TOURISM, ARTS & CULTURE INTERVIEW
Outperforming Decison to stay open during the pandemic proves a right choice
Scott Webb President – Kolter Hospitality How did the company react to the pandemic and what were the results? Kolter Hospitality develops, acquires, and manages its own hotels. We have also launched a third-party management company offering our services to hotel operators looking for an operating partner that shares its vision of customer service and performance. We are proud to say, in the post-COVID-19 environment, our portfolio has outperformed competitive hotel sets. When the pandemic first hit, we had to evaluate closing versus staying open. When we did the math it was clear: by staying open, even in our full-service operations, what cash flow we did get went to offset our fixed-cost expenses so it made economic sense to keep our hotels open and operating. The second consideration was what would it take to ramp back up if we closed. Our calculations indicated it would take four to six weeks to get people rehired and trained and we would miss some big swings in occupancy by then. This proved to be true when the state of Florida started to lift restrictions and there was a pent-up demand for normalcy and locals started booking rooms. Another critical factor was keeping as many of our employees as we could during this pandemic. The decision to open appears to have been the right choice for us. What opportunities have you identified in the hotel sector throughout this economic cycle? The reality is not much is trading right now. Year over year transactions are down substantially in the hospitality world. The challenge is determining what is the real value of an asset post COVID-19. It really depends on how long you anticipate this economic impact will last and how long it will take to get back to 2019 performance numbers. There is a large spread in the bid-ask for any asset right now. The second challenge is there really is not any debt available for new hospitality deals.
What is your outlook for the rest of the year and when do you anticipate a return in travel? For us to return to a more normal booking pattern, first we need air travel to return to normal levels. Right now, air travel is about 15% of normal. Once this opens up, we will see normal transient travel return as there is a real pent-up demand for vacations. Business travel will then start to return as business relationships are personal and people need to get out to see their clients and network to expand their businesses. Next will be group business like corporate meetings, weddings, and finally, convention business. This will be the slowest part of the guest mix to return and we will not see this happening until there really is no need for social distancing. www.capitalanalyticsassociates.com
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