PHOENIX—“The View from the Top: Let's Talk Development” was another general session at the Lodging Conference held at the Arizona Biltmore this week. The session moderator was Jeff Higley, vice president/editorial director of Hotel News Now.

Panelists were Joel Eisemann, chief development officer, The Americas, IHG; Phil Hugh, chief development officer, Red Roof Inn; Eric Jacobs, chief development officer, Marriott International; David Pepper, chief development officer, Choice Hotels International; and Matt Wehling, senior vice president, development, US and Canada, Hilton Worldwide. Pipelines, lessons learned and projects were among the hot topics.

Jacobs kicked off the pipeline discussion declaring that 2018 should be a good year in terms of openings. The deals are safer this time around, he says, and the “looky-loos” have been kept out.

Pepper concurred, saying, “We are asking ourselves, 'is this hotel going to make money for the franchise?' With that, two-thirds of our pipeline is new construction. There will be a massive amount of openings in 2018. Everyone is rushing to get shovels in the ground.”

A concern, Eisemann said, is construction costs but “there are great opportunities out there. We've learned from the past. Lenders are requiring greater equity.”

Hugh countered the new construction discussion, saying that Red Roof Inn is more focused on renovation. He said the company is seeing a reduction in costs for conversions.

Pepper again concurred, saying Choice Hotels are doing conversions in upscale areas where land is more expensive. He said mixed-use and multifamily are competing for those sites.

A way around this is a more-bang-for-your-buck approach where hotels introduced a dual-branded hotel some time ago. These invigorate assets, said Eisemann. This would be where a Homewood Suites shares the same site as a Hilton Garden Inn, similar to the fast-food concept of Pizza Hut, Taco Bell and KFC sharing the same real estate.

Jacobs said Marriott even has a tri-brand in Nashville. While this concept is not as common, he says, it is located across from the convention center and has other mixed use property types nearby.

“We continue to explore those concepts,” Jacobs said. “Shared management (under one roof) saves costs.”

Wehling said the idea of dual-branded or co-branded hotels started in urban markets where land was scarcer but has branched out to the suburbs.

“We don't see that trend going away because you can maximize densities on a site,” Wehling said. Eisemann agreed that each market is different in terms of what guests expect.

Pepper said that innovative concept works, especially in light of higher land costs, increasing reportedly 1% per month in Miami-Dade County, he said.

“Labor and time have increased because qualified workers are scarce,” Jacobs said. “After 2008, some didn't come back.”

The conversation turned to the Marriott/Starwood merger, a hot topic at the conference and elsewhere in the hospitality industry, being called a game changer.

“Marriott has a conservative approach: 50% of growth is outside the US,” said Jacobs. “Because of Starwood's international presence, China and Europe can now be expanded. We are looking at franchising. The consolidation of a development team means you are chasing the same deals. There is a challenge in growing the brand with a market after mergers.”

Pepper said Choice only has 1,000 hotels outside the US but is looking for opportunities. In terms of international expansion, Eisemann said those hospitality markets are more cyclical than the US because of the somewhat-constant political undercurrent.

“The state of (Hilton's) development is steady as she goes,” Wehling said. “We look for the best sites in the best markets or the right brand at the right time by the right developer.”

Instant Insights /

Hotel Pipelines Set Sights on 2018

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