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MCR and BLT Joint Venture Close $647.5 Million Portfolio Financing for 53 Hotels

Lodging Magazine·13 November 2018
A joint venture of MCR and Building and Land Technology (BLT) has completed a $647.5 million financing across a 5,958-guestroom national portfolio of 53 Marriott and Hilton select-service and extended-stay hotels spanning 15 states and 31 markets. Thirty-three of the hotels are Marriott-branded, while 20 properties operate under Hilton brands. On average, the portfolio’s hotels are 12 years old and generate RevPAR of $90 and RevPAR Index of 120 percent.

Use AI to Stem the Growing Threat of Loyalty Fraud

Hospitality Technology Magazine·13 November 2018
When we think of hotel assets, we tend to think of properties. But loyalty programs are some of the most valuable assets in the hospitality industry.

What to know about opportunity zones created by recent tax reform

Hotel Management·13 November 2018
The U.S. Treasury recently released guidance about opportunity zones established under last year's Tax Cuts and Jobs Act. An opportunity zone is an economically distressed community where new investments may be eligible for preferential tax treatment, according to the Internal Revenue Service.

Hospitality Financial Leadership: What's Missing With Labor Planning Tools?

Hotel Online·12 November 2018
I’m looking for an end to end solution to labor planning and I have yet to see one that brings it all home. Let me explain what I mean.

What's Missing with Labor Planning Tools?

The Hotel Financial Coach ·12 November 2018
I'm looking for an end to end solution to labor planning and I have yet to see one that brings it all home.Let me explain what I mean. In a hotel that budgets and forecasts labor hours, productivity, and business volumes and uses a labor planning tool to generate schedules, we need an end to end tool or set of tools that ties everything to do with labor together. Budgets, Forecasts, Schedules and Variance Analysis all need to be geared to the same measure.So now that you're confused, let me paint you a picture. For me to paint this for you it's imperative that you use productivity measurements in all your financial reporting - hours per room occupied and hours per customer served in F&B. If you don't use these in your budgets, forecasts and actual financial reporting - you should. If you don't, I'm sorry to say that the rest of this article will probably be of no use to you. If you use labor as a percentage of revenue or as a cost per room occupied that's OK, but not nearly as effective as hours per.Here is the scenario. You're in the last throes of budget 2019. You have all your numbers together and you are proud to say that the rooms and F&B labor productivity budgeted next year are better than the 2018 re-forecast. You made sure of it and your year-over-year statements prove it. Well done. You have taken the approach that you will run your hotel more efficiently next year than this year. After all that's what you get paid to do, right? Who would put forward a budget that says to the owners, "By the way my plan is to have the hotel operate less effectively next year wasting resources and consuming more costs." You're just not going to be the one who makes that kind of fatal move.Now let's imagine it's January and the budget is approved. You need to move into the new year with the business plan for 2019 in hand. With labor, you turn the ideas that are in your budget into reality with your Operation Managers. They need to put into action the ideas you conceived in the budget to achieve the increased efficiencies. This is where the rubber meets the road. You have a quick look at the month of January and you see the budgeted productivity for rooms is 1.255 hours per room occupied. Last January the productivity was 1.291. You have some work to do.Let's move from 10,000 feet down to the ground. In your hotel, you have a labor planning tool. Your departments use it to generate their schedules and they measure their schedule to the labor standards. Here is where it all falls apart. This is the missing piece and the missing link to your budget. The labor standards are essential to produce the schedules, but they must also produce an overall productivity by the same key areas we track on the financials. The labor planning tool must be programmed to spit out the scheduled productivity and analyze the actual vs. the scheduled and the budget/forecast. End to end we must always be using productivity. I have said this before and I'll say it again, "We need to be fascinated with productivity!" If we were making cars it would be hours per car; in the hotel business, we're focused on rooms, F&B, and non-operating department productivity.I am sure someone out there has put this all together in their financial modeling system and it also seamlessly feeds their labor planning tool. I would love to see your system in action. If you're not 100% sure about what I am referencing, that's OK. Call me and I can explain further.In my past life, I worked with a great financial modeling tool and a "so-so" labor planning tool. The stewards of the labor planning tool could not, or would not, see the value of having the productivity as another measure in their system. They were firmly stuck on the labor productivity standard, which ultimately meant nothing because the standard changed frequently. All that was missing was a simple additional measure which would have divided the hours worked by the anticipated and actual volume of business and voila, it would have been magic! What we ended up doing to work around this was to dump the data from the labor tool into Microsoft Excel, analyze it and see if the schedules were producing equal or better labor productivity by area, department, and division. We messed around a lot with this and very often the labor standards were producing less. This is ultimately where the labor tool sucked wind.Build productivity into each part of your reporting, planning and scheduling processes. Always be measuring productivity. Always challenge your department managers to find ways to improve productivity. Show them how the simple measurement works and have them find ways to make it better. The hotel business is a game of inches. Every day we sell hundreds of rooms and we service hundreds if not thousands of F&B customers. To do this we expend thousands of hours of labor. It all boils down to the volume of business and the hours worked and how can we get just a little better tomorrow.This article is dedicated to Dan Araujo, who analyzed all that data not so long ago. He was taken from us way to early!

