All signs at the Americas Lodging Investment Summit (ALIS), held in Los Angeles, Calif., pointed to another positive year for the hotel industry as RevPAR and ADRs continue to grow and hoteliers start to see pricing power return. Development opportunities are also starting to pick up steam. Just ask Concord Hospitality CEO Mark Laport, who believes that 2014 will be a big year for building. The Raleigh, N.C.-based management and development company expects to hit a total development spend of $1 billion by the end of 2014.
Lodging: You’re on track to have $1 billion of development money in the ground in 2014. Can you tell me a little bit about that milestone and your strategy for success?
Mark Laport: It’s really been kind of the natural growth cycle of our company. We’ve been attractive to many types of investors over the years—from institutional investors to private investors. That has given us the ability to drive big capital stacks with big-time equity players. Having that long-term experience has signified success.
Lodging: What properties that we can expect to see from Concord this year—both opening and under construction?
Laport: We’re going to open a Cambria in downtown Washington, D.C., next to the convention center in May. It’s a great location in a mixed-use development in a market that we’ve never penetrated before. We have two hotels under construction in Manhattan, and a third one that will begin construction in October and open as an AC Hotel. It will be the first AC Hotel in Manhattan. In Jersey City, we are have a 250-room Hyatt House under construction. It’s right along the river and a very exciting market.
Lodging: We’ve been hearing a lot of buzz surrounding AC Hotels by Marriott. What attracted you to that that brand?
Laport: We have a history with Marriot. We have 65 hotels that we operate under Marriott agreements and have developed every brand except Towneplace Suites. We’re seeing and really believing that there is this shift towards millennial travelers. They look for something that is a little edgier, a little cooler. They really enjoy experiential stays. Frankly, I believe AC Hotels will be a power brand, especially in cities like New York.
Lodging: With all of the development activity happening with your company right now, is it safe to say that you feel confident about the next few years?
Laport: We have the most active pipeline for development in our 28-year history. The pendulum has swung to a lot more development. It’s a great time to put deals together. Term sheets from a credit standpoint are very compelling and hopefully interest rates stay low because that keeps our underwriting going. We feel very bullish about doing new upscale, select-service hotels. We’ll continue to look at locations near major universities and medical centers—not only across the top 25 markets, but anywhere we can underwrite a project.
Lodging: With all of the new development starting to happen, do you believe we could see a supply problem in the next few years? Are there certain markets that are already seeing that shift?
Laport: There are certainly markets already that are seeing that supply-demand shift. We were going to build a hotel in downtown Cleveland. It hasn’t been a very deep market for years, but there is a Westin, a Hilton convention center hotel, and an Aloft that just opened; a Drury Inn that’s under construction; a Kimpton that’s under construction; and an Autograph that is coming. We counted a 58 percent increase in supply in that market. Nashville is another great market—it’s doing terrific, but there are a lot of hotels there. We’re seeing a lot of other developers coming out of the woodwork. There is a lot of competition and it’s becoming much easier in this environment for those with not a lot of experience to start doing what we do.