Davidson Hospitality CEO Sees Bright Future For Hotels In 2023, Resort Demand Growing

With the pandemic in the rearview mirror, hospitality companies are gearing up for a travel boom that began a year ago and has no signs of slowing down. According to data from KAYAK’s travel trends forecast for 2023, flight searches are surging, and there is 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 growth period 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 according to J.D. Power, is one of them.

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

Geshay is realigning the hotel management company to fit the needs of today’s traveler as well as those of property investors, both of which have seen small changes since 2020. From his perspective, the future is bright for hospitality, and travelers will be the ones to benefit most from more choice, price points and product offerings. He shares how his company is planning for 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 contingency plan for disruption did not plan for revenues dropping to $0 and the world shutting down with no personal interaction. As the 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 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 certainly is a greater interest in resort assets today, it takes years of planning and execution to open a new hotel. During the pandemic, resorts and leisure-oriented hotels performed much better than city hotels, and they continue to thrive. Corporate and group-focused hotels are bouncing back more slowly and are still not back to 2019 levels. However, the hotels that are opening this year are developments that started their planning process well before the pandemic hit, so that transient, leisure effect likely was not part of the underwriting to build those hotels.

Going forward, there will probably be a greater focus on resort assets, but they are more difficult to build and take longer as the locations and land needs typically increase the cost and time of delivery to the market. At Davidson, there is greater interest in acquisitions of resort hotels as they’ve proven themselves a resilient asset class through the most difficult of economic times. So, look for more leisure-oriented properties down the line.

How have staff shortages affected your business?

In response to the demanding labor market, in order to attract and retain talent, Davidson is incentivizing staff in resort markets through subsidized employee housing, childcare and other benefits.

How have customer needs changed in the past two years?

Guests’ primary needs are similar 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 an elevated experience. For many, there is a new expectation that more services can be offered in a digital manner. The pandemic forced the hospitality industry to accelerate this transformation, from booking to buying to marketing. Another major change is an appreciation for experiencing life to the fullest with consumers are taking trips to improve the quality of their lives. This is a mindset that we don’t see changing anytime soon.

Will Davidson be opening more international properties in the future?

Davidson has always taken a very thoughtful approach to growth. After nearly 50 years operating domestic hotels, we have 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 fast growth internationally. There is still plenty of real estate to conquer right here in the U.S.

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

The restaurant and bar business has done very well following the pandemic. In fact, our same-store restaurant and bar revenue finished 2022 more than 10% over 2019. Consumers have shown a willingness to dine out and have also embraced ordering carry-out meals. A challenge has been the reduction in banquet and catering revenues as group and convention business has remained well below 2019 levels. A positive note is that group business is beginning to pick up for 2023 and 2024. Supply chain issues for menus and food commodity prices have also presented challenges.