , in terms of their loyalty programs and certain distribution , all that . But a lot of times brands are going on stage . They're like you know and I won't say the brand but like our hotel has the best pool in the world , where you know the water is at a perfect temperature of 72 degrees without fail . So it can get a little bit too marketing , you know , so kind of like a too much of a PR kind of vest . So it's always good when you're on a panel , especially in the audience , when the panels are very frank , they're really telling you like it is , they're not just marking themselves , they're really giving you kind of actionable whether it's tips or information about really what's going on in the hotel industry now and kind of looking down the road .

Speaker 2 3:52

Those are the panels that are , i think are the best that you come out way , walking out of it , saying oh , i really got something , something out of that . And most of them are like that . You just sometimes want to steer clear of the other type . But I think NYU this year is gonna be it's gonna be a really good gauge of where the industry is as a whole right now , kind of almost like a balance sheet of like where you are right now . I mean , i think the biggest thing you know we've seen the trends that it came out post pandemic right . Obviously , we know 2020 was a disaster year for for the hotel . It's really entire . You know globe Hotels are basically just running , trying to stay , break even , right running , break even analysis .

Speaker 2 4:33

That hopefully not lose money . But we came out of that . We saw the strength of segments like extended stay . They were huge . They are kind of resilient through all times . They do well With when the economy is good . They do well when the economy is bad . They basically do well when things are are .

Speaker 2 4:53

Are . You know people's up , people in life . You get divorced . Where you're gonna go stay ? an extended stay hotel , right , you , you , you're moving jobs . You got to go stay for a long time somewhere . You go to extend a stay hotel . So they do well in doom and loom . They also do well during doing times and you can see why all the , all the brands are like Pornie , into that , into that space .

Speaker 2 5:12

We've seen Hilton announced a new extended stay Offering and I guess the lower mid-scale site That's another . We can talk about that later . I just have this segments are all sliced and diced now , but Hilton's launching a new product there . Marriott's coming out with one that they haven't announced yet . Hi , it just came out with the new extended stay product . So everyone you know who hadn't been in it before had been in it But only had there . Like you know , we're dabbling in it or really rushing into that space . So extended stay . We saw resorts were resilient . So we've seen pox of growth . It's been . It's been the city markets . You know you're deep .

Speaker 2 5:46

I'm in DC right now . I remember during kind of the real bad days , i remember sitting in my in my we work and looking across the street And I saw that there are more lights on in the hotel than the office building next door , so you can see there was a disconnect there . But we're waiting to see that . Corporate travel , i think , come back in in gusto , but it's coming back . Groups are coming back . I said before well , i think right at the outset of the pandemic , i said that people have short memories and I still believe that . I actually think that You know we talk about work from home and that's here to stay . I'm not so sure . I think and I think it's it's not here to stay , because I think people actually want to go back to the office . I think people are sick of sitting at home working out of their robe at their kitchen table . I know I am , although I do get dressed in the morning . I do shower usually , typically . So I think that trend might be a fad . I think I think people want to get back out there . So we're seeing or seeing group come back . We're seeing corporate come back .

Speaker 2 6:45

Slowly , leisure has held through this entire . It shows that people don't want to . You know , forgo travel right , they want to get out there on the road . And for hoteliers , performance has done , you know quite well . We've seen strong rates and we've seen that growth . That's the rate growth sustained throughout this time period . I think there's , it's gonna get . It can only get , i think , a little bit , you know , ebb a little bit and get a little bit weaker as we move into the summer season and beyond . Looking at terms of demand , occupancy , there's still . Everyone talks about this recession . That still hasn't happened yet , so I don't know what will come of that , but I think things are looking pretty good .

Speaker 2 7:23

I think , from a travel perspective , if you want to flip it over to the kind of the real estate finance side And we've seen base rates , interest rates have gone up It's tougher to get financing specifically for new construction , it's more expensive to get financing . You know we year , you know , just five years ago , basically , money was nothing , was it was cheap money . He was like , basically , banks are like please go build something , we want it , we want to give you money . Yet That's flipped . So it's hard , but I think that's a good thing , because I think it it constrains supply a little bit and if , very if you own a hotel , that's a good thing , right , you don't want to see more who else popping up on your block . So it's obviously it's hard . It's harder now from a transactional standpoint to trend to make transactions , to do deals . You know , i was looking at some JLL numbers . Obviously compared , i think , compared to last year and the year before . Transactions are down , but I think those will pick up as we move through into , you know , q3 , q4 And beyond .

