Development's White Knight

Earlier economic downturns proved a direct correlation between RevPAR decreases and construction cost decreases. “This is the silver lining in the current environment, if you are fortunate enough to be actively developing and not forced to the sidelines until the market and construction pricing rebound,” says Yiankes.

More projects are on hold than most franchisors and/or consultants are reporting, says Yiankes, and he wouldn't be surprised if new supply increases were actually lower than projections show for the next 36 months.

“On the equity side, our internal owners continue to fund our equity requirements on a deal-to-deal basis. On the debt side, we are fortunate in that many of our lenders have been paid off in the last 24 months as a result of the RLJ transaction,” says Yiankes. “This, combined with our strong record, has allowed us to continue our [development] strategy with virtually no interruptions.”

White Lodging continues to focus on developing premium branded hotels in top 20 urban and select high-grade suburban/airport markets with favorable mid- and long-term growth prospects. Of its current managed portfolio of 135 hotels, 14 are owned internally, and the company expects to develop and open more than 40 internally-owned projects over the next three years.

In addition to established relationships with Marriott and Hilton, the Hyatt and Starwood brands are a significant part of White Lodging's growth strategy. The company is committed to developing hotels with brands that can position themselves number one or two in terms of market performance in their primary competitive sets.

“The brands require unit growth to maintain and build shareholder value, and our 20-plus-years track record combined with our owners' willingness to provide the necessary equity to bring projects to fruition makes White Lodging a safe bet for the franchisor,” says Yiankes.

The company's operating models tend to be very efficient. “Other than a few extreme situations where demand drop off is well into the double digits — like Phoenix, for example — the focus tends to be on top-line revenue generation,” Yiankes explains.

COMRADES IN ARMS

Marriott and White Lodging have come a long way since the developer opened the first franchised Fairfield Inn in Merrillville, IN, in 1990. The companies have similar values. “Like our company, White Lodging is committed to providing excellent service to its guests. They also embrace Marriott's philosophy of taking care of their employees,” says Liam Brown, Executive VP, select service and extended stay development, Marriott International.

Marriott launched a strategy of selectively developing multiple brands on the same parcel of land nearly 10 years ago, and White Lodging has been a major partner. White Lodging recently opened its 99th and 100th hotels with Marriott, both in the same footprint. The hotels — housed in the same building — are the Residence Inn and SpringHill Suites Chicago Downtown/River North. The 27-story hotel marks the first urban location for a SpringHill Suites and is the brand's largest with 253 rooms.

Currently, White Lodging has 24 Marriott hotels in the pipeline, including three dual-branded hotels.

Until a few years ago, White Lodging had been doing most of its business with Marriott. Then, it developed a couple of Garden Inns and a couple of Hamptons. The relationship with Hilton is strong and growing. “We appreciate what they do and that's why we named them Developer of the Year,” says Hilton's Bill Fortier, SVP development, Americas.

“Historically, hotel conversions struggle with customer satisfaction, but whenever White Lodging does one, customer satisfaction is as high or higher than a purpose-built hotel. They treat the customers right and that's what we're looking for. You always want to do business with those folks,” says Fortier.

Before naming White Lodging Developer of the Year, Hilton asked its development teams, i.e., the project-management team, the brand team, and the performance report team, for their recommendations. “We asked: ‘Are they doing what they said they would?’ ‘Are they paying their fees?’ ‘Are they treating the customers right?’ ‘Did they do a good job on the development?’ ‘Are they consistent in building to standards?’” says Fortier.

“When we need to recommend a management company, White Lodging is at the top of our list.”

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