Full transcript
0:00Welcome. Today, we have our wonderful
0:02guest David Breeding, who is the senior
0:05vice president of design and
0:06construction for Ambridge Hospitality.
0:08Welcome, David.
0:10>> Thank you. Glad to be here.
0:12>> Great to see you. Why don't we start
0:16with a few quick questions for the
0:18students about hotel brand standards. If
0:21you're going to do a hotel with a brand,
0:24how many are aware that hotels have
0:27minimum brand standards that they will
0:28require of you? So, if you want to build
0:31a Marriott, they're going to tell you
0:32these are the minimum things that you
0:33need to do. And last time we talked
0:37about a PIP. So, you all have heard
0:38about a PIP or a property improvement
0:41plan. And we're going to dig into that
0:43today with our guest David. So, David
0:46and I actually worked together at IHG,
0:49where we had the the pleasure to be in
0:51the trenches together
0:53>> [laughter]
0:54>> for several years. And David was leading
0:58the architecture
1:00and design team at IHG at that time. And
1:03then now being at Ambridge, which is on
1:07the management company side, you've been
1:08able to see things from both sides of
1:11one putting together the standards of
1:13what you're asking owners to do. And
1:15then now you help owners navigate how to
1:18handle the PIPs from the brands. But
1:20you've also built hotels in the past.
1:22One of our hotels that that we own, the
1:25Marriott in St. Louis, was a project
1:27that he worked on before I knew you. So,
1:30we've had a few intersecting lines. But
1:32I love that you have so many
1:34perspectives around building hotels and
1:37doing it to brand standards. So, really
1:39good to have you here today.
1:40>> As Lan was mentioning, we worked
1:42together at IHG.
1:44Um
1:45Lan, maybe now's the time for me to
1:47talk a little bit about who I am and
1:49sort of where I am.
1:49>> Yeah. Yeah, I'd love you to share your
1:51your journey. So, that would be great.
1:53>> So, I think it's it's it's interesting
1:55is and it my journey is a unique
1:57journey, and it was it was done by
1:59design.
2:00Um I grew up in the construction
2:02industry.
2:04My parents had their own company. I knew
2:06what construction was. I worked on the
2:07job sites during the summers, on
2:10weekends, and you know what? I
2:11absolutely hated it.
2:13So, I decided to be an architect, and my
2:14dad said, "Oh,
2:16you're going to be the person who can't
2:18draw
2:19anything correctly and is always wrong."
2:21I said, "Yeah, just like you're the
2:22person who can't build things
2:24correctly."
2:25So, we had a common, you know, a common
2:28feeling towards each other.
2:30But, I went into architecture, and I
2:31practiced architecture for about 10
2:33years.
2:35And I was actually doing retail design
2:38and construction.
2:39And I had no desire whatsoever to go
2:42into hospitality. I thought I would
2:45start my career and finish my career in
2:47retail. I loved it. It was It was a fun
2:50role, and
2:52there was one day I was told I was late
2:54to a meeting,
2:55and I fell into two hospitality projects
2:58that were under construction.
3:00And later I found that the only reason I
3:02was brought into them was because
3:04I had a construction background and you
3:06had to creatively solve problems,
3:08and I was able to bring the project
3:10back to within budget and back to within
3:12schedule.
3:14Um so, that was kind of my baptism into
3:18hospitality.
3:19And from there, it then grew to
3:22um
3:24much larger roles.
3:25But, I think what's interesting was a
3:28couple things I would throw out there is
3:29if you ever had the opportunity to
3:32intern while you're continuing your
3:34college career,
3:36jump on that as quickly as you can
3:38because I learned so much while I was
3:41getting my master's degree in
3:43architecture
3:44while interning for one of the largest
3:46architecture firms in the world.
3:48It opened up so many doors for me so
3:51early on in my career
3:53that if you looked at my first five
3:56years of my career
3:58versus my peers first five years of
4:00their career
4:02I was
4:03light years ahead of where they were cuz
4:05I had the opportunity to intern
4:07and they didn't. They wanted to continue
4:08to pursue a college career and have fun
4:11which you know we all have fun in
4:13college.