Speaker 2 8:18

There isn't has a bit too much to stressed assets out there . I'm only thought , oh , there's a pandemic . You know everyone's gonna tank and there's gonna be all this stress cell and a bank's been taking back Back assets . I think the one thing we all Not me myself , because I don't own any hotels But with the real estate community , learn and lenders learn . I was like we can't go back to the So wow , wow West days when people were were let with over leveraged and loan to value ratios were like , you know , 95% debt versus a small sliver of equity . I think they were smarter this time and they've gotten that rebalanced . Um , so I think , i think everyone's in a better position now going into , uh , the rest of the year and into 2024 . Um , you know , hopefully there's not another black swan event , but who knows ? So that's my take on it . I'm standing on that and that that's that's . I'll start there . That was a lot . That was a long answer , so I you could edit out as much as you want .

Speaker 1 9:09

No , no , i love that . I love that You mentioned something that

Industry Participants' Unfiltered Takes

Speaker 1 9:12

you know . I've always kind of felt that somebody conferences not necessarily just nyu , but at conferences people tend to be pretty guarded and unfiltered and I I'm curious because I Imagine everybody in the industry wants to get on your radar . They want to get their sound bite covered in in your recap article . So if you could wave your magic wand , what would you like to hear ? What are the unfiltered takes or things that you'll be listening for , uh , that people hopefully can open up a little bit more and share ?

Speaker 2 9:38

You know , i think it's funny you say that because any journalist in my position knows , before about a week or two weeks out , before a copper starts , you start getting emails from PR saying will you meet with this person ? And you get like third , you know , we meet with this person , we meet with that person and pure people are great . They actually Shout out to all the press people out there because they make our jobs a lot easier . They're the gatekeepers , right ? The problem is is that you only have so much time at a conference is specific , especially if you only have a . You know , when I come to a conference , i'm basically the only person there from our magazine . So I'm the one kind of I have to be everywhere at once . So I I actually typically enjoy sitting in on panels to sit there and See what's going on . You get different . You get different takes . Just there's multiple people on stage And then other times you take , you take what you take a meeting with someone . Now I I have to be select with those and kind of choosy just because you only have you don't ? you definitely don't want to fill your dance Core , i think , with like back to back to back meetings because , be honest with you . A lot of those , as we had said before , it's basically them saying , oh , we've opened 500 , or not five , we've opened 10 hotels this year . Yeah , i can get that from the press release and you get see stuff out of it . But you know , just , it all goes back to just I , typically , when I speak to to someone , you know if they want to take a meeting with me . You know , a lot of times the PR people or they'll say , oh , they want to talk about this , so they want to talk about that . Well , so that's great . But I'd like to talk about this and the thing is , i always like it's . It's the more usually , the higher that higher . The Higher up the chain you go , the more and more they want to . They want to make sure they control the messaging and they control What they're gonna say . So that always like My . My favorite thing is this will be like will you meet with so-and-so the CEO of blah , blah , blah ? and you'll come back and say , yeah , that sounds great , i'd love to do that . And then the next e-mail to them , it to you as okay , what do you want to ask him ? so it's like you just asked me to interview your , your your person and you're now you're making me do some Kind of effort and dig up question . So It's good .

Speaker 2 11:46

I usually , for my setup , i sit down with someone . I don't really like to come in with formal questions , it's more organic . You just sit there and they might get on a topic and you'll and you'll say , you know , like a topic like here's one seller financing which is like , basically I have an asset that I want to sell And I'm literally gonna pay you , give you money to take it off my hands , right , seller financing just being that , it's like the seller Actually finances helps finance the deal . I've never heard of that really before , but apparently that's some of that is happening now and there are a lot of . There are a lot of assets out there that I think will get and if you know , diabestive only . And there was another thing like you were seeing things like you loans maturing , you know . So like if you're loans maturing , it's like you know you either need to shit or get off the pot . Sorry , i don't know if this is a children's podcast , but it's either . Like what am I going to do this asset now ? I have my loans maturing , i'm going to have to refinance at a higher rate . What am I going to do with it ? Am I just going to say , okay , that's it . I made my money , i'm going to get out , i'm going to sell it , right . So there's that .