Market Snapshot: Asia Pacific 2018 | By Hok Yean Chee

HVS ·12 November 2018
Geographically, the pick up in transaction activity can be attributed to the North Asia and South-East Asia markets, while Australia markets witnessed a slowdown. Reasons for the increase in transaction activity could plausibly be attributed to the increase in investment opportunities, potential for growth in developing markets, buyers willingness to meet seller's demands, amongst others.Frequency and Volume of Hotel Transaction VolumeOver the period from 4Q2017 to 3Q2018, South Korea leads in number of hotel transactions with 65 transacted properties, 45 more than the previous four quarters. The increase comes despite weakening hotel market performance, indicating that investors' sentiment in the market remains optimistic. Markets across South-East Asia (including Maldives) recorded 27 transactions from 4Q2017 to 3Q2018, almost double the 16 recorded in the previous four quarters. With the exception of Philippines and Vietnam, all South-East Asia markets recorded more transactions in the last four quarters.Article by Hok Yean CHEE , Ho Mei Leng , Jeremy Teo, Larissa Lam, Fan Yang, Kok Xin, Hemant Chawla, Stacey Zhu ,Chloe Pang, Deborah RollandSee full article

Video: VisitDallas President and CEO on How Destinations Are Fighting Against Discriminatory Legislation

mycloud HOSPITALITY·12 November 2018
Phillip Jones, president and CEO of VisitDallas, joined Greg Oates, SkiftX's editor-at-large, at Skift Global Forum 2018 to discuss the value in banding together with fellow organizations and stakeholders to fight discriminatory legislation.

How the Facebook Data Breach Could Affect Online Fraud

mycloud HOSPITALITY·12 November 2018
Facebook recently announced that a previously unnoticed vulnerability in their site code has led to a hack of nearly 30 million accounts: Hackers were able to steal users’ access tokens, allowing them to stay logged onto the platform for months at a time.

Perkins Coie negotiates $57M financing for Atlanta Marriott

mycloud HOSPITALITY· 9 November 2018
Perkins Coie represented Integrated Capital, a private real estate advisory and investment firm, in the negotiation of a $57 million refinancing loan for the Atlanta Marriott Perimeter Center hotel.

Preparation is the Key to Risk Management

mycloud HOSPITALITY· 9 November 2018
Risk management is a dedicated preparedness rather than simply a mental exercise, according to Lisa Sommer Devlin, the most recent Smart Meetings webinar host. In her talk, “Risk Management 101,” she outlined strategies for dealing with the risks of the industry, as well as how to actively avoid them.

