LOS ANGELES ā Hotel owners, operators and brands must be on the same page when it comes to balancing standards, financial goals and guest desires.
During a session at the 2024 Meet the Money conference, hotel executives said the owner-brand relationship comes down to the need to maintain quality standards but be flexible to adapt to both owner needs and providing a more unique experience for guests.
"If you look at the key stakeholders as being the owner or the operator, the guest and then the brand, if you remove any one of those legs, the table falls over," said Tiffany Cooper, former chief development officer of the Americas and the Caribbean for Aimbridge Hospitality. "So you have to try very carefully to balance all of those."
Cooper said Aimbridge has received that flexibility from brands when the company asks for it, particularly when it comes down to creating a more locally driven experience on property.
"I always think of the Westin living wall," she said. "There's some climates that you have to change out the wall because of the climate ā the plants die, right? So you have to put cacti in the living wall in Arizona versus another kind of plant."
Panelists said the combination of flexibility and a desire for consistent quality standards are what have given rise in recent years to soft brands. Mike Higgins, regional vice president of luxury and lifestyle lodging development for Sonesta International Hotels, said that's where most of the investor interest lies today.
"When you look at my list of deals that I'm working on, the vast majority of those are soft-branded hotels," he said.
Higgins said those properties, which often can offer a more unique experience compared to traditional hotel brands, are only going to grow more prevalent based on the tastes of young travelers.
"I have five children that range in age from 33 to 43, and they don't want to stay in the same places that I stayed," he said. "They're looking for that experiential travel, something that's unique, something that's different. But at the same time, they want to collect their points, and they want the ease of booking."
Those more technical aspects like the booking process can tend to be more "clunky and cumbersome" at true independent properties, Higgins added.
Mark Younadam, vice president of development for luxury brands at Accor, said that quest for specific experiences among travelers is a big reason why hotel companies offer such a wide array of brands, including the soft-brand collections.
"What we're really looking at is the consumer demographics and psychographics," he said. "Each market is different, and we want to make sure we have a brand available for our guests where they're seeking us out."
It's important both the brand and the owner "know the make inside and out" and truly understand what the demand drivers are to choose the right brand and to help get on the same page and to make sure they get the most out of their investment, Younadam said.
"It's very important, obviously, to make sure the properties are profitable and maximize" return on investment, Younadam said. "So on the feasibility side it's very, very important when you're choosing a brand that you make sure it's going to fit the market and fit the clientele that you're trying to attract."
Jim Erlacher, vice president of North American development for Hard Rock International, said it's especially key at a company with a smaller portfolio of brands to find "an owner that understands what we do and how we do it."
"If we find the right partner and the right owner that shares that vision, the chemistry from day one is good," he said.
Erlacher said Hard Rock first and foremost views itself as an entertainment brand, so "trying to create authentic experiences for our guests" remains paramount.
Deal-making in the current high interest-rate and tight capital environment does require an additional layer of flexibility, Erlacher said. He added it's changed what kind of projects the company looks at for the time being.
"As it's getting more and more stringent, I think we are also focused ā for a lot of reasons having to do with construction costs, entitlement processes and entitlement development risk ā on finding conversion opportunities and utilizing our balance sheet to help make that happen," he said.
Cooper described the current development environment as "this weird purgatory" as hotel brands report growing pipelines but "nothing seems to be out of the ground and then there's nothing transacting."
She's hopeful the environment could open up soon.
"I think 'Stay alive until '25' has been kind of the motto," she said. "Get out of the election year and hopefully the Fed will drop [interest rates] a little bit and deal flow will start going."