The Opportunity In Select Service Hotels
With Greg Kennealey, CEO, Mission Hill Hospitality
Good morning. Over the weekend, Greg Kennealey gave us a recap of The Lodging Conference and shared why he makes every employee an owner. Today, we get to hear about the type of hotel he thinks is underrated for the opportunity it presents.
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The Opportunity In Select Service Hotels
with Greg Kennealey, CEO, Mission Hill Hospitality
Greg Kennealey // Credit: Mission Hill Hospitality
We often associate independent, luxury brands and properties as the pinnacle of hospitality. But Greg Kennealey, CEO of Mission Hill Hospitality, suggests we might be overlooking a segment that's underrated by many for innovation, growth, and profitability: select service hotels.
For those unfamiliar with the term, “select-service” hotels offer a more limited range of services compared to their full-service counterparts. "They deliver a fantastic guest experience. It’s everything you need and nothing that you don't," Greg said. Drawing a parallel to the automobile industry, he told me these hotels as like a "really nice minivan” - something not to be looked down on as a father of three!
The Allure of Select Service Hotels
There's a simple appeal to these properties, Greg explains. They're growing rapidly because of their focus on essentials that resonate with many travelers today. "They are more affordable. They’ve got free breakfast in certain cases, a comfortable room, a hot shower, fast Wi-Fi.”
It's the fastest-growing segment within hospitality. And the reason is because of the guest satisfaction.
More than just being a nice experience for guests looking for this type of experience, there's a financial resilience to these hotels. They tend to weather economic downturns better than some other segments of the market and bounce back quickly in more favorable conditions - and this resilience was especially evident in the wake of the pandemic.
Value Creation in Select Service Hotels
Beyond their growth trajectory, what makes these hotels particularly interesting for investors like Greg and his team at Mission Hill is the opportunity they present for value creation.
Often, with a little "tender loving care," properties can be transformed, he told me. Whether it's through renovations, reimagining space like converting unused pools into meeting spaces or enhancing food and beverage offerings, Greg sees numerous ways to elevate the guest experience while driving up profit.
Guest feedback plays a crucial role in this. In the digital age, real-time reviews and comments offer actionable insights. "We get feedback every single day. We can go onto TripAdvisor, we can go into Google reviews and find out how our hotel is doing this morning," he said. This sort of instant feedback allows them to make quick adjustments and improvements.
A People-First Approach to Investment
While the physical buildings and amenities are vital, Greg’s approach to hospitality investment underscores the importance of people.
Where we can win is through the talent of the people we work with and the way in which we work together.
From his perspective, fostering a team with high character, talent, and experience can make all the difference. By focusing on this people-first approach, Greg believes investors and operators can both enhance the guest experience and improve financial outcomes.
The Future of Select Service Hotels
As with any business, there are always areas for growth and improvement. Greg acknowledged the significant role of companies like Marriott, Hyatt, and Hilton play in the hospitality landscape. However, he hopes for a deeper brand-investor/franchisee partnership in the future, especially as the industry navigates post-pandemic challenges.
I think brands could think about things through the owner's lens a bit more. There are a number of things that happen every day at hotels that are in response to brand standards that are not profit-maximizing.
Greg noted how other industries use tiered pricing and add-ons and suggested operating this way could benefit both hotel owners and guests: "You want housekeeping? It's extra. You don't? You pay less. Do you want to ride to the airport? It's 10 bucks. You don't want to ride? You don't have to pay it. I think that's OK. Give options."
In summary, select service hotels may not always come with the glitz and glamour associated with luxury properties but, as Greg points out, their growth potential, resilience, and ability to adapt and innovate make them a compelling opportunity today.
Listen to our full conversation now - we cover:
How Greg became interested in select service hotels [0:47]
How to create a better guest experience and add value to your investments [2:30]
Renovating hotels [4:00]
A people-first approach [6:15]
Opportunities for hotel brands [8:04]
How Mission Hill is acquiring hotels now [11:14]
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