RALEIGH, NC-Concord Hospitality Enterprises is approaching the future with confidence. Recently, the company signed contracts to manage 18 hotels and is currently building four and developing five more. President and CEO of Concord Hospitality Mark Laport says that it is part of the company's "three-pronged growth strategy" of third-party management, joint ventures and wholly-owned properties.
Currently, many companies are having problems getting their hands on financing for any type of new development, particularly in a sector that is waiting for demand to push rates higher. Laport tells GlobeSt.com that Concord hasn't run into some of these issues, explaining that a lot has to do with their reputation. Marriot has been a close ally for over 20 years and much of their money is coming from smaller banks that have fared well during the downturn. It helps that Concord never had to turn over any properties, he points out.
Laport notes that the company’s confidence extends farther than its purchased properties, saying that some previously halted projects are being rejuvenated. "A couple we've taken out of mothballs," he jokes. Their reputation has even gone so far as to earn calls from banks, Laport tells GlobeSt.com. The thing that is easier, he feels, is that Concord isn't making mammoth hotels, so the money is easier to come by in the form of moderate-sized loans. The properties Concord is developing will be primarily three-star tier. "We opened a four star last year, but larger loans for full service hotels are harder to come by," Laport says. For now, the company will concentrate on select service, where there's still cash available for the right product and company.
Of Concord's 77 hotels, over 60 of them are Marriot brands and 10 to 11 are full service. One of the developing properties, in Pittsburgh, will be the first LEED-Certified Courtyard Marriot. The new property in Settlers Ridge and has an anticipated energy savings of 24% annually, as well as 300,000 gallons of water per year. The company estimates it cost an additional $500,000 to the Courtyard construction, but will save $50,000 per year and hopefully accelerate savings, as well. The design incorporates a heat recovery system, energy management system, water-saving wet-works and energy-saving light fixtures, to name a few.
This falls into Concord's new initiative of only building and developing LEED-certified product, which includes their properties in Washington, PA as well as Latrobe, PA. The Washington, PA property will be a Springhill Suites, which they helped pioneer with Marriot as well, and are partnered with Arnold Palmer for the property.
The confidence from Concord stems partially from Laport's belief that the market has seen the bottom: "2009 was it," he says. Hotels were selectively built and the pipeline in 2010 was when they saw a comeback, he explains, prompting them to reignite development. "Let's do what we do best," Laport tells GlobeSt.com. "Build hotels." Despite a lot of the concerns regarding rate and demand, Laport says that customers still make a flight to newness and a flight to quality, which is why they are looking at building more than conversions. "Buying old boxes are good, but it's hard to get refresh as good as new on a competitive basis," Laport explains.
As for pricing, Laport says that Concord has generally led the way with rates and figures, "If we're not going to do it," then maybe it won't happen. He sees market indicators ticking up and says it's time to be "gutsy to tell guests to move rates with us or you can't stay." Laport sees a rate change on the horizon. "It is happening for sure."
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