NEW YORK — It's a dynamic time for third-party hotel operators, according to John Schultzel, chief growth officer at Olympia Hospitality.
It’s a complicated business with a lot of moving parts, and margins aren’t always what they could be, Schultzel said in a video interview at the NYU International Hospitality Investment Forum. Since the pandemic, the hotel industry has only gotten more difficult.
“There’s been pressure on margins, and I think when that happens, people really decide we need to bring as much expertise to maintaining margins and values as possible,” he said. “Third-party management companies who specialize in those elements of performance are the best resource for folks.”
High-touch operators have received a lot of attention from owners who want their management partners to be available and focused, Schultzel said. Because it's such a labor-intensive process, that means operators have to be specialists in revenue management, sales, facilities, accounting, human resources and more.
"There's been a lot of [mergers-and-acquisitions] activity as people have tried to find scale, and I think that's a delicate balance where growth is good," he said. "I'm a chief growth officer. I love growth, but at the same time, you don't want to outgrow your capacity to manage all those details that owners are looking to be managed."
Olympia has hotels in a lot of markets with colleges and universities, he said. It specifically works with schools that own their own hotels, which are self-aware enough to know running a hotel is not part of their skill set.
Olympia’s involvement with the campus hospitality space involves smaller, highly bespoke properties that the schools own, Schultzel said.
“We’ve become a bit of a specialist in smaller, boutique properties that are somewhere in the 50- to 120-room range that just require a lot of touches,” he said.
That could be food and beverage, digital marketing and messaging, or implementation of more complex distribution and revenue management strategies, he said. If a hotel isn’t relying on a franchise engine to deliver these contributions, it falls on the operator to handle that.
Many larger hotel operators have created lifestyle divisions within their management companies. That’s because travelers want those types of experiences and that’s what developers want to build, he said.
“We used to use this sort of silly pun about being a boutique management company,” he said. “What that means is we don't manage boutique hotels, but like how boutique hotels operate, we take a boutique approach to how we engage with the customer.”
Olympia has a customizable approach in which it can adapt and evolve its reporting practices and communication styles to meet hotel owners' preferences, he said. Some owners are more experience-driven and less profit-driven. Others are the opposite.
“We have to pivot to the owner's priority, as opposed to pushing out our own sort of level of focus,” he said.
Olympia initially started managing franchised hotels, focusing on distinctive select-service properties that had elevated designs and achieve a rate premium, Schultzel said. As a result, the company developed a skill set around being great franchise partners and then migrated into the boutique, independent space.
“What we have found is that by investing time and energy in both of them, they're actually rather complementary,” he said.
Bringing a boutique, independent hotel approach to franchise operations can create a higher-performing franchised hotel, he said. Using the platforms, regiment and good habits of franchise hospitality can create the necessary structure and backbone to an independent hotel.
“We try to use the lessons from both to cross-pollinate performance in each, and that's been a good model for us,” he said.
For more from Olympia Hospitality's John Schultzel, watch the video above or listen to the podcast below.