On July 18th industry experts joined aspiring hoteliers at the 2nd Annual BOLD Ownership Symposium during the National Association of Black Hotel Owners, Operators & Developers (NABHOOD) Conference. The day was jam-packed with expert-led educational sessions, roundtables, and plenty of networking opportunities with industry leaders.
For those unable to attend in person, here’s a recap of the key insights shared:
What Is BOLD?
Wyndham launched the Black Owners and Lodging Developers (BOLD) initiative in 2022 to support entrepreneurs in an industry where fewer than two percent of owners are Black. We’ve already awarded 17 hotel contracts to Black owners and made an ongoing commitment to engage with Black entrepreneurs by providing an array of development and operational resources designed to address the unique challenges associated with hotel ownership.
Major Goals of the 2nd Annual BOLD Symposium
The goals for the symposium were to help attendees:
- Explore hotel ownership as a path to wealth creation.
- Gain valuable expert insights on the hotel industry landscape and trends.
- Determine their specific next steps to hotel ownership.
Individual sessions included the following:
- An introduction to Wyndham Hotels & Resorts and BOLD by Wyndham, presented by General Counsel, Paul Cash
- Key Considerations: Hospitality Industry Overview & Financing Outlook, presented by Banco Sabadell’s Vice President of Commercial Real Estate and Hospitality, Mariana Jackson
- Fireside Chat on Walking Through a Deal, presented by Morgan Mason from Wyndham’s Strategic Development team and Galen Barrett, head of Wyndham’s Strategic Franchise Initiatives
- Roundtable Discussions: Overcoming Common Barriers to Ownership
- Your Path to Ownership
- Hotel Financing 101
- Real Estate & Feasibility
Insights Shared During the Event
As you can imagine, each of our expert speakers had something exciting to share.
Why Scale Matters: How Wyndham & BOLD Support New Hoteliers
- Economy of Scale: We’re the largest hotel franchising company by number of hotels worldwide, with approximately 9,100 properties across 24 brands. With properties ranging from economy to luxury, we have more than 101 million enrolled loyalty program members. With an array of brands and hotels, we serve many different traveler categories, including blue-collar workers in our select-service properties. What all this means is that you’ll be joining forces with a proven hotel brand with built-in sales and marketing, and broad distribution capacity that will contribute to your success.
- Why BOLD? While 20% of hotel workers in the United States are African-American, just 2% of hotel owners are. BOLD is specifically designed to address the unique challenges Black people face in this industry.
- Advantages of BOLD: BOLD is built on two basic pillars: Laying the Foundation and Accelerating the Path. Through Laying the Foundation, you’ll have access to multiple resources, including both networking events and educational materials, as well as support from the Wyndham team in getting started. Accelerating the Path provides additional resources once you decide to take the plunge, such as enhanced operational support, supplier discounts, and a dedicated team to help you find local financing. We also have an incubator program for those who qualify. This program, provides participants more focused opportunities to network with industry experts who can advise on all aspects of hospitality. And, of course, we’ll provide you with ongoing support to help you get your hotel up and running.
Key Insights to the Hotel Market Today
- Take a risk, gain massive rewards! It is true that hotels are considered a risky investment. You need capital, labor, expertise, and a supportive ecosystem. Macro-economic factors beyond your control can also negatively impact your bottom line. But the drive-to leisure market bounced back fast after the pandemic. And you can hedge against inflation with daily repricing. On the plus side there are many benefits. Operating profits are typically high. And well-maintained properties tend to appreciate in value. Hotels also contribute to overall community development.
- Alternative financing or short-term loans can be the best bet. Financing is tight right now. Opportunities still exist to borrow about 55% of the property value on an initial 3-5 year term. Then when the hotel is running well, you can refinance for a longer term at better rates. Or choose alternative financing like private equity.
- Pro tip: Don’t make lenders nervous! New potential hotel owners often make mistakes such as: not completing a full development plan, not doing full due diligence, underestimating costs, and forming poor partnerships. Any of these will make a lender more apprehensive about lending to you.
Top Tips for Getting Started with Hotel Ownership
There are four basic things to consider when filtering your hotel opportunities: the hotel type, the market area, your budget, and finally the specific property you want.
- Hotel Type: Full-service hotels add complexity with many amenities, while extended-stay options are midrange in complexity with full kitchens and guest laundries. As a new hotel owner, though, you may want a limited or select-service property, because you can focus solely on learning to optimize the hotel itself.
- Market Area: Consider not only the geographical location but also what’s nearby: Businesses, colleges, tourist attractions, government facilities, and so forth can all drive different types of demand. What does your competition look like? Are they performing well? Is there enough demand for another hotel in your category?
- Budget: How much capital can you raise yourself or from friends and family? What about investors? Think about your different options for raising money outside of a loan. Then multiply the total you can bring by two or three, and that’s a rough budget for your hotel investment, including financing. Please note, this will depend on the lending environment which may impact the amount you are able to borrow.
- Evaluating a Property (Profitability Underwriting): Hotel revenue can be viewed as the combination of the industries. The two biggest metrics: average occupancy and daily room rates. Be sure to consider seasonal occupancy fluctuations as well as different types of rates (e.g., discounted promotions and group rates, same-day walk-in, etc.). Also, spend some time analyzing historical profit and loss (P&L) statements of the property (for hotel acquisitions) to understand how much operating expense previous ownership required to run the business. Finally, consider opportunities for efficiencies such as outsourcing labor or eliminating overstaffing. This exercise will help you determine whether the profit potential is worth the investment, and which property makes the most sense for you.
Learn more about BOLD by Wyndham and be the first to know about our future events!
There’s a lot to unpack, and at Wyndham, we know that becoming a first-time hotel owner can be daunting. That’s why we’re here to support our franchisees every step of the way.
Here are a few additional resources to get you started:
Are you ready to make your dreams of hotel ownership a reality? Visit our development site to join our BOLD mailing list and follow us on Linkedin to learn more about future events in your market.