Having opened six hotels last year and with numerous others in construction and in the active pipeline, John Q. Hammons, who celebrated his 90th birthday in February, could hardly be said to be slowing down.
To the contrary, 51 years after entering into a partnership to acquire 10 Holiday Inn franchises—and in the face of a major industry downturn—the chairman and CEO of Springfield, MO-based John Q. Hammons Hotels & Resorts maintains a full hotel development and management slate. After all, Hammons has been through more than a few downturns over the years, enabling him to maintain perspective and continue to move his company forward.
“Three years ago, we began to sense that a real downfall was coming and that the recession that resulted was going to be magnified to where it is now,” Hammons told HOTEL BUSINESS®. “I’m afraid we’re not going to make the progress with the economy we need to make this year. But I predict that things will start to seem better in the second quarter of 2010.”
Yet John Q. Hammons Hotels is proceeding full speed ahead. In February, for example, the company topped out construction on a new 228-room Courtyard by Marriott Hotel & Convention Center in the Dallas suburb of Allen, TX, a month before entering negotiations with the University of North Texas to build a full-service hotel and another convention center on university-owned land in the nearby town of Denton, TX. That same month, efforts also picked up steam to recruit 150 employees at Hammons’ new 263-suite Embassy Suites Hotel, Spa & Conference Center, which is nearing completion in the Denver suburb of Loveland, CO.
Nor has Hammons significantly changed his approach to developing over the years despite the downturn. “You don’t build unless there’s a market. And if you do build, you better have the right location, always with an eye to the competition. We’ve been successful because we’ve paid attention to the competitive forces that are always out there. Besides that, you’ve got to have the best personnel, the best training and you can’t make mistakes or you aren’t going to win,” he said.
A focus on the customer continues to be another given. “The reason we’ve been able to advance is because we do pay attention. We’re constantly after our people to do their best to take care of the customer because if you don’t you’re not going to be in business very long,” he noted.
Since the late 1950s, Hammons’ company has developed 206 hotels. As of mid-March, the portfolio consisted of roughly 80. In other words, over the years Hammons hasn’t hesitated to dispose of assets. “What Mr. Hammons likes to do is keep a young and vibrant portfolio,” explained Hammon’s executive vp of development, Scott Tarwater. “Over time, markets shift and properties pass the apex of their lifespan. When that happens, he’s not one to hold on to assets that he thinks need to be sold.”
At the same time, management as well as development and ownership has always been part of the strategy. “Managing is an essential part. Managing and owning, in fact, are aligned,” Hammons said. “When you manage, it allows you to better see things through the eyes of the owner.”
The creed has always been, “We own what we build, we manage what we build and we take responsibility for what we build,” Tarwater added. “As an extension of this, when a property is sold, management goes with the new owners. That’s always been the case. We never managed properties we didn’t own.”
Beyond individual hotels, Hammons has often been credited with helping develop entire communities wherein his company’s hotels and convention centers become the nucleus for growth of a larger community. Hammons described the process as strategic. “We look and see which ways the smaller towns in a select area are headed,” he said. “What’s going to drive their growth and guarantee that it’s sustainable? It shows you the strength of the area. You have to know what helps the market grow. And you’ve got to study the spending habits of people in the area, the strength of their earning power and so on.”
Tarwater cited two prime examples of such community building: Frisco, TX, and Rogers/Bentonville, AR. “When Mr. Hammons first bought land in Frisco, there was nothing on it, but mesquite and jackrabbits. Now it’s one of the fastest growing communities in the U.S. with a population of over 100,000,” he said. “He built a 334-room Embassy Suites Hotel with 100,000 square feet of meeting space. Five years later, there were about five million square feet of retail space, a baseball stadium, ice arena and acres of soccer fields.”
Similarly, in Rogers-Bentonville, today there is a 400-suite Embassy Suites Hotel with a 125,000-square-foot convention center on what had been cow pastures. “Across the freeway, there is a new 250-bed hospital and significant new retail development, all open and operating because Mr. Hammons had the vision to build there,” Tarwater noted.
In both these instances, Hammons was happy to build not only the hotels, but such mixed-use components as convention space, sports stadiums and retail. One component he steered clear of was residential development. And given the current state of the residential market, that decision has proven to be fortuitous.
“He started his career in residential development and has never gone back to it. When we speak about mixed-use at John Q. Hammons Hotels, it’s primarily lodging plus convention centers, retail and sports stadiums,” Tarwater explained. “In hindsight, this may have been a good strategy, considering the problems in the residential market right now. In many communities where we’ve built, residential development was added separately, but by developers whose specialty was residential.”
While a long time supporter of branded hotels, Hammons said he still looked askance at the profusion of recently introduced new brands until they had proven themselves. “Pay close attention to the growth and stability of these brands. Some may not have the resources to back up what they set out to do,” he cautioned.
Established brands are another story. Aside from Embassy Suites and Courtyard by Marriott, brands in the John Q. Hammons Hotels portfolio include Marriott, Hilton, Sheraton, Renaissance, Crowne Plaza, Holiday Inn and Radisson. In the limited-service without food and beverage sector Hampton is included. And while still a minor player in the portfolio, extended-stay brands Residence Inn by Marriott and Homewood Suites by Hilton are represented as well.
Benefitting from the brands
“The parent companies of the various flags we fly spend an inordinately large amount of money,” Tarwater explained, “not only maintaining toll-free call centers, but on platforms that market our product instantaneously around the world.”
In effect, a company like John Q. Hammons Hotels is buying the technology. “Their Internet reservations systems are the best in the world,” Tarwater continued. “Once we build a hotel in what we believe is the best location in a market, it pays dividends to plug into that worldwide sales and marketing opportunity.”
JQH, of course, benefits on both the transient and group sides. “Considering the amount of meeting space we develop, the group component is very important to us. These flags have sophisticated group reservations systems that would take us untold dollars to replicate,” Tarwater said.
Despite the dour economy, Hammons believes there are still ample opportunities for developers entering the field. “The fundamentals of the business are the same. But developers have to work harder than ever and know where they’re going to invest their time and resources,” he advised.
The proposed location is key. “Don’t make a mistake about where that product goes. You’ve got to know that there is a market there or you don’t want to proceed. It’s kind of like Wal-Mart,” Hammons said. “If they don’t have it, you don’t need it.”