During its Women Ownership Works (WOW) Summit, held at the Courtyard/Residence Inn Manhattan Central Park on Oct. 2, Marriott International announced plans to have 1,000 diverse- and women-owned hotels in its global portfolio by 2020. Of Marriott’s 4,000-plus properties, there are currently 660 diversely owned hotels. Another 433 are in the development pipeline, including 130 scheduled to open by year-end 2015.
The WOW Summit brought together a small group of current women hotel owners with women exploring hotel development as part of their investment approach. Julius Robinson, vice president for the Autograph Collection, said Marriott wanted to offer a targeted, intimate experience that would start the initial conversation about ownership opportunities. People who demonstrate a serious interest in hotel ownership are then invited to participate in an intense two-day summit for networking and education at Marriott headquarters in Bethesda, Md.
“We hope today spurs the initial cerebral thought process,” said Eric Jacobs, Marriott’s chief development officer for select service and extended stay, during the event. “There are a lot of different moving parts, and you can’t pick it all up in a half an afternoon.”
Liam Brown, president of select-service and extended-stay lodging and owner and franchise services, emphasized Marriott’s commitment to its owners and franchisees. “We do want each and every one of you to succeed. It’s important to us, and the system is dependent upon everybody doing well,” he said. Brown also asked attendees for feedback to help the company grow its forum and build diversity ownership within the system. “We already have a lot of diverse ownership, but we do need more.”
The event included a tour of the Courtyard/Residence Inn Manhattan Central Park, as well as an ownership discussion that featured Marriot executives and brand partners. Corry Oakes, CEO and founder of OTO Development, encouraged prospective owners to ask a lot of questions. “This is a big investment. Whether you’re looking at a $10 million hotel or $100 million hotel, it’s a significant investment, and it’s a daily business,” Oakes said. “When you think about all the real estate classes, normally people are signing a long-term lease, and your customer in this business signs a one-day lease. So it’s a management-intensive business. It’s like a garden, and the greatest fertilizer is that owner’s footprints.”
Marriott’s select-service and extended-stay brands—Courtyard, Fairfield Inn & Suites, Residence Inn, SpringHill Suites, and TownePlace Suites—are fueling its diverse owner segment. These brands are ideal for new owners because of the lower threshold for entry. For a basic deal in this asset class, owners typically would need approximately 30 percent equity and 70 percent debt to get a project off the ground. Mark Lapport, president and CEO of Concord Hospitality, suggested new investors reach out to friends and family to cobble together their equity. “Unless you have deep pockets on your own, we are in a friends and family business,” he said.
Evette Gradney, principal at BDK Associates, is among Marriott’s diverse owners. BDK, an eight-member ownership group that includes three of Gradney’s brothers, opened its first hotel, a SpringHill Suites, in 2011. The Lake Charles, La., property ramped up in six weeks and continues to be successful.
Gradney is one of 14 children born and raised in Lake Charles. When her brother, John Biagas, decided to invest in his community by building a hotel, Gradney, a former telecommunications professional, came on board to research flags, available incentives, and management companies. Marriott’s Diverse Ownership Initiative, launched in 2005, helped the family get their foot in the door. (The initiative provides access, education, and guidance throughout the hotel development process.) John’s company, Bay Electric, was the general contractor for the SpringHill Suites project and also fills this role for BDK’s next project, a Residence Inn that will open next door in 2015.
As a team, BDK’s members were financially strong, so they had no issues getting financing in 2008 and 2009 and secured favorable terms, Gradney explained. “There is a trust factor with a partnership that is very key to your success,” she added. “I am blessed to be in partnership with three of my siblings, and the other four partners are close friends of my brother John.”
With strong hotel industry fundamentals, including a forecast of 6 to 7 percent RevPAR growth in 2015, Lapport said it’s a good time to invest. “We are in a frothy time in our business. Had we all been sitting here in early 2009, I would say, go home for another year. Now, we’re in a very good spot. If you’ve thought this could be a business you’d invest in, it’s the best time I’ve seen for a long time.”