Posted 7/18/2008 - 7:28:45 AM
Andy Ingraham, NABHOOD President/CEO
With an uplifting theme—“Getting Stronger by Working Together”—the four-day event, which runs through Saturday, has drawn 423 attendees to network, participate in workshop sessions and to assess the opportunities for development and ownership within the lodging industry.
“I believe our theme is more important today than ever. We can do so much as a group; we can do very little as individuals. We can all be strong. We can all build hotels,” said Andy Ingraham, the association’s president/CEO, during the opening general session.
“The hotel industry continues to grow by leaps and bounds,” he added, noting minorities spend upwards of $50 billion annually in the hospitality industry. And while the number of African-American-owned hotels in the U.S. remains relatively low, within the past eight years 323 such properties have opened, pushing NABHOOD closer to its goal of having 500 properties open and operating by 2010.
Ingraham said the organization would continue to grow its strategic partnerships with management companies and brands, and its relationships with financial companies and brokers, thereby allowing members “to build not just one deal, but many deals.”
NABHOOD Chairman Michael Roberts Sr., who also is chairman/CEO of The Roberts Companies, which includes the 11-property Roberts Hotels Group, LLC, said many African-Americans who have gained a degree of wealth via sports or fast-food franchises are looking to diversify their portfolios.
“We think that the hotel industry, the hospitality space, is one that works. It’s [a hotel] basically just a glorified big house and it’s a house that our ancestors worked in. We did just about everything in this house that there is. We understand hospitality. The one thing we never did was—though we would clean, we would manage, we would work, we would cook—we just did not own. It’s time for that to change.”
Roberts Hotels Group itself acquired three hotels last year, bringing its room count to approximately 2,000.
During the general session, Henry “Hank” Thomas, NABHOOD board member and president of Victoria Hospitality Properties, Inc., which owns and operates Marriott-branded properties, said like other groups, NABHOOD members needed to learn to combine resources and “carve out our respective niches in business and we have got to learn to use those niches to create financial legacies for our families.”
General session speaker Noble Investment Group CEO Mitesh “Mit” Shah, whose father was among the pioneers of the Asian American Hotel Owners Association (AAHOA)—cited by Ingraham as a working model NABHOOD could emulate—characterized NABHOOD as an “organization committed to helping people with their dreams as entrepreneurs in a business that hasn’t been normally associated with African-Americans…This is an organization that is actually passionate about creating entrepreneurs. That’s very near and dear to so many peoples’ hearts in the hotel business because that’s kind of how this business what created—through an entrepreneurial spirit.”
Shah, however, also advised the audience to remember the hotel business is “all about how you take something that has very little cash flow and you build more cash flow.” He noted with the spectre of softening industry fundamentals and increasing interest rates “is going to create a lot of pain in our industry for those that aren’t ready to deal with that.”
Driving that home was a review of the industry’s performance in 2007 and expectations for this year and beyond presented by Mark Woodworth, president/PKF Hospitality Research, who forecast a softening in second-half 2008 before conditions pick up in first-quarter 2009, and Jan Freitag, vp/global development, Smith Travel Research, who sees ADR growth slowing but not dropping rapidly, with occupancies softening but rate holding.
Norman Jenkins, svp/North American lodging development for Marriott International put Kenneth Fearn, founder and managing partner of Los Angeles-based Integrated Capital, LLC, in the “developer’s hot seat” to give attendees greater insight into his projects, how he executes and his perspective on the current industry environment. For example, outside Washington, D.C., Fearn is near completion on a Residence Inn by Marriott as part of the National Harbor project in Prince George’s County, Maryland.
“The hardest thing is getting that first deal under your belt,” Fearn offered, noting “the market we’re in today is much different than the market we were in 12 months ago, and certainly 24 months ago. To me though, this is probably the best market and probably the best time for people looking to get into it. The last 36 months were ridiculous; everything was getting pushed up in value. So I think there’s going to be great opportunity for people looking to get into the business. The hardest thing about getting in today will be securing debt.”
Another general session, moderated by Barron Harvey, dean of the School of Business of Howard University and a also a hotel investor, paired Marlene Colucci, evp/public policy of the American Hotel and Lodging Association and Tom Baltimore, president/RLJ Development LLC and NABHOOD vice chairman.
Colucci updated the progress around issues that included H2-B visa activity, green initiatives, changes to ADA guidelines and protecting private ballot elections, the latter being “probably the most serious issue facing this industry,” she said.
Baltimore, meanwhile, painted a verbal picture for audience members of how significantly 2008 is differing against 2007 in terms of external influences on the industry and internal reactions to those changing conditions.
He said within his own company he expected the approximately $900 million sale of its first fund earlier this year to be its largest transaction for 2008
He noted “the reality is if there’s a silver lining in this whole process it’s the fact that we’re not seeing significant increases in supply. So when we come out of this recession or close to recession, we really should have pricing power pretty quickly.”
Despite the expectation of negative to flat RevPAR growth, Baltimore said he was “encouraged” by the data Woodworth and Frietag had presented earlier, which didn’t appear too negative.
“If that’s true that’s going to bode very well for all of us,” said Baltimore, adding: “I’m bullish on the sector long term. I’m glad to see that NABHOOD continues to grow.”