Ask Investors, analysts and industry pundits to characterize the past year, and many will tell a similarstory: 2013 was a good year for hotel investments.But, pose the same question to hotel operators, and they will tell a slightly different tale. As always challenges abounded, but the top performers persevered, developing, renovating and creating better operating systems that contributed to gross sales of $17.9 billion on Hotelier’s Top 50 Report, up from $16.9 billion last year. Standout companies included Parsippany, N.J.-based Wyndham Hotel Group, Vancouver-based SilverBirch Hotels & Resorts as well as Mississauga,Ont.-based Choice Hotels Canada Inc., which realized strong year-over-year growth.
Wyndham Hotel Group
As the fifth-ranking company on the Top 50 Report, Wyndham posted $791.9 million in gross sales, a 7.9-per-cent jump in 2013 over 2012. The worldwide company, with 13 brands spread among 4,700 hotels in 68 different countries, including nearly 500 in Canada — such as Super 8, Ramada hotels, Days Inns and Microtel Inn & Suites by Wyndham — had a strong fiscal 2013 due to strategic purchasing decisions, tactical renovations and carefully cultivated relationships with suppliers whose efforts and financial wherewithal advanced their cause.
Keith Pierce, EVP, Brand Operations, Wyndham, calls his company’s “very strong” property growth key to its fruitful 2013. And that growth, he says, was a result of various initiatives and resources for its owners, including loyalty programs, advertising syllabuses, distribution channels, a strong central reservation system and a range of promotional-type gambits. Wyndham Rewards, for example, a 10-year-old loyalty program that tracks its genesis to the U.S., has been aggressively growing its partnerships in Canada, including the recent addition of Aeroplan. Wyndham has 9.3 million active loyalty members and expects to reach 10-million members this year.
The company’s growth was largely due to the development of its Microtel brand. “It’s been incredible how quickly they’ve been able to get their master deals in the ground,” Pierce enthuses. “A lot of hotels have either opened, are under construction or on their way and in a short period of time.” Until recently, the Wyndham Hotel Group only had a handful of Microtels in its Canadian stable, including Microtel by Wyndham in Estevan, Sask., the organization’s first prototype hotel in the country. The success enjoyed by this landmark economy offshoot of the worldwide chain, which opened in November 2012, set in motion a series of projects. Wyndham’s master development agreement with Calgary-based MasterBuilt will see the addition of 75 Microtel hotels across Canada during the next 20 to 25 years, with Wyndham as franchisor and Microtel as builder, owner and operator of the properties.
Wyndham has also leveraged its strength as a multi-branded organization to the consumer by cross-selling on brand.com websites. So, if a potential guest logs on to the Ramada site to book a room at the Calgary Airport but finds nothing available, other Wyndham brands will be listed as alternatives. This is a new addition to its capabilities. Moving forward, Wyndham will strengthen its existing relationships, continue to support its properties and introduce more of its unrepresented brands to Canada, including Hawthorn Suites, an extended-stay player currently operating in the U.S., the U.A.E. and Nigeria.
Choice Hotels Canada Inc.
It’s been a fruitful year for Choice Hotels Canada Inc., which found footing in recent renovation projects. Assuming the 11th spot on the Top 50, the company earned $509 million in gross sales, an increase of 4.5 per cent in 2013 over 2012. Part of its success is due to its ongoing “improve-or-remove” campaign, which focused on giving a new face to 85 Comfort hotels across the country in 2013, a project representing a $65-million investment by the properties’ owners.
“To stay relevant, we knew we had to invest in our hotels to improve our breakfast programs and make guestrooms more contemporary,” says Tim Oldfield, managing director. “While the Canadian traveller likes fair value, he also likes current and contemporary style.” The broad-scale interior renovation encompassed new furniture, carpeting, wall coverings and light fixtures in the guestrooms and public spaces. The lobbies were transformed to make them more inviting, and guestrooms were converted to introduce breakfast rooms. The operational disruption was kept to a minimum thanks to the group’s largest hotel owner, Mississauga, Ont.-based InnVest REIT, which hired a project-management company to complete the renovation in less than six weeks with minimal impact on the guest.