Speaker 2 12:49

The other big thing is , like you know , during the pandemic , the brands are like they were cool . They're like all like you know , don't , you don't have to put any . We understand this is tough times . You're probably using your capex reserves to pay your mortgage . It's all good , man , it's all good . Now things have flipped back and they're like well , that lobby hasn't been touched in 10 , you know , 10 years . It's time to . It's time to get put some money in there , some some , some capex money there , and upgrade . You know , those guest rooms you need to be . They're too small , they don't have the right technology . That that's needed right now .

Speaker 2 13:20

Your soft goods , or hard goods That's the word I was looking for . I think I was thinking soft , soft goods All those things need to be kind of , you need to up your game with . So there's that part that , there's the pips that are coming . So I think a lot . I think owners now are in a position where they need to like really sit down and say , okay , is it worth it , maybe we could take , we could sell , take money , put it elsewhere . So , yeah , i mean that's a big thing . I think when you're talking to owners to see what that is , and on the brand side , it's the same questions like what are you making , what are you , what are you asking of your owners right now ?

Speaker 2 13:54

because you know as much as we the hotel industry is such a dynamic industry and the fact that there's so many different hands in it , you know you have , you have the asset right . So you have the owner of the asset , you have the brand that's on the front door , you have the person who's operating that asset , you have an asset manager , you have the lender on it , there's so , yeah , all the employees . So there's , it's such a dynamic industry And it's like operational real estate . It's always moving . It's not like and you know you reprice it every on a nightly basis , not like office or or , or multi fan or whatever it is where you know you have a lease for a year and you can just , this is a dynamic it's . It's breathing 365 , 24 7 business . So that interplay is always something I'm interested in .

Speaker 1 14:39

When I think , because there's so many participants in the ecosystem , as you pointed out , there's room for innovation , and I appreciate you kind of sharing your perspective on this , because I guess what I would like to see is more industry participants . You know kind of approach , earning media by creating something worth talking about right and and doing something differently right . And so I think you know getting your take . It's like they probably think okay , i opened new hotels , that's , that's so fascinating and it's so exciting . It probably is to them . But like you see this , you know from every brand , from every industry participant , you're like No , it's not , my readers don't care about this . You got to do something different . So , whether it's seller financing or it's , you know , some other element of the ecosystem , i think my takeaway from hearing you is like No , do something different and then actually communicate what is different in the industry . I agree .

Speaker 2 15:25

Those are the things we live for . I mean , you know , actually , the funny thing is I is , you know , you've been around in this industry for a long time . I remember when I so I've been , i guess , covering the hotel industry since 2006 . And I remember that every conference you go to back in the day you're like , oh , they're probably gonna , maybe they'll watch and there'll be a new brand announcement or something like that . And that was cool . You were like man , they blah , blah , blah , just watch the new brand . You wait for those announcements to be like Nowadays , there's so many , there's so many brands and brand announcements .

Speaker 2 15:55

Not only can't you keep track of them all , there's some of them going to the radar . But let's say it's not big news and it's news , but it's not like huge news , like , oh , they launched a new brand . Okay , well , they probably launched one . You know , last week also , i mean you know what I mean Like there's literally brands . I've seen that . I'm like What is that ? I had no idea that this was even a thing anymore . But I but to .

Speaker 2 16:15

But you know , when we get , when we talk about things like that , like brands , like there's not everyone talks about you have too many brands . Are there too many brands ? That's always a question that you get that a lot of the brain guys get on stage And I would say there's not . I mean , i mean , look at adjacent industry not adjacent industry , but look at like a company like Procter and Gamble . I mean , how many brands do they have ? they have thousands or hundreds of brands . They have the same brand , but it's different in in Argentina , as it is in , like , you know , Beijing or something like that .

Speaker 2 16:47

I don't think there's too many brands . I think it's literally like Is it , does it make sense to add something here ? Is there a gap here that we can fill right ? That would make sense for our loyal travelers , but for me and what I've seen of the year , it may has to make sense for the , for the guy is gonna build it Right , the money guy , the developer , the owner .

