Hoteliers on an ALIS summer update online panel discussion shared insights into how they have dealt with the pandemic in the midst of major developments.
REPORT FROM THE U.S.—Hoteliers on a virtual panel as part of the Americas Lodging Investment Summit Summer Update—NYC spoke about their experiences coping with the COVID-19 pandemic as they worked through major projects.
Shafi Syed, SVP and global head of hotel development for Equinox Hotels, said his company opened its first property in the Hudson Yards development in New York in 2019.
He said the company is pleased with how that launch went, but plans to ramp up that property and to continue growing the brand have hit unexpected hurdles, though not insurmountable.
“We’ve got five other projects that are a go,” he said. “From the lay-of-the-land perspective, it’s a good time to be in the development cycle to have projects opening on the other side of 2022 and beyond.”
Issues related to the pandemic have resulted in 2020 being a wash for the ramp-up of the first property, and now a “gradual” process is being planned for 2021.
Properties in the earliest stages see the biggest impact
Allie Hope, chief development officer of Virgin Hotels, said projects and properties within her company’s portfolio have been affected to varying degrees by the pandemic. She noted there was almost no delay in a recent project to top-off a New Orleans property, but others in Philadelphia and Miami that are in the design phase are “definitely slowing down.”
“Until we have more visibility (into financing markets), we’re probably going to stay in design and anticipate a decent delay on those projects,” she said. “Other new developments that we had soft deposits on, we decided to pull out of for the time being with the uncertainty in financing.”
A bad time for a major airport hotel
Kaunteya Chitnis, SVP of acquisitions and development at MCR, discussed his company’s recent marquee project, the TWA Hotel at New York’s JFK Airport.
COVID-19 has had a devasting effect on air travel, which filters down to a property intrinsically tied to the airline industry.
The property opened in May 2019 and was “still in the process of ramping up” when the pandemic hit, he said.
“We saw a 98% year-over-year decline in JFK airport traffic,” he said. “We were seeing roughly 130 flights per day when the year prior you were closer to 1,200.”
With no corporate and transient business, and few leisure travelers flying, the one bright spot has been contracts with airlines.
“We’ve been able to kind of pivot (to that demand),” he said. “At this point, it’s kind of a cash-management game. Our perceived notions of how this property would operate have probably been kicked back several quarters, but what we’ve seen is an increased demand for a day-stay product, which is a four-hour room that gives you access to certain amenities such as the rooftop pool bar.”
He pointed to that day-stay product as a sign of some form of leisure demand remaining, and noted the company has been able to “incrementally build” business back at that property.
Hotels need a tailored approach
Matthew Livian, chief investment officer for the Sydell Group, said his company’s development strategy has always been focused on finding a specific approach for a neighborhood and piece of real estate. He said in the current environment, it will be even more important to “pay attention to what consumers want and the safety measures that will help them feel comfortable traveling again.”
“But at the same token, you’ve really got to keep your eyes on the prize, which is how this is all going to look post crisis,” he said. “You have to make sure you’re not shooting yourself in the foot and killing what really make your properties or brands special and unique and what people really loved about them.”
Livian said his company’s hotels aren’t built “for the masses” as much as they’re tailored to sets of customers who love them “and come back again.”
“We’ve built a lot of loyalty through doing that,” he said. “If all you do is listen to these webinars and what’s going on today and all you’re focused on is how many times each surface is cleaned, you run the risk of losing what makes all of our hotels so special.”