May 2018 Digital Issue

maybe even from a lending
and a broker perspective
— is where are you going
to get the best return on
investment? [And that’s
by] plugging into a really
strong distribution system.
Independents plug into
certain distribution systems,
but they’re very costly. The
rates they pay for OTA,
commissions, or some of the
other affiliations are very
costly and may not have the
depth and the reach of a
strong brand.
RM: I always look at what
may be left on the table
relative to tapping into a
base of higher-value customers.
You might be running
a $220 RevPAR now as an
independent, [but] could be
north of $300 if you were
working within a system,
in some cases. So, it’s a
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mitigate your downside in
a down market by helping
control costs and bringing
the right customers to your
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end, how do we bring in the
really high-value travellers
to help your top line?
IR: The roots of our value
proposition are based on
looking at branded product
and we rely heavily on the
brands to ensure certain
standards in operations are
being maintained in the
properties. That’s one of
the large benefits of brands.
We’ll also consider some
unbranded opportunities,
but very focused with
tier one — our number-1
borrowers and sponsors that
have a lot of experience in
the space.
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BS: It depends on the brand,
the performance of the
property and the term of
either the franchise or the
management agreement.
But, overall, our experience
is that branded properties
perform better than the
market, [so] there might
be more income. If they’re
making more income,
they’re worth more. Having
a viable branding option
is almost everybody’s go-to
move. Very rarely have we
seen an asset de-branded
and made independent.
MM: [Soft brands have]
been a real developmentgrowth
vehicle for us. What
we’re looking for is not a
nice hotel, but one that
has a story, so the hotel
becomes the brand in and
of itself. From a development
perspective, that is
important for us and makes
that hotel successful. It
draws people there who are
looking for an experience
— that special getaway.
RC: What segments are
doing well in today’s
marketplace?
RM: We’ve had strong group
business in Canada in our
upper-upscale hotels. We
do have a strong luxury
footprint in Canada and
we’ve been very happy with
how they’ve been performing.
We’ve been at the
extended-stay business for
some time in Canada and
those products continue
to drive incredibly strong
ADRs. It's consistent with
some of our upper-upscale
brands — combined with
strong occupancy and a
favourable business model;
our extended-stay brands
have had a banner couple of
years with top-line performance
and their obvious
bottom-line performance
pulling through.
KG: Dollar for dollar, selectservice
brands provide the
best economics from an
ROI perspective. I would
put extended-stay [hotels]
in that as well. They drive
better economics — you
can buy them less expensively.
On a per-room basis,
it costs less to renovate
and you get better, middleof-the-PNL
performance.
Who’s building full-service
hotels, unless you’re in a
downtown market? The
bulk of the new development
is in that selectservice,
extended-stay kind
of product.
MM: Last year, we opened
12 hotels across the country
and half were full-service,
which was a bit of an
anomaly for us. The two
Vancouver properties were
new builds — part of a
larger, mixed-use development
and that’s how you get
the economics to work.
RC: Is your company
involved in many conversions?
KG: We’ve got 19 conversions
on the go, [including]
three dual brands. We like
to find hotels in suburban
markets that are tired [or]
don’t fit the current brand
and bring them back to life.
A lot of those are conversion
brands or dual brands.
ST: We’ve done three
conversions — a Radisson
(a soft brand called Hollis),
DoubleTree by Hilton and
an airport Travelodge to
DoubleTree. [In] the last
three or four years, a lot of
investors couldn’t spend the
14 MAY 2018 HOTELIER hoteliermagazine.com