Not everyone likes getting advice, but in the case of PKF Consulting, it’s coveted
As a management-consulting firm for the hotel, entertainment and tourism industries, PKF Consulting Inc. is recognized for its insightful, objective opinions on both the market and specific projects — whether clients want to hear it or not.
Providing this coveted advice has earned PKF a place with Canada’s major hotel chains and many leading event venues from coast to coast. Over the past 12 months, for example, PKF has provided advisory services on more than $1 billion in hotel and tourism industry assets, including Toronto’s newest hotels — the new Ritz-Carlton, the Thompson and Le Germain as well as the re-opening of the restored Rosewood Hotel Georgia in Vancouver and the Sparkling Hill Resort in Vernon, B.C.
Achieving that sterling reputation didn’t happen overnight
But achieving that sterling reputation didn’t happen overnight. The firm opened its doors in Canada
in 1970 and is a member of worldwide affiliate PKF International, which has been in business for about 100 years, with 380 offices in 199 countries.
“We’re known as an independent, objective third-party advisor, and most clients rely on those third-party opinions from an independent perspective,” says David Larone, who directs the firm’s Eastern Canada hospitality consulting practice. Proponents typically have a strong opinion on their projects, he says, and PKF is brought in to provide an objective assessment on a project’s potential performance.
PKF advises almost everyone — owners, lenders, purchasers and developers — focusing on hotels, resorts, foodservice, convention centres and various tourism-related attractions. (the only area it doesn’t get involved in is airlines.)
The firm works directly with clients to help them make informed business decisions.
“We really get involved in looking at what it will take to make a business successful,” says Larone. “All of our competitors are appraisers — so we do a lot of appraisal work, but we do a lot more than that.”
Part of its business involves advising convention centres and other event venues. Over the past year, for example, PKF has advised on major projects, including the Scotiabank Convention Centre in Niagara Falls, Ont., and the Fredericton Convention Centre, as well as the new EdgeWalk attraction at Toronto’s CN Tower (just given a Guinness World Record, Edgewalk is the world’s highest full-circle hands-free walk. Adrenalin junkies walk a five-foot ledge encircling the top of the tower, 1,167 feet above ground) — all of which opened in 2011. “PKF’s business planning work assisted the management team of the CN Tower to get the necessary approvals from its ownership group in order to develop and operate the attraction.”
One of the key factors that sets the organization apart is the experience level of its four key executives — Beth Walters, David Larone, Brian Stanford and Fran Hohol. With the exception of Walters, who works in Vancouver, the rest operate out of the Toronto office, although each of the group spends a great deal of their time travelling to see clients. All of the team has been with PKF since the late 1970s, a feat practically unheard of in today’s business world. Together, they have more than 125 years of experience.
“Each of us has been with the firm 30 years or more,” says Brian Stanford. It’s that kind of experience that operators find appealing. “From a Starwood point of view, and personally what I really like about dealing with these folks, is there isn’t really a market that I’ve ever had questions about that they don’t have intimate knowledge of — knowing the players, the properties and the places,” says Scott Duff, senior director of Development for Canada and Alaska with Starwood Hotels and Resorts Worldwide Inc.
Duff believes the strength of PKF’s data is a key differentiator. It gives them a strong sense of market performance, trends and historical references. But, he adds, it’s also about the relationships he’s developed with Beth Walters in Vancouver and Larone and Stanford in Toronto.
“It’s also the personalities, the willingness to help, the sense of humour and all-around great people,” said Duff. “They’ve had folks in that role for so long and have done so much across the country. The in-depth personal knowledge they have in the market is exceptionally helpful for me.”
The firm is actively involved in more than 30 hotel and tourism associations across the country and boasts a proprietary database that provides highly detailed information for market reports, industry outlooks and trade publications.
“It’s the only proprietary database on the hotel industry in Canada, and we are turning that information back to the industry,” says Larone. The database has been in place for more than 40 years, and while respecting the confidentiality of individual property data, it allows PKF to track the top-line, operating structure and bottom-line performance of individual properties.
On an annual basis it tracks about 650 properties (representing the equivalent of about 113,500 rooms); those properties provide PKF with their operating statements, and the data is used to produce reports on trends in the hotel industry.
PKF also monitors the rate and occupancy of 1,600 properties on a monthly basis, which represents almost 60 per cent of the Canadian industry’s 370,000 rooms.
“We’re not in the database business, so we’re not out there charging for [the data], but we invest significant dollars in the operation and development of that database — it’s in the hundreds of thousands that we spend on it. But that’s what gives us the ability to be so effective in everything else we do,” says Larone.
Combined with industry expertise, the database is used to provide monthly and annual outlooks on how the industry is performing (which are provided at no cost to the properties that supplied the data). As a result, the Hotel Association of Canada, as well as provincial governments, various associations and destination marketing organizations have come to rely on PKF’s trends reports to benchmark the health of Canada’s lodging sector.
“You won’t get a higher ADR unless you ask for it”
“We’re taking our knowledge and utilizing it to be more forward-looking, and that’s something many people rely on,” says Stanford. “That’s the biggest thing we’re providing — a level of objectivity, the perspective we have on the industry they can’t really get anywhere else.” This might mean helping a client figure out if a business or branding strategy is appropriate and, if necessary, suggesting ways to adjust that approach for better results. Hohol adds, “We drill down to business mix, market segments, pricing per segment and the detailed operation, revenue and expense of every department in the hotel and recommend how to make that more effective.”
As anyone in the hotel industry will tell you, the group, led by Larone, constantly advises hoteliers to maintain rate integrity. “You won’t get a higher ADR unless you ask for it,” says Larone emphatically. “We are at functional capacity in virtually all major downtown markets in Canada. We are running out of excuses.”
PKF recently completed a survey of investors and lenders in the Canadian hotel industry to better understand their criteria for investment and their approach to lending the accommodation sector money. And, it’s also updated “The Economic Impact of Canada’s Lodging Sector.”
These types of market reports have become even more critical since the events of 9/11 and the SARS outbreak dramatically, and unexpectedly, hit the hotel and tourism industries. In times of crisis, many operators, associations and various levels of government seek answers about the impact of such events.
“We’ve gone through a number of crises, so we can look back in history to better protect the industry”
“We’ve gone through a number of crises, so we can look back in history to better protect the industry,” says Hohol. For example, it can use its analyses to help predict when the industry is going to come out of an initial shock period following a crisis — and the data suggests these shock periods are getting shorter. “The industry is looking for answers as to what the impact might be and what they can and can’t look forward to in the following year,” she says.
While there’s a demand from industry for this type of information, it also requires a degree of trust on their part. “In terms of the database, it speaks to industry’s trust and respect of our organization that they are handing over their sensitive information,” said Hohol. “And we continue to grow the database.”
As they look ahead to another year, there’s a good chance they’ll also keep growing their business — and everyone else’s, too.
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