4:14But I'd say if you had the opportunity
4:15to intern you should definitely do so.
4:18Um
4:19So my first job was an architect
4:22uh
4:22licensed architect and still hold my
4:24license in
4:26a couple of different states. I quit
4:27practicing in 2020
4:30where uh I was working on
4:33the project that Lan mentioned which is
4:36uh
4:37uh a big project up in St. Louis
4:40and I walked out of a meeting with the
4:42architects, the contractors, the
4:45subcontractors, the consultants
4:47and realized I was not going to continue
4:50to yell and scream and argue with
4:52everyone at the table.
4:54And what I didn't know was how the
4:56ownership thought, what their thought
4:58process was, and what the brand thought
5:00process was.
5:01So I decided I was going to leave and go
5:03to work for the brand.
5:04And I did. I left and I went to work for
5:06Gaylord Hotels
5:08and actually built a very large hotel in
5:12uh Dallas
5:14about a half a billion-dollar project
5:17was very heavily involved in the Gaylord
5:20project at uh
5:22um the Gaylord National in DC
5:25helped do the early underwriting the
5:27Gaylord that's being built in San Diego
5:31and also the the Gaylord in uh
5:34Denver, Colorado.
5:36So again, it was by decision
5:40design that I bounced from role to role
5:43to learn the perspectives of those
5:45around the table
5:46because what I will say early on, what I
5:49said early on was
5:51go find opportunities. If you want to
5:53learn more about how the business side
5:54works, if you want to learn more about
5:55the brand side,
5:57or the construction side, go do it.
5:59You're young in your career, you you can
6:01do that. You can bounce back and forth
6:03between different roles, but
6:06gather that knowledge as much as you can
6:09um
6:10while you're while you're starting your
6:12career. Find some great mentors, you
6:14know, network along the way. Um that's
6:17what it's all about.
6:18Is is doing that. So, again,
6:20I had no idea I was going to get in
6:22hospitality, and I've been in
6:23hospitality almost 30 years now.
6:27I love it. It's it's a it's very
6:30a passion of mine. I've met some great
6:33people. Lana and I connected, and we've
6:35been friends for
6:36what, over 10 years now.
6:38But we have such common goals in life.
6:41How do you help people? How do you help
6:43them achieve their goals? How do you
6:45understand their goals?
6:47That's what it's all about. Hospitality
6:48is is about helping people. That's the
6:50fun part of it.
6:52So.
6:53I mean, I I may have rambled a little
6:55bit too long, but that's kind of my goal
6:56in in sort of my career path to where I
6:59am.
6:59I learn something new every day,
7:01and I love to help people. I love to
7:03mentor people. That's that's the fun
7:05part of it.
7:07>> Absolutely. Thank you, David. I
7:08definitely came to David a lot of times
7:10with a problem going, I've no idea how
7:12to do this. I'm just a deal person.
7:14Like, tell me how I'm going to fix this
7:15problem. Um and and David always had um
7:18great creative solutions. So, um so
7:21yeah.
7:21>> We We That's interesting, Lana, that you
7:23mentioned that because there were there
7:25were problems that we we both incurred
7:27that we had no idea how to solve.
7:29But we put our heads together, and we
7:30figured it out, and
7:32you know, I see ourselves as creative
7:34problem solvers. We figured it out.
7:36>> Let's dig in on the process of how
7:40owners and brands determine what the
7:42hotel's physical design is going to look
7:45like. And as I mentioned in the last
7:46class when we had Heather, she discussed
7:49why PIPs are important when you're
7:51looking at a hotel deal and you're
7:53thinking, "Okay, I want to take it to
7:56this brand or another brand." The PIPs
7:58can be really important because the cost
8:01to do that work that you agree with the
8:03brand you're going to do X, Y, and Z
8:05things to the hotel. There are projects
8:08where that might be more than the cost
8:10of what you put in to buy the hotel. You
8:13might buy it for a certain price, but
8:14the PIP could be the same amount or even
8:16more. I mean, it just depends on the
8:18deal. And so, it can have a really major
8:20impact on the profitability of your
8:24project in terms of what the scope of
8:26your PIP is, how much you're going to
8:28agree to do, what timing you're going to
8:31do it in,
8:32um, and to what standard. So, that is
8:35definitely a part of the negotiation
8:37when you are working with a brand.
