PHILADELPHIA—While branded hotel development is often a matter of demographics and real estate, there is no cookie-cutter approach to identifying a site for the next independent hotel, according to a panel of independent hotel developers speaking last week during the Independent Lodging Congress.
“It’s like being at a deposition. It depends,” said Alex Cabanas, president of business development and finance for Benchmark Resorts & Hotels.
The process is often dictated by a deep dive into a given market to better understand its shifting psychographics, said Jason Pomeranc, who recently launched Sixty Hotels.
“It’s very unscientific. … Understanding that X factor is something you have to do yourself, ultimately,” he said.
That is what made Thompson Hotels, which Pomeranc co-founded, so successful, he said.
“We made our bones in the industry going to what would seem to be offbeat locations at the offset,” he said, pointing to the 60 Thompson as an example. When that hotel was built, the West SoHo neighborhood of New York was up-and-coming. But in it Pomeranc saw an emerging epicenter of art, entertainment, nightlife and retail that would drive demand for decades to come.
“You choose cities that way, too. … Where are the younger generations moving? Where are the more creative industries moving?” he said.
It’s not as simple as locating a site next to a large, grade-A office building or residential complex, Pomeranc said.
That’s not to say a good opportunity doesn’t occasionally fall in your lap, said Dan Flannery, COO of Morgans Hotel Group. The company’s high-profile brands prompt a lot of interest from would-be investors, such as a Qatari national who is sparing no expense to build a Mondrian hotel in Doha, Qatar.
“They have a passion for it,” Flannery said of such investors, “but if their vision isn’t the same as ours, it’s not necessarily a good opportunity for us.”
Finding good partners
As important as location is the partner helping to fund the development, the panelists agreed.
“Sometimes you get that bad feeling about having good partners. … Being able to walk away from product that has a lack of clarity—that’s really what it comes down to,” Pomeranc said.
Cabanas said there is a “shocking” amount of animosity between operators and owners.
Pomeranc agreed. “I think what’s happened is there’s a lack of a sensitivity gene among some of the largest operators of what the developers go through to get that project to where it needs to go,” he said, adding any given hotel requires years of work, financial risk and emotional drain just to get it off the ground.
Many larger, institutional operators tend to brush off these concerns because they think they know best, he said.
“There needs to be this happy medium where you’re really working with aligned interests,” Pomeranc said.
Atef Mankarios, CEO of operator Trevi Luxury Hospitality Group, reminded attendees that owners’ interest should be served above all else.
“We’re in the relationship business. We’re not just in the hotel business. If you build the proper relationship based on two parties that understand their roles—the owner understands that their responsibility is to provide the building … and the operator’s job is to provide the promises and the delivery of the promises. The relationship of operator and owner is not equal. That’s when you create the friction. The operator … is an agent of the owner working solely to realize the goals and the objectives of the investors, not their own goals and objectives.
“It’s all about the owner. … If you work for the owner, the owners’ interests are paramount, and that’s what you serve,” he said.
Service expectations rising
When asked what shifts have occurred in the independent space, Flannery recalled one of Morgans’ first hotel reviews. “If you’re the type of person who doesn’t mind waiting 90 minutes for roomservice from a fashion model,” the review read, “then we have the hotel for you.”
There was a time when being high-fashion, high-design, high-concept was a strong enough differentiator in the independent world, but today’s customers expect more, he said.
“There’s so much more competition now, in the lifestyle space in particular. … It’s making the guest demand more,” Flannery said.
Taking a somewhat different view, Cabanas said the service bar is exceptionally low. “We really don’t have to do much to wow a guest,” he said.
The travel experience is fraught with so much frustration that simply going above the bare minimum can make a huge difference, he said.
“It’s the little stuff. … It’s amazing the stories that get to us. It’s the simplest of things. It’s just paying attention. It’s opening the eyes and ears of our staff, who unfortunately if they’ve worked in poorly run hotels they’re told to do the standard,” Cabanas said.
Mankarios was quick to interject with one key reminder: “The standards are the floor, not the ceiling.”