Speaker 2 17:11

So it's like when you , when they build out these brands I think they're all in and they'll admit it they build brands for For a traveling niche that I guess they weren't reaching before , but it's always like okay , can we get the money guys behind it to actually see this , see this through and And let's be honest in ? I'm not gonna be the first to say this . It's like when Marriott or Hilton pull , pushes out a new brand , i think the other brands are like Well , shit there , marriott and Hilton are now jumping deeper and deeper into our pool , like we talked about extended stay . When you look at at other you know extended-state brands like wood spring or Or the other you know extended-state America , they've been like the name traditional names in this space . They've done it for so long . They've done a fantastic job . But it's like now you have these bigger guys that are coming down into your neck of the woods . It just make it just place to the pie that much spinner .

Speaker 1 18:12

Yeah , totally I would , if we get . I want to promote your panel . Okay , tell me a little bit about kind of what you're , what you're gonna be talking about .

Speaker 2 18:18

So our panel is actually called the alumni panel . Right , i

NYU Alumni Panel on Economic Analysis

Speaker 2 18:22

was lucky enough . This is my first year actually moderating a panel at NYU , even though I'm an NYU graduate . So it's , it's , it's a first for me and I'm really happy about that that they finally thought to , thought to include me . I was like where's my ? where to my tuition dollars ? Do I don't even get to moderate a panel ? now I'm moderating the panel , so I'm , and I'm not moderating what's called the alumni panel . They don't even give it a name , they're just like we'll call it the alumni panel And it's basically . It's me and four other graduates of NYU are the better , probably done better in life than I have after it , after NYU . But so the panel ? Oh well , you know , the panel is basically analyte . It's looking at deals , analyzing deals and in Against these kind of macroeconomic issues . We talked about inflation , the economic slowdown and more . That's the the panel name . There's always and more , and So it's a great group I have . I'll tell you real quick what I have .

Speaker 2 19:18

So I Cook read he's the VP of operations finance for MCR hotels . If you know them , if you know MCR , then you know their CEO , tyler Morse , who is actually the one guy that you , you , you stop to watch him speak when he's on stage because he , he's about , he's he when we talk about Frank , this He's the one guy like he's gotten so good . I've been in multiple Industry events with him speaking and he has like a stump speech now And I don't know if it's changed , but it's like literally like he's on the stump , like a politician . He says the same thing every time . There's a little bit of nuance to it and I appreciate that , but it's always very candid like he , he , he always says it like it is or how well , he says it like he thinks it is . Um . So we have some friends here . We have Chu Zhu .

Speaker 2 20:03

She works for RLJ They're real estate investment trust huge . She's the director of investment and portfolio analysis . She'll be there . I'm really Shaw , she's great , she , she , she , she owns her own hotel company with her family . She's also an attorney , she's a banker , she does literally everything . So she , she'll be talking about , about That entire kind of world there . And then , last one , that not at least Estelle Yang , because a senior associate . Capital markets are collier , so we'll get that kind of consultancy perspective and basically , you know , i , you know , i've gone through and I've already put two questions together , but basically we're talking about the same things that we I've been talking about for the past 30 minutes . Really , it's about Kind of you know , one of the things we're talking about is , once the we talk that we hear all about private equity And they're kind of like on the sidelines now and they have this huge wall of money , what they call .

Speaker 2 20:51

They always say we have , there's all this dry powder out there That private equity is just kind of sitting on . So I think we're all everyone's waiting for , like the black stones , the Brookfields , to kind of light that match and see what they're there up to now . I think the funny not the funny thing is I mean , it's not the kind of it's funny about the private equity world . It's like the humorous of a thing to talk about , but you know People like last and they're always out there at the forefront . They know what to invest in usually , but you're seeing , like the Brookfields , the world get slaughtered when it comes to like they're getting out of office , like out of it , because We don't know what's going to happen to real office , real estate anymore . Is it going to be converted to probably multi-red , to multi-residential , even hotels , because That's the other thing .

