DAVID M GIBBONS
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The Conundrum of Hotel Convention Blocks 

2/9/2017

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A year ago I was appointed to the position of Executive Director of the Massachusetts Convention Center Authority. To say the least it has been an exciting and fulfilling year on many fronts. One area in particular has been the opportunity to analyze and understand the long term booking dynamics and strategies of the region. To delve into the numbers and leverage the power of the data.
Early in my tenure here I found it necessary to educate and reinforce, to non-hotel stake holders, the basics of room segmentation and the resulting gap between a robust transient prevailing rate and a good, but sober, base convention rate.  There was little knowledge or understanding of the way blocks are built with commitable rooms that were booked far out over the horizon, or that these blocks are the foundation upon which we build a matrix of rates from many years in advance right up to the hour of arrival.
Convincing the development and regulatory community that all hotel rooms are not created equal was another challenge. Hotel development has changed in the past decade, owners favor small limited service properties that are quick and affordable per key to build, are light on operational labor costs and have leased out F&B (if any). These properties receive the benefit of hotel room rate compression generated by a major convention but are rarely if ever part of the block that secured the business. From their perspective they get the best of both worlds - skimming the cream of high priced compressed room rates during an event while avoiding long term bookings that could impede an exit strategy that is likely well before the commitment date we require for a room block. Their fiduciary responsibility may be in protecting their flexibility to flip the asset long before the convention in question comes to town. Also, consider the fact that the convention planners prefer fewer and bigger properties rather than cobbling together, and contracting with a wide array of small and mid-sized properties.
It was not just the lay audience that I needed to engage. My native hotel industry is currently enjoying the financial fruits at the top of a long uphill ADR run. Compression causes an intoxication that comes when all the right factors are in alignment and causes an irrational surge in last minute transient rate. I reminded my colleagues of the history of the last two cycles where the ‘over/under’ has played out in the past. When markets crash transient quickly cascades downhill and suddenly group rates look golden by comparison. In good times properties start to restrict their blocks, in great times they resent their blocks. However, as soon as there is a shudder in the market, there is capitulation and the phones start ringing and formerly wary partners are once again eager to increase their blocks. The problem is that we, at the Authority have such a long trigger time. The convention we do not have today is because four or five years ago we were unable to assemble an acceptable block for the client. Conversely, the proof of the decisions you make today about blocks will not be realized for years to come.
If it was a stock portfolio then room blocks and convention business are the bonds, lower yield but solid, while the transient are the more volatile stocks subject to quick and often severe volatility.  As a market we need to true up our investments and re-calibrate our strategies on a regular basis to match short term rewards with long term stability to create a healthy, durable hotel marketplace.

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2 Degrees of Separation - The Grand Budapest Hotel

3/16/2015

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I love the movie 'The Grand Budapest Hotel' for many reasons, the beautiful whimsy of the landscape, the craftsmanship of the camera work, the skill of the actors, the audacity of the script, but it is the romance of our hotel industry, that is portrayed so acutely in this masterpiece of film, that I love the most. The eccentric guests, the legendary staffers, the rundown palace, the glorious hospitality, the ever turning wheel of fortune, the camaraderie of co-workers - it is all captured here.

If you started as a dishwasher, a bellhop, a busboy, or a kitchen commis and made your way through the labyrinth career ladder then you know these characters with all of your heart. You too became one of the brotherhood and sisterhood of the hospitality industry. Friendships for life that are in your pores and anchors your DNA. Your smile is forever tattooed with that welcoming charm, that open warmth that you extend to all. Wherever you go in your travels the professionals you meet are always just 2 degrees of separation from someone you worked with or for. ‘The Society of the Crossed Keys’ is there to hasten your journey, book you a private table, secure a suite during the convention.

What is different than the movie is the ownership. There are more REITs and fewer baronesses in the boardroom. There are more inspectors looking for standardization, more job combinations and cuts. However, despite all of the commoditization of our properties we are still a community of individuals with a loyalty to each other and a devotion to the art of service.

When you walk into a lobby on the other side of the world you are always at home.




