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Newly appointed Ryan McRae, Canadian Senior Vice President of Business Development and Joe Reardon, Chief Development Officer, Business Development and Marketing Speak to Hotel Equities Plans in Canada

 

Can you provide a brief description of your background in the hotel industry?

Ryan McRae:  After starting my career on the retail side of real estate with Ivanhoe Cambridge, then completing my MBA at INSEAD, I joined the development team at Hilton as a Development Director in their Europe and Africa region in 2006. I relocated back to Canada in 2009 and continued to work with Hilton covering development in Western Canada.  In 2012, I joined SilverBirch Hotels & Resorts as their Vice President of Acquisitions & Development, responsible for all SilverBirch’s acquisition and development activities Canada wide. In 2014, I transitioned back to the branded side of things, and joined Marriott International as their Area Vice President – Lodging Development in Western Canada.  After 6 amazing years at Marriott significantly growing their portfolio in Western Canada, I am very excited to be joining the Hotel Equities team.

What does your appointment indicate about HE’s commitment to the Canadian market?

 

Ryan McRae:  From day one, when Hotel Equities decided to enter the Canadian marketplace three years ago, they were fully committed to having the right in-market, above property resources in place. That included opening its Canadian regional office with full support from all disciplines to ensure they were providing their owners and associates with the best-in-class support for their hotels.

My appointment is a further extension of this commitment to having the most relevant and localized expertise and support for our current and future owners as we grow the HE portfolio. That is how we ensure great results for our owners.  Joe Reardon’s comments have always been that HE gets bigger as we get better and with the results the team is producing, especially since COVID, we expect to continue growing with opportunities to double our presence quickly in Canada.

What is the current portfolio in Canada?

 

Ryan McRae:  In addition to the 26 hotels we have open and trading in the Canadian market, we also have 7 in various stages of development and an extensive pipeline. We also have a strong focus on merger and acquisition opportunities.  We are excited to be able to work with brand partners on multiple platforms including Marriott, Hilton, IHG, Choice, Hyatt, and Wyndham.     

What is your strategy for expanding here and what do you see as the major challenges?

 

Ryan McRae:  We will be working very closely with the owners of individual assets in addition to portfolio owners.  Hotel Equities’ value proposition to owners is clear in terms of the RevPAR premiums our properties are able to generate relative to their competitive sets, in addition to the costs savings our scale and efficiencies can bring to a hotel‘s bottom line.  One of the other most significant value adds that HE brings to the conversation is the internal time and resources that we can free up for an owner / developer by taking the hotel management piece off the table for them, allowing them to concentrate on their core business of investment / development.

We also work closely with owners on optimizing their portfolios, providing guidance on acquisition, repositioning, and dispositioning strategies, in addition to working with groups that are new to the hotel space and looking to invest in the asset class.

From a challenge perspective, while I will be working with many existing owners, in a lot of cases, a change in hotel management is very often linked to a change in ownership event. Given the ultimate impact of COVID on Canadian hotel transaction activities still very much remains to be seen, the pace of our growth may be slowed (or perhaps accelerated) depending on the pace of transactions.

 

Joe Reardon:  The opportunity will continue to be business travel, group and conventions during the next couple of years. Our extended stay and regional based hotels continue to overachieve in our markets in both Canada and the US. 

The strategy here is two-fold, one is working with small owner/management groups to find synergies to work together. We are seeing a massive flight to quality on the management side as the tide is certainly out. This flight to quality allows owners to take advantage of our procurement processes, proprietary business intelligence that measures real time success and opportunities, control cost, allow HE to take on regional payroll and operate premium RGI and results to the market. This strategy allows owners to focus on possible future transactions and further out development while de-risking their current model.

The second strategy will be to identity a few smaller management groups that have alignment with HE on a merger type of strategy. This again allows a group that may be struggling to partner with us on a go forward strategy.

Lastly, HE Is currently in discussion with several owners regarding their development services/owner asset management their development projects and pips. HE rolled out our development services team over two years ago and has successfully helped owners ensure a well-built asset, on time and under budget. 
 

Has the Covid pandemic affected how the strategy will be rolled out?

Ryan McRae:  There has not been a single area of the hospitality industry that has not been impacted by COVID in one form or another, and the same is true for development.  It is very safe to assume that we will be see a contraction in new-build hotel construction starts in the short to medium term, with many projects shelved indefinitely.  While historically Hotel Equities’ growth would have come through a balance of new-build and exiting assets, with the slowdown in growth of new-builds, our strategy has shifted to have a bias towards existing assets where we can add value to owners.