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

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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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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