Davidson Hospitality CEO sees bright future for hotels In 2023, demand for the resort is growing

With the pandemic in the rearview mirror, hospitality companies are bracing for a travel boom that began a year ago and shows no signs of slowing down. According to data from KAYAK’s 2023 travel trends forecast, searches for flights are on the rise and there is a strong appetite for international travel.

So it comes as no surprise that hoteliers here and around the world are eager and excited to return to the period of growth they experienced before Covid-19 shook the world. Thom Geshay, CEO and president of Davidson Hospitality Group, a third-party hospitality management company recently ranked number one in guest satisfaction by JD Power, is one of them.

Although the Davidson name does not appear on hotel signage, it manages hotels from almost all the major brands, as well as a number of independent hotels. This is the traditional business model for most hotels today. The properties in the Davidson portfolio include popular hotels and resorts such as Snowpine Lodge in Alta, Utah; Margaritaville resorts in Nashville, Hollywood Beach and Palm Springs; Eden Roc Miami Beach; Don CeSar in St. Pete Beach, Florida; Sheraton Kauai Coconut Beach Resort and Grand Hotel on Mackinac Island in Michigan.

Geshay is reorganizing the hotel management company to fit the needs of today’s travelers as well as real estate investors, both of which have seen little change since 2020. From his perspective, the future is bright for hospitality, and travelers will be the ones to benefit most from more choices, price points and product offer. He tells how his company is planning growth in a still unstable economy.

How did the pandemic affect hotel management companies?

In my 34 years with Davidson, this was the most difficult circumstance the company had to face. The outage contingency plan did not plan for revenue to drop to $0 and the world to shut down without personal interaction. As an employer of tens of thousands of people around the country, the first priority was to protect the health and welfare of team members and guests. The next focus was to protect the property owners’ interests and assets. Many management companies, including Davidson, ended up closing many hotels to preserve liquidity and the property itself. This is simply unheard of as hotels are not designed to close for periods of time.

What types of hotels are opening in today’s market?

While there is certainly a greater interest in resort properties today, opening a new hotel takes years of planning and execution. During the pandemic, resort and leisure-oriented hotels far outperformed city hotels, and they continue to thrive. Corporate and group-focused hotels are recovering more slowly and are still not back to 2019 levels. However, the hotels opening this year are developments that began the planning process well before the pandemic hit, so the transient leisure effect was likely not part of the warrant for building these hotels.

Going forward, there will likely be a greater focus on resort assets, but they are more difficult to build and take longer as the locations and land requirements typically increase cost and time to market. At Davidson, there is greater interest in the acquisition of resort hotels as they have proven to be a robust asset class through the most difficult economic times. So look for more leisure-oriented properties along the line.

How has the lack of staff affected your business?

In response to the challenging labor market, to attract and retain talent, Davidson motivates employees in resort markets through subsidized employee housing, child care and other benefits.

How have the customers’ needs changed in the last two years?

Guests’ primary needs are the same today as they were pre-pandemic, but some of their priorities have changed. They are more focused on cleanliness today than they were before and are willing to spend more for a high experience. For many, there is a new expectation that more services can be offered digitally. The pandemic forced the hospitality industry to accelerate this transformation, from booking to purchasing to marketing. Another big change is an appreciation for experiencing life to the fullest with consumers taking trips to improve their quality of life. This is a mindset that we don’t see changing anytime soon.

Will Davidson open more international properties in the future?

Davidson has always taken a very thoughtful approach to growth. After nearly 50 years of operating domestic hotels, we have the confidence to begin entertaining international destinations. Davidson is very selective with the owners, markets and hotels we bring into the portfolio, which means there are no plans for rapid growth internationally. There is still a lot of real estate to conquer here in the United States

How is Davidson’s restaurant business doing after the pandemic?

The restaurant and bar business has done very well after the pandemic. In fact, our same-store restaurant and bar revenue ended up more than 10% in 2022 compared to 2019. Consumers have shown a willingness to eat out and have also embraced ordering takeout meals. A challenge has been the reduction in banquet and catering revenue as group and conference business has remained well below 2019 levels. A positive note is that the group’s business is starting to pick up for 2023 and 2024. Supply chain issues for menus and food prices have also presented challenges.

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