From RevPAR to TRevPAR: Gauging What Really Drives Hotel Growth

Glenn: Hey, everybody. It's your hospitality. Friend Glenn here. I'm at I, I NYU here in fabulous New York City. And I have got Joseph Joseph Boganowski with me from P-e-m. How are you, man?

Joseph: Great. Glenn. Good to see you. It’s so great to see. Nice to be here in the city. You know what? Yeah. Great energy. Like. Yeah. The conference is off to a great start.

Glenn: I will tell you, one of the cool things about I lived in New York for so many years is that energy really helps make your career. Because if you feel like you’re sitting back for one second, everybody else is going to is going.

Joseph: To take advantage. And that's what happens here in the city for sure. It sure does. Yeah.

Glenn: Also, I’d like to say I love the fact that we’ve been getting to talk more on air. We went to many years without doing that. And just before we went on, I’m like, what are you thinking about? What are you interested in talking about? And we’re in this place of lack of clarity. And how do you make decisions when there’s not clarity in the marketplace, considering it’s set against the backdrop of already the fundamentals, we’re starting to slow up or drop in some instances. So how are you putting this puzzle together to be successful?

Joseph: Yeah. It’s interesting. So I had a call with the team on Friday, and there’s so much noise. And where we’ve landed is stop looking at what’s trending and focus on them trends. Yes. Right. So what are the numbers telling us? Not what you’re reading or hearing about on on any news channel that you happen to look at. And so and interestingly for this year there was inauguration. Inauguration in January, the holiday season sort of shifted from March to April. Spring breaks were over an eight week period of time this year versus a 3 or 4 week period of time last year. So May was the first month where it was like a true year over year comp. And you know what? It’s not bad, right? So the US as a whole is about 3% growth. And yes, everything’s slowing down a little bit and, and moderating a bit. But May wasn’t a bad month for us. And it’s not a bad month for the US as a whole. Not where we want it to be. But good ADR growth some offset to the expense growth there. So not terrible. And then what I was saying to Brett before we got on air, I was in Tahoe last week at Evo Tahoe City. That
opened on March 1st. It was packed.

Glenn: Amazing.

Joseph: Peak rates, cycling, hiking, kayaking, fly fishing. The experiential side is alive and well and booming. And this summer is going to be great on that side of the ledger right now.

Glenn: I’ve said this in a couple of other videos while here, but Joseph here is just reconfirming what I’m thinking. I’m really believing the hospitality economy at this point is untethered from the general economy. I think people have enough things. I think in the post Great Recession era in 2008 below, I think we really went through a transformation process, and now we’ve got a whole generation of people that were raised wanting experiences and not needing those things. So I think that might be our way out.

Joseph: I think it is. And when you look at the demographic of the traveler, specifically the age groups. Right. So millennials and Gen Z now have overtaken baby boomers traveling more often, not spending quite as much as baby boomers, the baby boomers spending more but more travel there. So it lines up perfectly. And what do they want? They want experiences. They don’t want things. And so it lined up perfectly. And then interestingly too, I think for those of us that are also on the branding side, we need to think about that very carefully, because there are opportunities to bring experiences into those types of hotels as well. So whether they’re there for business or whatever it might be there’s some there’s some side of that that we can bring. So for us as a company and with the merger with sightline in in November of last year, we’ve gone through this learning process. We are taking those best practices and what we’re learning from experiential travel and moving them sort of into the maybe core, sort of branded side as well.

Glenn: So what you’re saying without saying is that you really got to start to look at the value per customer as opposed to the value per room, and start to create things that will get them to willingly spend more money and make them feel good about it.

Joseph: Exactly. Which aligns with our key focus area for this year, which is Trev Par, not Rev Par. There you go.

Glenn: Total revenue?

Joseph: Yes. Exactly right. And they are still spending. And they’ll spend on things that they value. And the question is whether you can tell the story in a way that creates that value and then charge accordingly.

Glenn: Right. So I’d like to know what you all think. Are we crazy over here or is there something to be said about the fact that people really want to travel and have experiences over other things that we do in society? I don’t think that they need to go to that mid-market steakhouse on a Tuesday night, but they do need to take a trip.

Joseph: Yeah, exactly. And they will be.

Glenn: Yeah. Awesome. Well, thanks so much, everybody. We appreciate you watching. Like, share, subscribe all of that kind of good stuff. So, for Joseph and myself Glenn see you next time. Bye bye everybody. See you.