Lodging Magazine: Alex Tisch on the Niche Loews Has Found Among Bigger Players
Alex Tisch is chief commercial and business development officer and executive vice president at Loews Hotels & Co, whose portfolio includes a mix of branded Loews Hotels and partner-brand hotels. Loews now owns and/or operates 24 hotels and resorts across the United States and Canada. As Tisch explained to LODGING, rather than competing on equal footing with the “big guys” in the hotel business, Loews instead focuses on properties with built-in demand generators including Universal Studios in Orlando, the Texas Rangers’ Globe Life Park, and the Dallas Cowboys’ AT&T Stadium, in Arlington, Texas, to name a few. He describes how forging partnerships and catering to markets individually drive the company’s business decision making, including the addition of the six new properties now in various stages of development.
Looking at 2019, what can we expect to see from Loews Hotels? Are there new initiatives you are planning to launch or ramp up?
On the commercial side, we have two hotels opening this summer. Live! by Loews in Arlington, Texas, which is in partnership with the Texas Rangers, has 300 keys, 25,000 feet of meeting space, and is located right next to Texas Rangers’ Globe Life Park. The other, the Endless Summer Resort, is our seventh hotel in Orlando; it will open this summer with the first 750 of a total of 2,800 keys planned.
Looking ahead to 2020, we’ll open Live! By Loews–St. Louis, near Busch Stadium in partnership with the St. Louis Cardinals. We’ll also open Loews Kansas City Hotel, which connects directly to the Kansas City Convention Center; it will have 800 keys and 60,000 square feet of meeting space. In 2020, we’ll also complete another 22,000 rooms at Endless Summer.
What types of markets do you focus on?
Our business plan is really to concentrate on building—alone or with partners—two types of hotels: big convention center hotels, like KC and Miami, and hotels with built-in generators, as with Universal Studios, the St. Louis Cardinals, and the Texas Ranger. Having only 24 fully functioning hotels now, we are at a distribution disadvantage with larger players, so dealing with demand generators really helps bridge that gap.
We generally target markets that lack development. In many of the big markets—as had been the case with Kansas City—they build a convention center, but not a hotel, leaving a void in their ability to compete with cities like Nashville and Austin, which are very pro-business.
What we’re seeing—especially in the southern part of the Midwest corridor—are properties that want owners and operators to come in with a long-term investment horizon, partner with the city and the convention center, and create a lot of jobs for their citizens. Those are the types of new projects we’re looking at. For them, we continue to look further in Texas, where there is a potentially bigger project in that Arlington area between the Ranger Ballpark and Dallas Cowboys’ AT&T Stadium. We’re also exploring work with the city of Memphis to build a convention center hotel in the revitalized downtown.
What are the biggest challenges you are facing now and how are you dealing with them?
First, there are labor issues that impact both revenue and customer service. Wages, which account for 30 percent of hotel operation costs—are definitively rising. Now that Disney has raised its minimum wage to $15, we must, too, both because we have to be competitive, but we also want to enable our people to afford the lifestyle in their own market.
Combine this with the tight labor market. Finding team members qualified to do all jobs—from the back of the house to the front of the house to C-suite or executive suite—is becoming even more challenging.
Of course, the higher costs involved in filling all levels of jobs eat into the margins. Bigger operators are likely to recapture that lost revenue either through rate increases or what I call intermediary distribution decreases—i.e., reducing commissions with OTAs, group bookers, etc.
We deal with these and other issues mainly by being a “fast follower”—that is, letting the big guys, who spend as much as our annual operating budget just on technology upgrades, be the thought leaders, the ones to figure out what works. One of the things we’ve already learned from our partners at Universal is the importance of being able to capture every dollar in your consumer’s wallet when they’re traveling; whether it’s F&B or wellness, this is something hotel companies must get better at.
We are also using our size advantageously to customize the guest experience to the market it’s in. Unlike properties that must adhere to strict building guidelines to standardize their assets, we can build them specifically for the market they are in—for example, by using local builders and designers, and gearing F&B to local, not New York City, tastes.