Still, “2013 wasn’t an easy year by any stretch,” admits Oldfield. Increased competition, social-media demands, an ongoing call for novelty in the marketplace, and a “fickle” consumer whose visits to Choice’s more than 300 Canadian hotels were intermittent, left the company’s franchise owners — many of whom are single-family businesses — working hard to improve guest counts.
To address these challenges, head office beefed up franchisee support, and rising franchisee satisfaction survey scores reflect that. “Our franchisees tell us loud and clear that they appreciate our very human element in dealing with them. We tailor our services to what they need in their marketplace,” affirms Oldfield.
In fact, Oldfield listened to franchisees who asked for more training options and added a Webinar program. It streams training to properties directly, saving franchisees from having to pay to send employees for regional training. These sessions — developed in 2013 and launched in 2014 — take place weekly and cover many topics in both of Canada’s official languages.
Continued growth across the brand portfolio is a priority for Choice, which has already opened three new hotels in 2014 with plans for a dozen more hotels this year. “You’ve always got a market that’s on fire and a market that sits at the opposite end of the spectrum,” says Oldfield, referencing the nation’s big hotel chains. “[There’s] a tremendous averaging phenomenon that takes place. But 2013 was an absolutely successful year for some of us.”
SilverBirch Hotels & Resorts
“We’re one of the few companies selling hotels, building new hotels and potentially buying hotels — all at the same time,” boasts Steve Giblin, president and CEO of SilverBirch Hotels & Resorts, which ranks 19th on this year’s Top 50 with gross sales of $162 million, a 63.6-per-cent jump in 2013 over 2012. The “dramatic series of changes” that characterized the past year included the shuttering of the Mayfield Hotel in West Edmonton. Earlier this year, the property relaunched as the DoubleTree by Hilton West Edmonton, sharing a site with the newly built Home2 Suites by Hilton. In Halifax, the organization toiled through 2013 with a new build on the downtown site of the Citadel Hotel, which it tore down to make way for a Homewood Suites by Hilton and Hampton Inn by Hilton in 2014. SilverBirch also closed the Regina Inn in 2013 and, just before the Grey Cup, opened the DoubleTree by Hilton in Regina.
SilverBirch’s transitions unfold beneath an arching strategy to brand its hotels as Hiltons or Marriotts, two companies with whom SilverBirch has good relationships. By 2018, Giblin predicts the company’s current portfolio of 20 hotels will blossom into 35 Hilton and Marriott properties. “We’re doing this because Canada’s [becoming] much more international, not only with tourism, but economically, with national resources, affiliations with China, trade agreements with Korea and others. The scope of business is really going to change. And businesspeople arriving from [abroad] want to see a Hilton or Marriott brand. If they come to Halifax for a shipbuilding contract and see a Citadel, it doesn’t mean anything to them. But if we have two Hilton hotels downtown, it’ll mean a lot.”
SilverBirch, which has opened approximately 937 guestrooms and unwrapped five renovated Hilton hotels (including Canada’s first Home2 Suites) since November 2013, is looking at further developments in Toronto, the Maritimes, Vancouver and Calgary. The company also recently announced the largest Marriott Residence Inn in the world — a $100-million-plus 390-room mixed-use project that will open in about two years in Calgary.
Overall, three elements have facilitated SilverBirch’s transformative 2013, says Giblin: a source of funding among shareholders who see Canada as a favourable place to invest, a stable market that promises good returns over the next three years, and “a great group of employees who understand the strategy.” Case in point: when management gathered the staff of the Citadel to explain that the property would be knocked down and rebuilt, staffers cheered. This in spite of the fact that they’d lose their jobs for two years. When SilverBirch reopened the revitalized property this past June, almost 70 per cent of employees returned.
It was a similar story at the DoubleTree West Edmonton, where 87 per cent of displaced personnel returned to the hotel a year after it was revamped. “The company has been built on an openness that you don’t see in other companies. People are willing to talk about their problems, to come in and say, ‘This is something we’ve got to work on.’ By engaging them in solutions and allowing them to express themselves, you build loyalty. And with our growth, there are a lot of opportunities to attract a lot of talented people. And, I’m glad we have, because we need them all,” says Giblin.