TAMPA, FL—For J.B. McKibbon, hospitality is in his DNA. The family business, McKibbon Hospitality, bears his last name. Serving as asset manager for the McKibbon Family Investment Fund, he is the fourth-generation McKibbon to work for the company, and serves under his father, John, chairman of the management firm.
Despite interest in the FBI and the military growing up, McKibbon knew his career would end up being in hospitality. “I was always sort of dragged through the hotel business growing up,” he said. “My dad is obviously extremely involved in it, and it was really something I grew into over time.”
Naturally, his father has been a lifelong mentor. When asked if there was one thing that he has learned from his dad, J.B. McKibbon told the story of a visit to the Avion Park development, which is currently home to four hotels and his company’s headquarters.
“My dad’s been sort of a visionary and really been able to step back and see opportunities where others have not,” he said. “Some of that is an art and some of that is a science, and the science piece is something you can learn in textbooks. The art piece is something you can’t, and I’ve tried to spend so much of my time while he is still working to pick as much of that knowledge out of his head.”
He continued, “I remember walking the Avion Park site with my dad. I’m now doing my first round of hotel development for its fifth hotel, but there was nothing there back then. It was a dirty site, and it was owned because it was near the airport. It was zoned for lower heights, but my dad knew that the airports nearby had larger structures. So he studied it, then talked it through with the airport authority, and he was able to get the property zoned and permitted to do much greater heights and density. Now they can do six-, seven- and even eight-story buildings, and it’s become this gem property that no one else had looked at. It’s that type of out-of-the-box thinking that I want to master.”
McKibbon sat down with Hotel Business for a discussion on obstacles and trends facing the hotel industry. The first one, which has taken over a majority of the news cycle, is the coronavirus. (EDITOR’S NOTE: The conversation took place the first week of March, before the travel ban and the virus spread throughout the U.S., forcing postponement of meetings and conferences, and temporary closures of some hotels.)
“The most immediate obstacle that’s probably on every hotelier’s mind is the coronavirus, and I don’t think anyone has a crystal ball on that,” he said. “I don’t think there’s a solution to that other than just time. I personally think it’s going to be similar to the flu. It’s going to kill some people and, hopefully, we’ll have something that can curb the symptoms heavily and/or potentially be preventative like the flu vaccines we have today. In the near term, that could be a major disruptor that we see through the end of this year and into next year as well.”
Another obstacle McKibbon pointed out is the fact that supply has outpaced demand, which has weakened occupancy growth.
“Prior to the coronavirus, the industry had a record run in terms of growth, basically my whole career as a professional,” he added. “Ten years of just solid single-digit RevPAR growth across the country, and that is slowing. Supply is really outstripping demand, and that’s already happening in several markets. We’re not going to see any more occupancy growth. The only avenue for continued RevPAR growth is through rate and, in many cases, that RevPAR growth is not exceeding inflation. There’s still a good bit of supply In the pipeline, and these things are always on a lag. Even if building slows down now, it will take several more years before the full impact of that heavy new supply is fully on board and can start to be absorbed. We’ve had some benefits in terms of interest rates, with the Fed cutting rates and that’s helped owners maintain margins for now. But I do see it moving into a scenario where, assuming wages continue to increase and unemployment remains low, the underlying assets are just going to become less valuable due to the fundamentals.”
He sees his company weathering any downturn because “our goal has been, and continues to be, build the best possible brand and product in the best possible locations.”
“The people that are going to really hurt in a strong economic down cycle are those that build products that are not that great in areas that are not demand drivers,” he noted. “There’s enough excess demand to go around that they still do well, but when things start to go poorly, those will be the first operators to experience major issues as demand starts to taper off.”
The asset manager sees as a major trend the fact that Generation Z travelers book hotels seeking experiences rather than just a clean bed and a place to shower.
“This younger generation of travelers is putting less emphasis on purchasing things and more emphasis on purchasing experiences,” he said. “It’s a great place for us hoteliers. People want to travel to places and see things and, therefore, they book more hotel room nights stays.
“My dad’s generation went from basically crappy roadside motels where there was no quality to clean hotels with decent service that they could count on wherever they traveled. That was kind of the advent of branded product coming out with consistent offerings,” he added. “Travelers now are really demanding beyond that, something unique, something different, and that could be just location. It could be proximity to really cool things to do and just making it much easier for them to see things. It could be at the hotel itself, with say an F&B offering that is a destination in and of itself. But some of these newer lifestyle brands are really more experiential and lifestyle driven. You’re seeing people gravitate to those brands because they do offer something that’s a little bit more fun and different than just a clean bed.”