Franchise Companies and Brands Dominating the U.S. Construction Pipeline

Lodging Econometrics · 9 November 2018
According to the third quarter report by analysts at Lodging Econometrics (LE), the franchise companies dominating the U.S. construction pipeline with the largest pipelines are Marriott International with 1,380 projects/181,907 rooms, Hilton Worldwide with 1,350 projects/150,698 rooms, and InterContinental Hotels Group (IHG) with 939 projects/95,312 rooms. The construction pipelines for these three franchise companies comprise an impressive 68% of the total construction pipeline projects with Marriott and Hilton again setting all-time highs for their companies. The leading brands by project count in the construction pipeline for each of these three companies are IHG's Holiday Inn Express with 422 projects/39,667 rooms, Hilton's Home2 Suites by Hilton with 401 projects/41,958 rooms, and Marriott's Fairfield Inn with 284 projects/27,678 rooms. These three mid-market brands are so dominant that they alone account for 21% of the projects in the total construction pipeline. Other significant brands in the pipeline for each of these franchises are: Hilton's Tru by Hilton with 302 projects/29,245 rooms and Hampton Inn and Suites with 300 projects/31,013 rooms; Marriott's TownePlace Suites with 207 projects/21,525 rooms and Residence Inn with 204 projects/25,014 rooms; and IHG's Staybridge Suites with 147 projects/15,427 rooms and Avid Hotel with 142 projects/13,160 rooms.

Annual Fraud Attack Index· 9 November 2018
Fraud attack rates overall, have increased by 13% since the beginning of 2017, coupon abuse in Q1 of 2018 increased 217% from the last quarter and account Takeovers increased by 31% YOY in Q3 of 2017.

Napali Capital Announces Formation Of Napali Hospitality Group

Napali Hospitality Group · 8 November 2018
Napali Capital, LLC, today announced the formation of Napali Hospitality Group, the first addition to the Napali Capital family of companies. Napali Hospitality Group will focus on the acquisition of hospitality assets with the goal of achieving the highest level of employee and guest service and profitable returns for Napali Capital investors and stakeholders.Tim Black, Co-founder and Managing Partner of Napali Capital, will lead Napali Hospitality Group alongside his brother and Napali Capital Co-founder and Managing Partner Thomas Black, M.D. Tim Black's experience in hospitality management and operations, maximizing revenue, implementing new revenue streams, and cost control were fundamental in forming Napali Hospitality Group. As a 32-year veteran of the hospitality and entertainment industry, he spent the last 13 years of his career at Great Wolf Resorts before retiring as Chief Operating Officer of the company. Black also worked for Six Flags Entertainment where he served as park President for Hurricane Harbor, Wild Animal Safari, and Six Flags Great Adventure, the company's largest and most profitable asset.Tim Black and Thomas Black are joined by former Great Wolf Resorts Chief Executive Officer Kimberly Schaefer who brings more than 25 years in hospitality industry finance, leadership, and executive oversight to the company. Schaefer, who was instrumental in orchestrating Great Wolf Resort's public offering in 2005 as we as well as in its sale to private equity, first in 2013 and again in 2015, also personally has owned numerous hotels. Her portfolio included many nationally recognized brands including Holiday Inn Express, Holiday Inn Hotel & Suites, Hampton Inn & Suites, Country Inn & Suites, Fairfield Inn & Suites, Crowne Plaza (now Holiday Inn & Suites), Microtel Inn, and Clarion Suites."It's exciting to be able to bring together my accumulated experience to form Napali Hospitality Group," said Black. "With our team's knowledge, experience, and resources combined with the momentum in hospitality profitability, we were presented with the perfect opportunity to move forward with this business plan.""I'm really looking forward to partnering with Tim on this new venture," said Schaefer. "Our combined tenure and passion for this industry along with Tom's financial insight makes for a promising and profitable future for Napali Hospitality Group and its investors."In addition to verifying each investment meets strict criteria, Napali Hospitality Group leadership also consults an Advisory Board, of which Schaefer is a member along with Bill Simpson and Rilous Carter. The Advisory Board provides expertise through their extensive careers as management and operations leaders in major, nationally and internationally recognized hospitality brands to consult with Napali Hospitality Group on investments.Simpson is an experienced executive with 40 years of experience in the hospitality and entertainment industries. Most recently, he worked with Hershey Entertainment and Resorts Company for 21 years, serving as its Chief Executive Officer from 2013 until his retirement in 2017, during which time, he and his team achieved record financial results, increasing revenue by 20 percent and EBITDA by 46 percent. Simpson's reputation for strong organization development that focuses on company culture, team building, training and development, and succession planning is recognized throughout the industry.Carter is a forty-five-year veteran of the hospitality industry. His early industry career includes leadership and management roles at Hyatt Hotels and Resorts Stouffer Hotels and Resorts, now Renaissance Hotels & Resorts. In 1997, Rilous joined Walt Disney World Resort where he served in numerous management and critical team roles at numerous Disney World Resorts and Disney's portfolio of exclusive Vacation Club offerings. Before his retirement in 2016, Carter was Vice President of Disney's Hollywood Studios theme park, Epcot and then of Catering, Convention Services, and Park Event Operations for all Walt Disney Parks and Resorts."Coming from an industry of service, I'm thrilled to be able to continue serving through Napali Hospitality Group," said Carter.Simpson said he was "honored to have been included as part of the Advisory Board and am looking forward to being a part of the growth of this company."Napali Hospitality Group's first acquisition, the Holiday Inn DFW Airport Area West, will be offered to investors next week. The asset is a five-story, mid-rise, full-service hotel located eight minutes from DFW Airport, and is centrally located between Dallas and Fort Worth.