8:39You're negotiating your franchise fees
8:41and you're negotiating how long your
8:43contract's going to be and all those
8:44other rights that we talked about last
8:46time, but you're also negotiating what
8:49does the PIP look like. So, don't assume
8:51when you get the PIP that that's what
8:53it's going to be. Some Some owners
8:55negotiate more heavily than others, but
8:57it is all part of a negotiation in terms
9:01of how that happens. And when we were at
9:04IHG together, David's team was
9:05responsible for writing the PIPs. Um,
9:09and so, we were always in the middle of
9:11something together where an owner was
9:13negotiating something. And, you know,
9:15David's team would write the PIP and
9:16we'd send it to the owner and the owner
9:18said, "I don't want to do all that." And
9:20then we had to sit down and negotiate
9:21like what was fair, what was going to be
9:23most impact, what was really necessary,
9:26could we be a little more flexible. But,
9:28there is a whole process in terms of how
9:32those PIPs get written and what the
9:34negotiation looks like. David, do you
9:37want to share for example, if an owner's
9:40buying a hotel and converting it to a
9:42new brand, what's the process for
9:44generating
9:46How How does the process begin?
9:47>> Yes, so so
9:49you know, as Lynn mentioned, the PIP is
9:52is sort of the guidelines. It's the
9:53minimum guidelines
9:55that the brand requires
9:58the franchisee to perform
10:02to allow their flag to be put on that
10:03hotel. I Holiday Inn Express,
10:07Staybridge Suites,
10:08uh Courtyard Marriott, Hilton, pick any
10:11one of the brands. They all have basic
10:13minimum standards that they want to
10:14apply adhere to
10:17so you can put their flag on
10:19on the building.
10:20And the way it starts off is either the
10:22seller can request a PIP,
10:25change of ownership PIP, or the buyer
10:28can request a a PIP.
10:30There are different kinds of PIPs.
10:31There's the change of ownership PIP when
10:33the owners change and sell to another
10:35owner but keep the flag.
10:37That's a change of ownership PIP. Then
10:38you have a a license renewal, which is
10:41when your license actually expires and
10:43you have to renew, so that's another uh
10:45version of a PIP.
10:46Then you have a soft goods PIP, which is
10:48something that usually falls within the
10:50five to seven range,
10:51five to seven year range,
10:53where you're changing out all your soft
10:55goods, your carpet, your upholstered
10:57seating, things like that, your
10:58draperies, your window treatments,
11:00lighting.
11:01And then there's a hard goods PIP, which
11:02usually takes place around the 12 to 15
11:05year mark. And all the brands are about
11:08the same, they all have about the same
11:10time frame.
11:11So when you're writing when you're
11:13reviewing a PIP and underwriting it,
11:16you really sort of have to know
11:18where it is in the
11:20in the life of the project because you
11:23can negotiate certain things in and out
11:25of the PIP based on where it is in the
11:27life cycle of the project.
11:30>> Hey, sorry, quickly, uh
11:31could you just dive into a little deeper
11:34quickly for them the difference between
11:36soft goods and hard goods?
11:38>> Sure.
11:39So, a soft good PIP when you sign your
11:41license agreement with the brand and you
11:44negotiated your terms, it could be a
11:4615-year license agreement, 20-year
11:49license agreement.
11:50Um and during that time frame,
11:53about every 5 to 7 years, you're going
11:57to be renovating your hotel.
11:59So, a soft good renovation will be after
12:025 to 7 years, depending on what your
12:05term states,
12:06in the guest rooms, replace the
12:08carpeting, you'll replace the drapery,
12:11you'll probably replace the artwork,
12:13you'll replace the bedding,
12:15and really it's a it's intended to be a
12:17light refresh
12:19of the guest rooms, not very heavily
12:22um burdened on cost,
12:25but it's it's the lighter things. It's
12:26the things that typically wear out the
12:28quickest that need replacing.