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The Doormen

2/24/2015

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Whenever we drove down Park Lane and passed The Dorchester my grandfather would tell us stories of how the top hatted and tailed doormen were wealthy men in their own right. Like palace guards they were the sentries who controlled the door and the forecourt and choreographed the comings and goings of power, luxe and history. For this they were gratuitously rewarded with cash and gifts and even the occasional hot tip on a horse or a stock. 

In my career I have had the pleasure of working with a number of legendary doormen, gentlemen and one gentlewoman, who were as famous as the properties they manned. 

Tipping in todays world is always a thing that intimidates many powerful people. Doing the math and the protocols at a dining room table with a cognac in one hand and a gold card in the other is much different than trying to figure out what to give a surly doorman on a crowded sidewalk on a rain driven New York night. The world wants a cab but they are all headed for Queens. The right bill in the doorman’s hand and the crowd is parted and you are safe and dry, ensconced in the back of a  black sedan, on your way, on time, to an expensive Broadway curtain.

When I was a rookie Executive Committee member my family would arrive at the hotel for an MOD weekend and as they got out of the cab Sonny the head doorman would reach into his pocket and give my kids $5 each and tell them they had to be good boys. Years later after he had retired I was once again back in New York and heard that he had passed.  I gathered a number of the staff and we went up to the Bronx to the wake to show our respect.

A great place for any General Manager to stay in touch with the reality of his property is to spend some time each day standing at the door listening to the doorstaff, the employees who are literally on the front lines. They will tell you the real deal of how you are doing. Listen!

davidmalcolmgibbons@gmail.com
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Luxury is an Open Window

1/20/2015

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Merriam‑Webster  Definition of WINDOW. an opening especially in the wall of a building for admission of light and air that is usually ....

Growing up hotels were exotic destinations. We were a big family and a summer vacation was packing tents on the roof of the car and heading off to  a series of provincial campgrounds. No A/C in the car so windows were open as we motored down the highway. Tent flaps let in the night breeze. Fresh air is always a fond memory of the luxury of childhood holidays.

Growing older and life became more urbane and more urban. Staying in hotels became part of life and before long a career. Hotels usually had retrofitted air conditioning units stuck under old casement windows. If a guest preferred the city night noises to the battleship drone of the A/C they could always open their window. 

Fast forward. Most new hotels have windows that never contemplated being opened. If windows ever did open they are today often screwed shut in the name of safety. So now we have a sealed box of a room that is dependent upon a complex system of air exchange.

So let’s take a look at this engineered system. Makeup air, conditioned or not, is dumped into the hallways and finds its way under the guest room door and out a bathroom vent to create a flow of air. The wall unit that is found in the guest room only has one job - to heat or cool the air, stagnant or not that is in the room. 

With this in mind walk the property with your Chief Engineer and test the bathroom vents with a ply of kleenex and see if there is a draw. Go up on the roof and check the vent exhaust fans. Put your hand on them to see if they vibrate and that the motors are working. Once during a transition I found 70% of the roof exhaust vent fans were broken and one of the make up air units wasn’t feeding 10 floors. The result was a building filled with stale air, a literal malaise. The poor air becomes a subliminal background problem that  affects the good health and mood of your guests and your staff.

Do yourself, your guests, and your staff a favor and check to see how well your air circulation is working.

davidmalcolmgibbons@gmail.com
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The Hotel Seamstress

1/12/2015

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Most budgets find little room for a seamstress. When you see a concierge who looks like they were suited on Saville Row you know that hotel has a seamstress.

A great hotel needs to have a great seamstress and a great valet. Then the staff are always well turned out in their uniforms, the managers look crisply tailored and guest emergencies become memorable moments of service. 

When the CEO of your top client loses a suit button 20 minutes before his televised board meeting, when your Vice President of Ops splits his pants  on the first day of a property audit, when a new doormen needs his overcoat let out on a frigid morning, you really need someone on property who can sew. Luckily I have been blessed with some great tailors and seamstresses, men and women who learned their craft in far away places like Hong Kong, or Latvia, or Odessa or Rio de Janeiro. They brought their skill along with their work ethic and found a home in the hotel business. In this disposable world we live in sewing is becoming a lost art. I do not know if hotel schools spend a day on the subject.

