Key Aspects in Growing a Hospitality Portfolio and Organization

By Mark Ricketts President & Chief Operating Officer, McNeill Hotels | February 03, 2019

Hospitality is a demanding, fast-paced operating business all rolled into a complex commercial real estate investment. As we know, those entities looking to expand their portfolios, and their accompanying organizations at the property level and in the C-suite, have their work cut out for them.

Between our competition on the one hand and the guests we care for on the other, there is always a scramble for properties and people. For any given entity, finding the appropriate properties in which to invest must fulfill a demanding constellation of well-defined parameters. These include such factors as location, per broad national region and within a discrete market; the condition of the property, from new build to complete rehabilitation; the class of property, whether economy, select-service or upscale/boutique; debt structure and overall financing; anticipated operating income or the potential for asset appreciation.

Similarly, a host of factors determine which people are best suited for any organization, whether we are considering a housekeeper, front desk staff, director of sales or human resources manager. Who to hire and when to hire are traditional challenges, perhaps complicated further by the competition for talent in today's strong employment marketplace.

In this article, we will look at some of these challenges and discuss principles and approaches to achieving that desired path of growth. Issues considered include: core philosophies; operations and outsourcing; property type, geographic region and brand affiliations; and the overall "people part" of hospitality.

Setting Core Values and Culture

It may be useful to consider the difference between an organization's investment and operational strategies, even its vision or mission, and its core values.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.