12:31The difference between that and a hard
12:32good renovation is you're going to
12:34actually tear out your case goods,
12:36replace your case goods, you're going to
12:38replace all your wall finishes,
12:40you're going to tear up your hard
12:41flooring, you're going to replace your
12:43bathroom fixtures, your tile in the
12:46bathroom on the floors and the walls,
12:48your lighted mirrors. You're going to
12:49spend a lot more money. So, the
12:51difference usually is
12:53about 30% of the total value of the cost
12:56could be a soft good renovation
12:58versus about 100% of the cost for um
13:03you know, a hard good renovation. Cuz
13:05case goods are designed to last 10 to 15
13:08years plus.
13:10Soft goods are designed to last between
13:12the 5 to 7.
13:13Um so, that Does that kind of make a
13:15little bit more sense,
13:17difference between a soft good
13:18renovation and a hard good renovation?
13:22>> Yeah, thank you so much for going into
13:23that for us, David.
13:25>> Sure. Sure.
13:26So, let me
13:27>> call that goods renovation if you're
13:29doing if you're doing the furniture,
13:31right? So, the nightstand, if you've got
13:34an armoire if it's not built in, if
13:36you've got a dresser, those are the case
13:38goods you'll normally see. And so, it's
13:41sometimes called a case goods
13:42renovation. And sometimes they wear out
13:45and sometimes they just are no longer
13:48fashionable. They just get ugly over
13:51time. And you might see something that's
13:52in perfectly good condition. The owner
13:54spent a lot of money and it was
13:55well-built, but after 12 years it just
13:58looks really dated and the brand may
14:00want you to change it out. And so, that
14:02that usually becomes one of the
14:04negotiations, right? Like, does it
14:06really have to be replaced? It's not
14:07falling apart, but obviously it doesn't
14:10look fresh. It doesn't look in style
14:13right now, what people would be
14:14installing. So, that's always
14:17>> Or and in in a soft goods, you know,
14:19sometimes you have a little bit of
14:20leeway to
14:21to touch it up
14:23and refinish it versus replacing them.
14:25Let's take a look at a couple of
14:26different PIPs that I've got that I can
14:29share. This happens to be a holiday I'll
14:32share two PIPs with you. One will be of
14:35a Marriott branded hotel and the other
14:37will be of an IHG branded hotel just so
14:38you can see the differences between the
14:40two, but also focus on the similarities.
14:43So,
14:44what a PIP sort of entails is general
14:47hotel information such as the name, the
14:48address, location,
14:50you got project number, location number,
14:52and in code, and when it was built,
14:55number of rooms, number of stories, when
14:58it was visited, and when it's issued and
15:01then how long the the PIP is valid for
15:04cuz PIPs do expire, usually about a
15:066-month lifespan before it expires.
15:09Then it lists sort of your major
15:11milestone dates of when you actually
15:13have to submit your plans to plan review
15:16for review, when you get the approval to
15:18proceed with your innovation, can start
15:21it, and when you expected to complete
15:23it.
15:24Um
15:26And then it's got some just some general
15:28you know general
15:29CYA language if you will listed in every
15:32PIP.
15:33Um then you agree to it it becomes it
15:36becomes a binding agreement to your
15:38license agreement your franchise
15:40agreement. So it's binding you've got to
15:42follow through on it.
15:44Um
15:45Then it lists sort of the code
15:46requirements then it lists where you can
15:48go find information about the particular
15:52um guidelines for whichever brand it is
15:54you're working on. This one happens to
15:56be
15:57a Holiday Inn
15:59which I'll share with you in a second.
16:01Uh the design connect cuz each brand
16:04has their own design standards and they
16:07give you access to the different
16:09websites to go download that information
16:12find that information.
16:14And then it talks about the different
16:15standards um that you should be adhering
16:18to.
16:20Brand standards and ADA compliance.
16:23Um and then it begins to break down the
16:26rooms in terms of the total number of
16:28rooms
16:29showers and tubs types of room for the
16:32room mix
16:34type of construction exterior
16:36construction parking spaces
16:39um
16:40smoke detector fire life safety
16:41requirements
16:43um
16:44meeting space F&B and maintenance.
16:47And then you start to get into the fun
16:49stuff.
16:49>> All of this is the existing when the
16:51person comes to walk the hotel to write
16:53the PIP.