Motel 6 to pay $7.6M for providing guest information to ICE

Hotel Management· 8 November 2018
Reputation and trust are worth their weight in gold, and Motel 6 is taking its first steps toward reclaiming traveler confidence after mishandling guests’ information. Following a class-action lawsuit, Motel 6 has agreed to pay up to $7.6 million to Latino guests who say employees shared their private information with immigration agents in 2017, and further legal action is on the horizon.

Take Charge of Your Hotel Budget Process: Identify Your Trends

mycloud HOSPITALITY· 8 November 2018
Amid the flurry of November’s falling leaves, the avalanche of activity surrounding your 2019 budget preparation is most likely in full force. New technologies and digital innovations continue to disrupt the hotel industry, and savvy hoteliers are turning to advanced solutions to help them better navigate the budgeting process. The right technology streamlines and improves many budget-related activities, particularly when it comes to identifying trends. Understanding your performance over time helps you build a solid foundation for your budget plan.

U.S. News & World Report - Best Law Firms(r) Recognizes JMBM as 2019 "Best Law Firm"

Hotel Online· 8 November 2018
A hotel lawyer brings together numerous legal disciplines, depending on the hospitality project. That’s why the Global Hospitality Group® is part of a full-service law firm. My partners at Jeffer Mangels Butler & Mitchell LLP (JMBM) provide first-rate services to our hospitality clients and I am pleased that their efforts were recognized today in U.S. News & World Report’s list of Best Law Firms.

Hotel FF&E Tariffs

mycloud HOSPITALITY· 8 November 2018
In my last newsletter, I explained the pros and cons of modular elevators. Today I want to address a rising concern in the industry—U.S. tariffs on furniture, fixtures, and equipment (FF&E) used in hotels.

New Global Directors Join the 2018-2019 HFTP Board

8 November 2018
The HFTP 2018-2019 Global Board of Directors was installed during the association's 2018 Annual Convention and introduces new directors Toni Bau, Carson Booth, CHTP and Mark Fancourt. These extensive director profiles give insight into the distinguished professions and personal goals of HFTP's newest association leaders. By Briana Gilmore

3 Ways to Simplify Your Hotel Digital Asset Management

mycloud HOSPITALITY· 8 November 2018
As digital assets in the form of documents and rich media such as images and video continue to grow, the resources and people needed to maintain these assets grows larger by the day. Adopting a Digital Asset Management solution can drastically improve efficiency and help free up resources needed in other parts of your hotel’s infrastructure.