I remember hosting a Leading Hotel of The World conference with 200 General Managers, and their spouses. They came from the most luxurious hotels around the world descending upon the property with overweight luggage filled with evening dresses and tuxedos. For this challenge we planned ahead. The Executive Housekeeper from a sister property came a few days prior to support our seamstress and set up a complete in-house valet and tailoring station. On the day of arrival, right on cue, there were gowns that needed a hem, dress shirts that had to be laundered, suits to be pressed. Turn around time had to be almost instantaneous there was no option to tell a guest that we could get it ‘expressed’ and it would be back in 24 hours. Like Cinderella the black tie ball had a clock ticking and you did not want any of your guests feeling like a pumpkin.

Every day is not a world wide conference but everyday there is some one in your hotel who needs a stitch. Check your manning guide.

davidmalcolmgibbons@gmail.com
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Brand Standards 

1/4/2015

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One is never sure if Corporate Executives dream up ‘brand standards’ because consistency is the key to their brand differentiation and promise, or if they just don’t trust front line employees.  The word empowerment is bandied about by every hotel management company out there but many don’t trust the waiter to drop the breakfast check at the appropriate time. Where is the bar? How low is the common denominator?

Next time you are having a leisurely breakfast at a corporate transient upper/upscale, don’t blame the otherwise charming and competent waiter for dropping the check the minute your eggs appear, it is the sacred ‘standard’ that has come down from the mountain, he has no room for a judgement call.

Having your name bellowed across the lobby three times before you are checked in is another rigid concept that is often imposed from above. One time I had Bill Gates arriving late in the evening. Even though he had been pre-keyed I thought it appropriate to greet him. Forget using his name, forget brand standards for VIP’s. He jumped out of a black SUV with a driver/bodyguard who looked like he had been trained by some agency in Langley or Tel Aviv. As I approached the ninja sidekick gave me a killer stare that froze me in my tracks. I backed off and smiled as they went straight to the elevator. In the morning my staff had a call that Mr Gates would be leaving at a particular time and requested ‘no goodbyes’. 

So what is the moral? If you are a billionaire and stay in a luxury hotel you do not have to suffer through the brand standards imposed by someone miles away from any front desk. I appreciate when someone uses my name but please don’t keep count and don’t worry I will let you know when I need the check - my guest and I are not finished yet.

davidmalcolmgibbons@gmail.com
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“The Manager of the Night”

12/21/2014

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When I was  a rookie AGM in a New York hotel I would wake up at 4:45 am, be on the subway by 5:15 am and at the hotel before 6:00 am.  My morning ritual was to share a pot of coffee in the back office with the night manager. 

Aside from hearing the happenings of the night one was treated to a little hotel history 101. The night manager was a raconteur of some of the legends of his days in some of the great old hotels of New York. Tales of movie stars and would be presidents, gangsters and home run kings. eccentric owners and some crazy general managers. His stories embodied the romance of what is great about being in our business. Another account, another laugh, a knowing philosophical quip. as he wrapped up his shift and I started mine.

In the better hotels the Night Manager -  wore black tie - Smoking. Guests in their formal wear returning from the Opera or a charity ball were right at home in a soft lit lobby, with the background noise of a live pianist wafting through from the bar, and the gracious manner and greeting of “The Manager of the Night “. 

Now the night manager, is called the night auditor. Somewhere along the way a consultant decided we could get rid of the night auditor but then another consultant decided we could eliminate the more expensive title of night manager and have the night auditor do all of the work! 

No matter his title, he is still the person whom most of the staff never meets!  He is the welcomer of late night road warriors and lost travelers, the bookkeeper who closes the house, and the one who breaks the bad news about the overbooks to the poor walks on a snowy night.

Do yourself a favor and next time you have insomnia go hang with the night guy!

davidmalcolmgibbons@gmail.com
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Transitions - Best and Highest Use

12/13/2014

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Transitions - Best and Highest Use

The economics of real estate demand that an asset should operate at its best and highest use. Striving for this sometimes elusive goal can be the driving force behind a transition.

One used to think about hotels as iconic local landmark institutions, it was unthinkable that they would ever close or change names. Nowadays hotels, which have become commodities, change brands because with the investment of a PIP one can maybe drive a higher Revpar, or perhaps a more favorable management contract. Amazingly some suburban office parks have 20 year old hotels working on their third or fourth incarnation. 