Speaker 2 21:42

This whole trend of working , how everything's changed now that people aren't in the office Five days a week , seven days a week , you know , working from nine to eight , five o'clock or whatever it is , and what that does , it has this kind of like domino effect , like a people aren't in the office , you know , i want to say , destroys , it , hampers local economies there . So the guy , the big guy who owns a sandwich shop down the street , he's not getting that income every lunch . Now , right , so this kind of has this , this hang on effect that it's like if the offices aren't crammed with people , adjacent businesses aren't gonna do as well , hotels aren't gonna do as well . Was it not made ? as many people are traveling into the cities for work , corporal or otherwise ? There's always this kind of knock on That . But I think one of the things is we're just waiting to see who's gonna be some of the buyers that swoop in . I mean , you know Blackstone's been Creative in the in the past , in in the hospitality space . Obviously , if you look at what they did with Hilton and they made a , they made a bundle when they exited that investment . But you know the black stones that the , the KKRs . There were all the cast , a lot of tell you There's a lot of buy a big-time buyers out there and and well , so we'll see kind of what will transact there .

Speaker 2 22:50

And then obviously on just on the operation side , like , how are you operating a profitable hotel ? I think there's been this kind of . I work for another company . You know This is me doing exactly like hold it myself I wouldn't do is be a marketing guy . But I work for a company called hot stats , which is basically a They won't , they won't want to see me to say this , but they're the str of the profitability kind of a space .

Speaker 2 23:14

So they're really focused on not so much as red part just looking at room sales , right , but really digging into the P&L and looking at , you know , your total revenue per available and looking at your gross operating profit for available room . So when you look at hotels nowadays they're not a lot of the way the hotels are built out now It's not just about selling rooms . There's the ancillary revenue that comes through , you know , fnd that comes through , spa , that comes in , all the all these different kind of outlets , bar obviously . So looking at your in ancillary revenue there and basically Taking all that revenue into account . But but then looking at your expense picture and flow through and looking at your utility costs , looking at your obviously your biggest cause , which is your labor , and then seeing how much of that money flows down to the bottom line , so really booky honing it on profit . So I think hoteliers , as they kind of move further and further out , it's really about looking at your P&L and making sure that you're operating an optimal kind of asset right and and profitability .

Speaker 2 24:13

You know , as I've said before , you can't take , you know , revpart isn't pay the Reston , pay the mortgage , right . You can't take it to the facts . You , you can only take the back , the bottom , what you squeeze out at the end of each month . So those are kind of some of the topics that I think you know we'll be , we'll be talking into and obviously I'm gonna kind of hopefully They'll be very candid , like I said before and looking at You know what kind of market it is is a buyer sell market . Looking at you know bid-ass spreads and all that fun stuff , right ? Or maybe I'll just talk about basketball and the NBA playoffs for a good , a good 20 minutes . I could do that too Well , you got to be there , so you got to be there to find out .

Speaker 1 24:50

But no , seriously , i think I'm really interested in you know , kind of like the , the panel that you put together here , where there's , you know , we talked about this trend or that trend , but having the people that are looking at the data all day and they're the closest to it , right , they can actually speak to what is happening , versus people's just pontificating , right . So you got an awesome , awesome lineup there . So I'm definitely pointing people your your way , david . I feel like we covered everything I was hoping to . Is there anything before we go that you wanted to talk about that we didn't get to ?

Speaker 2 25:19

I'm trying to think no , i think You know it'll be , it'll be . It's always listen . I think conferences are great . It's it's a chance for people to it's really , really what it comes down to is networking and their networking . And then you know , see past , you know friends of the industry and you know getting , sometimes getting deals done .

Speaker 2 25:39

I mean , a lot of these powers are just for that . It's like I'm at the bar having a drink and someone walks over , you start talking and I'm looking to buy something . You might be looking to sell something or something of that . So it's a lot of like that collegial atmosphere . That's really what these conferences are all about . I mean , the education is great too . You know sitting at panels and kind of hearing of what's going on in the industry . But it's really about , like I said before , it's about people to people . It's about people to people and mono a mano and Tethetect . I think I'm using up all my , all those crazings , but really kind of coming together as in as humans and you know , Talking over a coffee or a or a beer or something like that , and really I think that's what conferences are great for .

Speaker 2 26:23

Yeah , and you're seeing , i mean I was , i was at the was the last conference I was that I can't remember . You know they was . They're getting , they're back to over . You know , like logic conference in September , over 2000 people plus , or 3000 people and people people I think are are Are itching still to get back out there and I think conferences or something that allows that To happen .

Speaker 1 26:44

Yeah , you got to open yourself up to serendipity , right ? So definitely pointing people to your panel and thanks . Thanks for joining us , david . I appreciate your perspective and looking forward to seeing you at the show . You .