VENZA Appoints Josh Bergen as President

VENZA · 7 November 2018
As part of 2018's wave of growth and development, and to support its overarching drive for excellence, VENZA recognized the need to bring on an additional layer of leadership. This week, VENZA announced the appointment of Josh Bergen, CHAE, CHTP, to the position of President. Jeff Venza, formerly President & CEO, will remain with VENZA as CEO and Chairman of the Board.The move to President will leverage Bergen's hospitality background, leadership skills and financial expertise and help to position VENZA at the forefront of data protection in the hospitality industry. Jeff's focus will now be on the creation of the VENZA Board of Directors and the securing of additional strategic business partners to continue growing the business.Josh has been employed with VENZA for just over a year, and in that time, moved from VP of Marketing to Corporate Controller to the new role as President. What has been behind this quick rise through the VENZA ranks? A resume that reads like a who's who in the hospitality industry, for starters, with Josh having held several executive roles since 2006. In his esteemed career, he's also held many different positions within the hospitality industry--from operations and finance/accounting to SaaS-based sales. Hailing from Florida and having graduated from the University of Central Florida with a Bachelor of Science in hospitality management and accounting, as well as a Master of Science in Hospitality Management, his academic prowess is perfectly aligned with VENZA's goals and strategic vision. And for those who have attended the annual HITEC conventions, his street cred is legendary, having danced onstage with Wyclef Jean and Flo Rida at successive events. Bergen's diverse hospitality background, team-building skills and exceptional leadership style have been an asset to VENZA thus far and will now be fully utilized within his role as President."As President, Josh will provide leadership to position the company at the forefront of data protection within the hospitality industry, as well as develop a strategic plan to advance the company's revenue, profitability and growth. This will all be accomplished while maintaining our company's mission to guide good people to do great things," says Jeff. "He will work in conjunction with Diona Reeves, our COO, to ensure production efficiency, quality, customer service and cost-effective management of our resources."VENZA's focus will not change with this new parsing of corporate duties, "The success of our customers is the lifeblood of our company, everyone should be doing their part to protect sensitive data in this age of identity theft, using our training hotel staff are able to protect guest data on a daily basis just as the VENZA staff focusses on solving real-world data protection/compliance challenges for our hospitality clients." said Josh Bergen, President.

Three ways hotels can mitigate financial challenges·Requires Registration · 7 November 2018
In today’s hospitality landscape, managing hotel financials is more daunting than ever.

Capital Gains Hotel Equities, Virtua Partners team up on $500M investment·Requires Registration · 7 November 2018
Building out a holistic hospitality platform is what many companies have been trying to do. Some companies in the market are able to carve out a portion of the management market, while others bite at the development side of the industry. Hotel Equities had both, and the only thing it was missing was capital—so it found a partner.

RLJ lowers outlook due to hurricane, asset sales Featured Articles· 7 November 2018
As a result of impact from Hurricane Florence on its Myrtle Beach and Charleston markets, and other factors such as asset sales, RLJ Lodging Trust lowered its outlook for full-year 2018.

Belmond Sees Slight Takeover Bounce in Third Quarter - Hotels· 7 November 2018
Now it's just a wait-and-see approach to see who will snap up Belmond's treasure trove of luxury assets.

Hotels take hit in rash of severe storms across Europe Featured Articles· 7 November 2018
It‘s not just the Pacific Rim, the U.S. and Gulf of Mexico that are seeing an increase in bad weather lately. Europe, too, has experienced recent storms, which have caused the deaths of 29 people and noticeable, if temporary, damage to hotels.

How Involved are Hotel Owners in Property-Level Decisions?

