Ok, so let’s talk about what it means when we say “raise rates!!!” in the hotel biz (which you should ALL be doing) I meant to do this a few weeks (months?) ago, but got distracted by some deals - weird, weird deals (other stories for other times)

How should you select a third-party management company for your hotel? A (hopefully useful) thread: First. If you’re buying or building a hotel with any scale, and you don’t have operational experience, you should (and in many cases, will need to) hire a third-party operator. Doing it yourself will be painful and expensive

I’ve owed you all the next benchmarking thread for a while… here we go! Now that we’ve been through benchmarking, let’s look at a “live” example of a hotel deal – how would I use this to see if a deal is worth chasing?  Thanks to a member of the #ReTwit crew for offering up a hotel – I’ve anonymized so it shouldn’t be recognizable.

Ok #HotelTwit, let’s talk benchmarking! We’ll look at each department from the Summary P+L and talk about how we compare it to like hotels, and why. This’ll get us to be able to do a “quick & dirty” proforma, which we’ll do for a real hotel next week Quick reminder – you can find the Glossary of Terms in the thread below. I’ve added a few things since the launch as well

https://twitter.com/somehotelguy/status/1477387960484081668

Next up in the #HotelTwit series is an intro to the P+L!

Every operating co has their own format, so I’ll show you a representative example (with no #s) and also an example of how I like to look at it (with fake #s) Going to focus today on the Summary, and will get into departmental levels in the future

A new pinned tweet! Links below to a glossary of terms (will be updated on an ongoing basis), my bio thread, and whatever else feels right Glossary of Terms:

https://twitter.com/somehotelguy/status/1477387960484081668

Going to kick of #HotelTwit with a running glossary of terms. I’ll keep adding as we go, and keep pinned on my profile. If you have requests for add’l terms, just drop ‘em in the thread! Occ:

Occupancy. The percent of room s occupied in any stated time period. Occupied Room Nights ➗ Available Room Nights

Going to walk you all through my back-of-napkin on a currently listed property, thanks to our friend @moseskagan!

The Property: A 27-room motor lodge in LA’s Thai Town listed for sale for a whopping $11.28MM ($418K per key). The Harvard House Hotel at 5251 Hollywood Blvd. My Process: (a) look at the site on our friend Google (Maps, StreetView, Earth); (b) look at pictures of the property (LoopNet, the publicly-available OM, the website, Google, etc.); (c) SWAG a renovation budget; (d) add renovation budget to purchase price to get all-in basis;…

We generally invest from discretionary funds but will occasionally pitch others on our deals; institutional capital partners as LPs or institutional owners for us to act as a 3rd party operator (lenders are a whole other ballgame).
 
These are the deals in which I learn the most. Pitching outsiders means I must convince two separate groups, each discerning in their own way, that the business plan is solid, risks boxed in, and upside available (if not likely).

Next up in the @somehotelguy series on new development… Facilities Programming!! As always, stream of consciousness (a.k.a., long).

Here we’ll talk about an incredibly iterative process – how you figure out just what you should build when you’re looking at a hotel site. I’ll do this from my perspective as an investments guy, but CRITICAL to the actual success of this process: involve someone with deep zoning knowledge, someone with deep HOTEL architecture knowledge, and someone with deep operating knowledge.

So, here’s my single best tip for guest room / guest room bathroom in new development:

Build out a model room

Ideally, one of each of your most frequent room types

https://twitter.com/somehotelguy/status/1437546055088889857

Will this cost extra in your budget? Yep

Will this save you way more than it costs? Yep

It’s @somehotelguy’s first New Development thread, “On Guestrooms and Guestroom Bathrooms”:

First an apology – I don’t have a library of floorplans I can post from like @bobbyfijan, so this won’t be anywhere near as informative or cool as his threads. Second caveat – for most suburban limited or select service hotels, you’ll just build whatever plans the brand hands you, adjusted slightly for site conditions. This thread does not apply to those hotels. Third caveat – I’m all over the place here, sorry!

1/35 Ok, so by popular request, a quick desktop look at this potential hotel redevelopment found by @harrisonfinberg. I'm skipping some steps that either don't lend themselves to narrative or are the artistic flourish of underwriting.

https://twitter.com/harrisonfinberg/status/1409330089033097218

2/ As Justice Stewart said, you'll know 'em when you see 'em.

Let’s start with market then think through post-renovation performance. We can then back into a renovation budget and take a guess as to whether or not it’s remotely feasible given the budget.

1/ On Market Diligence:

I go as deep as I can, albeit not right away. 2/ Early on I try to identify direct competitors and their historic performance, any new supply, any major known changes to market demand drivers (e.g., ‘the factory’s closing’), and any major new developments.

1/56 SomeHotelGuy’s take on Sonder. Quick disclaimer – I have nothing to do with Sonder, I’m not particularly smart, and I’m in no way a securities analyst. This isn’t investment advice. 2/56 My goal here is to look at the investor presentation and see where things don’t quite add up from a traditional hotel perspective. Maybe there’s knowledge outside this deck that causes it to make more sense, but if so I don’t have it. I’m going to try hard not to be a jerk

1/7 I spend a lot of time talking numbers, metrics, and cost savings, so it’s time for a thread on what this is all about – hospitality. 2/7 As hoteliers, we are in the business of hospitality… of warm, sincere welcomes; of kind, helpful interactions; of thoughtful, creative problem solving; of surprise, of delight.

1/24 De-Risking Hotel Acquisitions: Thread 5 – Expenses (our denouement)

We’ve talked along the way about expenses obliquely – shifting business mix to bring down reservations costs, slimming down or eliminating room service, considering meal periods, outsourcing parking, etc. 2/24 , but now it’s time to focus fully on the expense side of the ledger. Again, each project is different and there is only so much one can do to identify, understand, and “box in” the risks, but here are some of the areas I focus on and what I look for.

1/27 De-Risking Hotel Acquisitions Thread 4: Business Plan, B+C, Minibar, IRD, and Other Revenue

We’ve got a good one for you tonight folks! #SteveHarveyImpression 2/27 We’re going to start with Banquets + Catering (B+C) revenues, then hit on the small F+B sources – minibar and in-room dining (IRD) – and then move on to other revenues.

1/25 De-Risking Hotel Acquisitions Thread 3: Business Plan, F+B Outlets

Now that we’ve talked Occ + ADR, let’s talk about some of the more fun areas of a hotel – the F+B outlets. Full Disclosure – I’m not a “restaurant and bar guy” professionally. 2/25 I work closely with them on hotel acquisitions and developments, and have learned quite a bit about how they think about outlets, but I’m not an expert here (other than at the eating and drinking part – I’m seriously, seriously good at that).

1/20 De-Risking Hotel Acquisitions Thread 2: Business Plan, Top-Line

We’ve already talked a bit about underwriting, both top-line and expenses, but here’s where we’ll try and connect the numbers to actual business planning. 2/20 Each potential acquisition presents a different turnaround story, and those stories are myriad and varied. For our purposes, we’ll try to hit on a wide variety of items that will help us find and confirm our turnaround story. This one will focus on Occ + Rate.

1/17 De-Risking Hotel Acquisitions Thread 1:

First focus is on the value-add, and narrowing my risk profile there. The renovation is likely driven mostly by the new brand’s PIP and any material requirements of the new operator, along with any value add items my team identifies. 2/17 Before getting to anything specific process-wise, this is absolutely critical: TOUR THE HOTEL WITH AN ENGINEER. Take as much time as you want. See as much as you can. Take good notes. Take photos.