Davidson Hospitality CEO sees a bright future for hotels in 2023 as demand for resorts grows

Davidson Hospitality CEO sees a bright future for hotels in 2023 as demand for resorts grows

With the pandemic in their rearview mirror, hospitality businesses 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, flight searches are on the rise and there is a strong appetite for international travel.

It is therefore not surprising that hoteliers here and around the world are eager and excited to return to the growth phase they were experiencing before Covid-19 shook the world. One of them is Thom Geshay, CEO and President of Davidson Hospitality Group, an outside hospitality management company that recently ranked #1 for guest satisfaction, according to JD Power.

Although the Davidson name does not appear on hotel signs, he manages hotels of almost every major brand, as well as numerous independent hotels. This is the traditional business model of most hotels today. 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 Rock 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 meet the needs of today’s travelers as well as those of real estate investors, both of which have undergone small changes since 2020. In his view, the future looks bright for hospitality, and travelers will benefit most from more choice, price points, and product offerings. He shares how his company plans for growth in a still unstable economy.

How has the pandemic affected hotel management companies?

In my 34 years at Davidson, this was the most difficult circumstance the company has faced. The disruption contingency plan did not envisage dropping revenue to $0 and shutting down the world with no in-person interaction. Employing tens of thousands of people across the country, the top priority has been protecting the health and well-being of team members and guests. The next focus was protecting the interests and assets of property owners. Many management companies, including Davidson, eventually closed many hotels to maintain liquidity and the property itself. This is simply outrageous as hotels are not designed to close for specific periods.

What types of hotels are opening in the market today?

While interest in resort properties is certainly greater today, it takes years of planning and execution to open a new hotel. Resorts and leisure-oriented hotels have fared much better than city hotels during the pandemic, and they continue to thrive. Corporate and group-oriented hotels are recovering more slowly and are still not reaching 2019 levels. However, the hotels opening this year are developments whose planning process began well before the pandemic hit, so a temporary leisure effect is unlikely to be part of the underwriting for the construction of these hotels.

There will likely be a greater focus on resort facilities in the future, but they are more difficult to build and take longer as locations and land requirements typically increase the cost and lead time for the market. At Davidson, there is greater interest in acquiring resort hotels as they have proven to be a resilient asset class during the toughest economic times. So look across the board for more leisure-oriented properties.

How has the staff shortage affected your company?

In response to the demanding job market to attract and retain talent, Davidson provides incentives for employees in resort markets through subsidized employee housing, childcare and other benefits.

How have customer needs changed in the last two years?

The primary needs of guests today are similar to what they were before the pandemic, but some of their priorities have changed. They are now more focused on cleanliness than they used to be and are willing to spend more for an upscale experience. For many, there is a new expectation that more services can be offered digitally. The pandemic has forced the hospitality industry to accelerate this transformation, from booking to purchasing to marketing. Another key shift is an appreciation for living life to the fullest, as consumers travel to improve their quality of life. This is a mindset that isn’t about to change 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 are confident in entertaining international destinations. Davidson is very selective about the owners, markets and hotels we add to the portfolio, meaning there are no plans for rapid international growth. There is still a lot of real estate to conquer here in the USA

How is Davidson’s restaurant business doing post-pandemic?

The restaurant and bar business has done very well after the pandemic. In fact, same-store revenue from our restaurants and bars in 2022 was more than 10% higher than 2019. Consumers have shown a willingness to eat out and have also embraced take-out orders. One challenge has been the decline in banquet and catering revenues as the group and convention business has remained well below 2019 levels. On a positive note, group business is starting to recover for 2023 and 2024. Problems in the supply chain for menus and food prices have also presented us with challenges.

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