Developers of Mixed-Use Projects Remain Committed to Hotels (6/22)
Jun 22, 2009 11:14 AM, By Elaine Misonzhnik
Brand value
For the next several years, however, most developers will likely concentrate on repositioning existing mixed-use properties rather than building new ones, notes Cadwalader. Part of the repositioning might involve thinking up ways to increase profitability of hotel components as the hospitality sector struggles with falling demand. In that case, bringing in third-party management in place of existing brand operators might make the most sense, according to Cadwalader.
As a general rule, owners don't want to give up the star rating of their hotel—that might put off visitors, as well as leave a bad impression on office users and shoppers who frequent the complex. What they want to do in a challenging environment is bring down operating costs and that might mean paying an independent firm to operate a Four Seasons or a Ritz Carlton property at a fraction of the price. The trick is that to avoid legal battles, third-party managers need to be approved by the original brand.
For example, Davidson Hotel Co., based out of Memphis, Tenn., has been designated as a "preferred" operator by Marriott International, Hilton Hotels Corp., Global Hyatt Corp. and Starwood Hotels & Resorts, among others. Dallas-based Prism Hotels & Resorts manages properties under the Hilton, Marriott, Doubletree, Radisson, Holiday Inn and Crown Plaza brands. And Arlington, Va.–based Interstate Hotels & Resorts manages brands ranging from Days Inn and Best Western to Embassy Suites.
Still, when switching to an independent manager, having a lower tier hotel might turn out to be an advantage, as brands with ratings below four stars cooperate with a wide network of third-party managers, whereas an operator of a Four Seasons or St. Regis caliber might approve of only a handful of firms. "The lower you move down the chain, the more sophistication there is in separating the flag from the management," Bredburg notes.
Acceptable Use Policy blog comments powered by Disqus
