Burton Brooks, a principal in Mumford Company’s Atlanta office, has been involved in the sale of more than 100 properties representing aggregate volume approaching $177 million in 10 states, mainly in Southeastern United States markets. Speaking from the perspective of one who works almost exclusively with sellers, he shared with LODGING his thoughts on what his clients are investing in during this time of prosperity.
Brooks says this is the time for potential sellers—as all owners are—to invest in everything that touches guests. This, he says, includes employees, who he believes, will be happier—and more likely to stay—if they have more authority to make decisions. “For example, I think a front desk agent would appreciate having the ability to proactively sell and negotiate on rates to get someone to stay at the property as well as be able to upsell and handle guest concerns. Their supervisors need to work with them, and there’s always a risk they’ll make mistakes, but now’s the time we can afford it and learn from it.”
Brooks sees clients getting a great return from investing in technology that directly touches guests to maximize sales. “Right now, you need to consider everything a guest encounters. This includes the ability to text the hotel to find out if their room is ready as their plane is landing, being able to bypass the front desk to gain access to their room, and to have sufficient WiFi and outlets for a family or individual carrying a full array of devices.”
Then, too, Brooks adds, is the use of technology to get heads in beds. “You don’t want to take one single hotel room offline, because if you’ve got one available, you can sell it—for the most part—and get a good rate for it.”
For these reasons, Brooks says, having a modern technology infrastructure in place is essential. In fact, he predicts, the hotel franchisors of the world will evolve to become even more technology focused to drive more business, amenities, and back-of-the-house services to their franchisees.
“The big question faced by every investor is ‘Can this continue?’ Although there’s always a concern we have hit the top of the market, our list of prospective buyers is as extensive as it’s ever been, and we don’t see it slowing down anytime soon.”
He views the market now with optimism. “Right now, the market is nearly as good as it can get—speaking from a transaction, investment, and brokerage perspective. Our sellers are happy, but it still makes sense for buyers to acquire assets. The big question faced by every investor is ‘Can this continue?’ Although there’s always a concern we have hit the top of the market, our list of prospective buyers is as extensive as it’s ever been, and we don’t see it slowing down anytime soon. Wherever we are in the cycle, you will always have buyers with good reasons to acquire assets and sellers looking to sell assets that do not fit their investment profile.”
Still, says Brooks, sellers and buyers need to be realistic. “Right now, debt underwriters are projecting very conservative growth. No one expects dramatic rate increases, and banks are likely to laugh off—and reject financing requests—based on suggestions that they might spike anytime soon.”
As for the sellers his company represents in this hot market, he says, they, too, need to be realistic. “They need to figure out what their hotel is actually worth and understand potential buyers’ financing obstacles. They should also make sure their property looks its best. An investment in enhancing curb appeal is always money well spent.”