A downturn in the economy, a new highway interchange, a super mall, or metro stop in the wrong place, and suddenly one whole wing of a property becomes a dormitory for a rich local university. What of a condominium tower where the original apartment units values are inextricably tied to the halo of a hotel brand that is about to disappear. In one transition a local newspaper publisher asked me about rumors that the adjoining apartments would lose 15% of their value the day we transitioned the historic hotel. I told him not to worry that in their home country the incoming brand managed palaces for royalty. 

Sometimes it can just be about the dirt and the air. When the land value and the vertical development rights become more valuable than the existing hotel then the compelling equation is to tear it down. I was the last General Manager of such a situation. We were operating a 500 room luxury hotel with great margins and cash flow.  A half billion dollars later it was shuttered and torn down and became the world’s most expensive vacant lot. Today it has just topped off higher than the Empire State Building and is selling some of the most expensive apartments anywhere.

Some asset managers miss their window of opportunity as earlier hands have already been in the cookie jar and an encumbering oversized mortgage or onerous management agreement leave them on the shore watching the tide come in unable to make a play but for some the timing is right and they catch the perfect wave and ride it!


davidmalcolmgibbons@gmail.com
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CSI Hotels - The Forensics of Transitions

12/7/2014

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Don’t forget that the hotel business is at the end of the day all about bricks and mortar.  When transitioning a property with all of the action of operations and personnel make sure you get behind the scenes and get a quick handle on how the building really works or doesn’t.

Start on the roof and work your way to the basement. You will get to see systems that are patched or broken or atrophied and abandoned. Usually every issue has a back story and the best keeper of those stories will be a shift engineer. This is what I call the forensics of the building, the witness marks of prior problems. It will tell you the talent level of the property team and also the asset philosophy and expertise of the owners and management companies past and present.

Once in an overcrowded hotel basement that dated back to the 1920’s I could see where every time a new system or new wires were run no one removed the old. You ended up with generations of redundant pipes and wires. In one situation, ten years earlier, the hotel had converted to city steam and had bypassed the old boiler system and fuel bunker.  You could tell that the tax credits that were used for the crossover did not have an allowance for the removal of the old. Fast forward to the present a whole section of the basement had a rusted out boiler system that was going to cost a new owner major money to cut up and remove.

davidmalcolmgibbons@gmail.com
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Hotel Transitions - The First 48 Hours

11/30/2014

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A hotel is a complex enterprise with hundreds of employees, thousands of processes, and  a million moving parts. Transitioning such a detailed entity from owner to owner or brand to brand is something that needs to happen all at once -’at the stroke of midnight’, or whenever the bankers and brokers have decided. As the General Manager your job is to quickly get your arms around it all, have an acute helicopter view and to move it all forward with great rapidity towards a pre-determined pro forma destination.

Like a crime scene the best window of reality is the first 48 hours. The clues you discover are invaluable, those precious first impressions are often right and leave an indelible mark. Burned out light bulbs, room service trays in the hallways, outdated promo pieces in the elevator tell you a whole lot about different departments but more so of the overall morale of the property. You also get to see who are the everyday heros who shine through even in the midst of dynamic change.  You have to be aware that many of the staff feel abandoned by the outgoing flag. They have worn this corporate identity and wowed many customers in the name of the ‘brand’. Now some of them feel like foster children being sent back to the orphanage. Your job is to give them a fair sense of purpose and security so that they can focus on the job at hand and deliver the hospitality promise to your guests.

In a few short days the staff have an invisible GPS tag on you, a boss radar. They know you are coming before you turn a corner and suddenly what you see is a show for the boss. All the reason more to take advantage of those first few days.  Be on the loading dock at 5:00 am and find out who is dropping what produce on your dock and who if anyone on your side is checking it in. Then check with the night auditor to find out what happened after midnight,  then a coffee in the employee cafe with the incoming morning team to see who starts their day with a smile, and whose kid is sick.

Remember it is a two way arrangement, as you are judging the staff they are judging you. You will be remembered for your modesty, your manners, or your arrogance, long remembered will be your commitments of those first few days.

davidmalcolmgibbons@gmail.com

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