COSTA MESA, California—Few, if any, companies can match the knowledge of the Southern California hotel environment possessed by Ayres Hotels. By owning and operating 20 hotels located within an hour’s drive of its Coast Mesa headquarters, Ayres has its collective finger on the pulse of the busting region’s lodging landscape.
“We’re encouraged by current economic trends; we’re experiencing a pretty good summer, but we’re very cautious about the fall and beyond,” said president Jim Roos.
Like many regions, Southern California experienced a hotel-building boom during the last up cycle—and the region is paying for it as it tries to dig its way out of the recession. There are 15 hotels under construction in the region and another 32 in final planning, according to STR.
“We saw plenty of hotels built here prior to the crash that shouldn’t have been built,” Roos said. “It will take those markets a long time to rebound. … We’re renting enough rooms, but you can’t get the rate for them that you got in 2004.”
With 2,631 rooms and suites flying the Ayres Hotels flag, the company finds itself in the middle of a battle royale for hotel guests.
Roos said the company is outperforming competitors by focusing on an affordably priced boutique hotel experience, which he described as 90% traditional and 10% hip.
“Our traveler is looking for something unique, cozy and comfortable while they’re away from home,” he said.
|
| Ayres Hotel Manhattan Beach in Hawthorne, California |
A major part of achieving that goal comes from the Ayres family, which has been involved in the Southern California real-estate scene since 1905. In addition to chairman Don Ayres Jr., there are several other family members actively involved in the company: Janet Ayres, wife of Don Ayres Jr.; daughter Allyson Ayres; sons Don Ayres III, Bruce Ayres and Douglas Ayers; and son-in-law Bruce D’Eliscu.
“Our lobbies are the Ayres’ living rooms, and they want their guests to be comfortable,” Roos said. “They want to talk to employees and customers, and they want to be able to personally inspect what’s going on. They’re very active in the business, and that’s a great asset to have on a daily basis.”
A family affair
Family members have active roles in interior design, entitlements and general contracting, among other things, Roos said. When a new project is considered for acquisition or construction, an Ayres family member becomes a champion of the property, presents it to the rest of the family and oversees the integration of it into the Ayres system if the project is approved.
“We’re a family business. There’s going to be an Ayres family member to greet a client or an Ayres family member that will take care of the client’s needs,” Roos said. “It wows the customer. It takes a great sales staff to bring those clients to the Ayres family member.”
Roos said one of Ayres Hotels’ main objectives is to provide top-notch service to guests, which has an interesting side benefit.
“The No. 1 reason employees leave hotels is they feel they can’t take care of guests well enough,” Roos said. “There’s a technical side to the business, but the basics are the spirit of hospitality. Finding people who like to serve people and keeping them is essential. To satisfy a customer is a really, really powerful feeling.”
Lessons learned along the way
Roos has been president of Ayres since early 2004. He had been leading the Candlewood Suites extended-stay brand until InterContinental Hotels Group acquired it at the end of 2003. Family considerations—his own and the Ayres’—attracted him to Southern California. His four adult children and two grandchildren live there, and the Ayres’ approach to business were too much to pass up, he said.
“I actually like little companies better,” Roos said. “You’re much closer to ownership; you’re much closer to the customer. I just like that spot. I feel like I can control my own destiny.”
Roos, a lifelong hotelier who has also worked for Hyatt and Promus Hotels Corporation, said his philosophy for getting ahead is simple.
“Once you start solving people’s problems they keep giving you more problems to solve,” he said. “That’s been my secret to success.”
A concentrated growth plan
Roos said Ayres Hotels plans to develop hotels when the right opportunities present themselves. Any addition to the lineup must be in a location where the company can be directly involved.
The company added six hotels to its portfolio since 2004, including five new-construction properties.
“We’re going to buy land at the right time, go out to bid at the right time,” Roos said, adding that what hinders the acquisition process at this time is what he called unrealistic pricing expectations on the part of sellers. “We have our eyes open for (real estate owned) to see if we can buy something well below replacement costs,” he said.
REOs are hotels owned by a lender after an unsuccessful sale at a foreclosure auction.
“It’s opportunistic growth. We want to have a hotel or two under development at all times,” Roos said. “They have to be relatively close to home. Maybe we’ll go more than an hour. A family member has to say ‘I’m going to watch the property closely.’”
Roos said the company has a couple of projects moving ahead in the very early stages of development.
Ayres Hotels will not deviate from its long-term growth strategy, according to the executive.
“We stay conservative in the good times so we have no trouble getting through the tough times,” Roos said. “There are no assets that have an exit plan; this is a long-term hold mentality.”
The loyalty factor
Roos said Ayres joined Stash Rewards, because of the importance of guest-loyalty programs.
“At Candlewood we dealt with the objection of travelers that said we didn’t have a rewards program—we just couldn’t make sense of the numbers,” he said. “It held Candlewood back and it was one of the things that made it attractive to IHG. It was the same way here when I got here.”
As the recession reached its depths, it became clear to the Ayres team that business travelers were more demanding when it came to where they stay—and earning points was a big factor in the decision-making process.
“We know there are people who like boutique hotels elsewhere that don’t know of Ayres Hotels,” Roos said. “We’re well-known here, but we’re a regional brand and need to attract travelers looking for what we have to offer. It’s been an immediate hit with clients and an immediate hit with redemptions.”