The Hospitality Show 2025 kicked off at the Colorado Convention Center in Denver, Colorado. Attendees convened and networked on the first day of the conference while keeping some of the industry’s buzz subjects, such as profitability throughout an uncertain hospitality marketplace, in mind. Eileen Herzog, vice president of account management, Avendra, led a conversation among three industry leaders that discussed the role each hospitality constituent plays in profitability. Herzog emphasized, “Everybody has a role in profit in hospitality, so whether you’re an owner, a brand, or a management company, or Avendra, we have a role as well.”
Mitch Patel, founder and CEO, Vision Hospitality Group, noted how hospitality is a “very capital-intensive business,” meaning “there’s an expectation for a return.” However, he noted that’s not necessarily a deterrent for hospitality. “We look at things a little different,” Patel said. “We are in this business for the long term. We think that this business is a marathon, not a sprint.”
Thom Geshay, CEO and president, Davidson Hospitality Group, reiterated, “I don’t think profit looks different to all of us, the different constituents. That’s part of it. I think what’s different is our role in that profitability, because, in our industry, after the guests and after our team members, the owner is next on that stack.”
Geshay continued, “What we want is an industry that encourages people to invest. People invest in our industry, [and] that makes us successful. And we’ve seen it with all the different real estate classes. …We’re an investable business. That’s a great thing. It’s good for all of us.”
From a brand perspective, Keith Pierce, executive vice president, president franchise and development, Sonesta International Hotels Corporation, said, “You always focus on trying to drive the top line and then provide service—procurement services, cost reduction services—and through the scale of most of the major brands, try to reduce your transaction costs. …Focus on the top line to drive profitability, and then wherever we can utilize our experience and our scale to drive the cost, the operating costs, particularly for branded properties. We think about profit in very much the same way because if our owners and our managers are not profitable, well then, we’re not going to make it very far.”
Pierce shared similar sentiments to Patel and mentioned, “If we do not get alignment from an ownership standpoint and a brand standpoint and a management standpoint, or when you can get the best alignment, is where you get the optimum output, where it starts to break down is where perhaps brands get heavy-handed, when they push for standards or compliance. And it’s a one brush, and one brush doesn’t fit all, particularly in these times, particularly post-COVID.”
Patel brought up two ways to improve the owner’s business model: payment upon booking with cancellation fees as an industry standard, and e-tipping as a brand standard or industry standard within the brand’s apps. Both of these, he noted, “would go a long way in improving our business model.”
The misalignment with profitability among hospitality constituents and tying it back to the owner’s business model could bring tension in between owners, brands, and operators. Geshay concluded that brands and owners essentially want the same things, including high-quality guest service. The tension, he mentioned, comes from brands asking owners to pay for things the brand wants, which is natural. What matters, Geshay said, is the owner’s investment “because if the hotels aren’t maintained and standards aren’t followed, well then you have a horrible product, and that’s not great for our business either. So, both sides are right.”
However, although there’s tension, Geshay added, “The collaboration, I think, has gotten so much better between brands and owners. As an operator, I’m an agent of the owner. But we can’t get where we need to get if we don’t have a good working relationship with the brands as well. And everybody’s open to it because it impacts all of us, the lack of growth, lack of profitability, the tight margins, frankly, that we’re seeing everywhere, that impacts all of us. There has been a real movement, I think, for collaboration.”