EHL · 7 November 2018
Hotel owners increasingly contract hotel management companies to operate their properties. While extensive research has examined management agreements to determine the balance of power between owners and management companies, little research has investigated the actual role that hotel owners play in property-level decision making. This is perplexing because management companies generally insist that hotel management agreements (HMAs) specifically stipulate that the owner should not seek to influence the hotel's general manager (GM). In other words, in exchange for their services, management companies have generally required owners to relinquish involvement in the hotel's day-to-day business. However, hotel owners are increasingly sophisticated and institutional, suggesting they may not be content to remain uninvolved as individual or single-property owners had previously done.Management companies generally do not want owners to interfere. They tend to strive for complete managerial control because hotel operations are their area of expertise and the reason they have been hired. Their motivation for full autonomy may also be due to the fact they do not want the incentive fee bonuses on which their profits largely depend to be potentially hampered by owner interference.Owners, meanwhile, worry that management companies are not always incentivized to make decisions that are in the owners' best interests, and so they have a vested interest in monitoring and controlling the GM's decisions. Furthermore, as owners carry most of the financial risk, they argue they should be permitted a substantial role in influencing the hotel's management, even - or especially - when engaging a management company's services. Thus, while owner involvement is technically restricted in most HMAs, what owners are supposed to do and what they actually do may be quite different.Given the increase in multi-unit and institutional owners, many of whom have operational expertise and engage the services of asset managers, we investigated the actual role that hotel owners play in the operating and financial decisions of their hotels. Similarly, we were motivated to study this by the idea that even if HMAs do restrict owner involvement, management companies may be turning a blind eye to appease the owners on whom they are increasingly dependent due to their own asset-light strategies.We surveyed hotel general managers as they are the nexus between the management companies and the owners, and are best positioned to report on the owner's involvement. We received 499 responses with two-thirds of the general managers operating hotels under management agreements and the other third responsible for independent properties. While some of what we found confirmed our hypotheses, we were also surprised and intrigued by much of what the data revealed.The general managers from both independent and managed hotels acknowledged that their owners influence financial decisions to a greater extent than operational ones. While this was what we expected based on conventional wisdom, we were surprised to learn the actual extent of owner involvement. The results revealed that owners involve themselves in HMA hotels to essentially the same degree in independent hotels, with 50 percent of GMs noting that such owners have a moderate to strong influence on the hotel's financial and operational decisions. In other words, the HMA does not seem to reduce an owner's role compared to that of the independent hotels, which do not have contractual restrictions on their involvement. The general managers also reported greater autonomy in hotels that were not overseen by an asset manager.What does all this mean for owners, management companies and general managers? Some owners of managed hotels we later spoke to were surprised to see how involved many of their peers were and took this as a sign that they too could, and maybe should, become more involved in property-level decisions. Similarly, they may seek to renegotiate this involvement clause should they fail to increase their participation due to the strict enforcement of the current contractual terms.Furthermore, the results suggest that asset managers do provide owners with a greater degree of oversight and involvement in their hotels across both operational and financial issues, thereby confirming what asset managers often tout as one of the advantages of hiring them.The results raise an important question about the fundamental objective of entering an HMA. These contracts are supposed to enable owners to adopt a hands-off approach to the daily operation of their hotel, because the management company has been appointed to do so based on their managerial know-how. This, in theory, allows HMA owners to focus on the real estate side of the business.The HMA is supposed to align both parties' interests through, for example, incentive fee clauses that reward operators based on the hotel's performance. However, given the relatively high degree of owner involvement in such hotels, we wonder whether HMAs are in fact aligning owner and management company interests as far as possible. That is, are owners seeking greater involvement because in fact they are displeased with the operator's performance or objectives? According to CBRE Hotels Americas Research's Trends in the Hotel Industry, only 18.1 percent of hotels actually paid an incentive fee in 2015. While this may be due to onerous contracts requiring difficult-to-achieve performance targets, owners may also interpret it to suggest that the two sides' objectives are not as well-aligned as they want or need them to be. Our findings suggest that owners might well come to the HMA negotiation table better equipped to seek greater involvement rights if they believe their involvement can help the hotel to perform better. Given the sophistication of many owners, and their own internal management expertise and resources (including those of their asset managers), this may be a positive development in the important owner-operator relationship.This is the first article in a three-part series about the evolving relationships and roles of hotel owners, management companies and their general managers. In our next article in this series, we explore how hotel owners and operators can better align their objectives to benefit both parties.Note. This article is based on the following research paper:Hodari, D., Turner, M.J., Sturman, M.C., and Nath, D (2018). The role of hotel owners across different management and agency structures. International Journal of Hospitality and Tourism Administration. Access full paper here


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