16:54>> Correct.
16:55>> This is not what's required but this is
16:57what's existing.
16:58>> Correct. And and one thing to keep in
17:00mind
17:02when a PIP is written
17:04the PIP is written with the
17:06understanding that the property has been
17:08maintained
17:10in accordance with standard guidelines.
17:13So deferred maintenance. So when it says
17:15replace whatever It's assuming that that
17:19the building is already in compliance
17:21with code and everything installed in it
17:23is is up-to-date. So,
17:26a fallacy you run into as you will start
17:28to get involved in these
17:30is
17:31the PIP may cost $2 million on a
17:33100-room renovation for a soft good PIP,
17:37but it may have a million dollars worth
17:39of deferred maintenance.
17:41So, you've got to always take that into
17:42consideration because the brand's not
17:44required to tell you when building
17:46doesn't meet code or has not been
17:50properly maintained. So, you've got to
17:51keep that in mind. So, as you're
17:54reviewing your budgets and you're
17:55underwriting these um PIPs,
17:59at you have to ask the question,
18:00"Deferred maintenance, is it included or
18:02not included? Are there separate line
18:04items?" Because often
18:06that's what gets owners in trouble. They
18:08underwrite the PIP, they go in thinking
18:10it's a $2 million problem, they find out
18:12it's three, and then they want to
18:13negotiate with the brand because they
18:15don't have the extra million dollars to
18:17maintain the property. They have the
18:20and it's a property need.
18:22Um
18:23So, kind of going forward, these are
18:24just some general requirements for all
18:26items. It talks about your finishes and
18:28your guest rooms and public areas.
18:30Door finishes, carpet, window, door
18:33locks, artwork, lighting, signage.
18:37Um then exterior uh life safety
18:39requirements where it talks about
18:42um needing fire um extinguishers. It
18:45talks about sustainability cuz
18:47everything
18:48all brands today are looking to be
18:50sustainable just as we all are looking
18:52to save the planet
18:54minimize the amount of energy, minimize
18:56the amount of waste, water, so on so
18:58forth. So, there's always a
18:59sustainability statement provided.
19:02>> Sorry, on the life safety you've got
19:03there. A lot of these things do get
19:05negotiated, but what I found is life
19:08safety tends to be the one thing that
19:11the brands won't be very flexible on.
19:14So, you might be able to negotiate, you
19:16know, I'm going to do this or I'm going
19:18to do it later. I'm not going to do it
19:20right away. I'll do it in 3 years. But,
19:22I'd say that life safety is one area
19:24almost all the brands are pretty rigid
19:26on.
19:27>> Yes.
19:28And actually, the thing about life
19:29safety, Lynn,
19:31the brands life safety criteria
19:34often exceeds building code criteria.
19:38It's more stringent than building code
19:40criteria, and owners don't think they
19:42have to do it,
19:43and they quickly find out that in order
19:45for the flag to go on the building,
19:48you have to do the life safety
19:49requirements for the brand standards.
19:51Otherwise, they won't put the flag on
19:52the building.
19:54So, again, keep that in mind as you're
19:56as you're evaluating these.
19:59So, again, then it goes into exterior,
20:00then it talks a little bit about site
20:02work,
20:03and then talks about the building
20:04exterior, patio.
20:06So, kind of as you see,
20:09you know, the beginning of the of the
20:11PIP up here talks about the existing
20:13aspects of the building.
20:15Then it begins to talk about just
20:17general requirements are needed, then it
20:20begins to break it down in the different
20:21categories,
20:23um in different areas of the project.
20:26Then when you start getting into the
20:27public areas,
20:29you start to get into a little bit of
20:31the uh the requirements where
20:33you're replacing finishes or you're
20:35replacing
20:37um reconfiguring the building with if
20:39you will.
20:40Um then you get into the front desk and
20:42market, and they try to break it down in
20:44areas as you're walking through the
20:46building from a from a sequence
20:48perspective.
20:50Um
20:51but a quick quick question before we go
20:53further.
20:54Does anyone know where the bulk of the
20:56costs are in
20:59a PIP renovation, whether it be
21:01soft goods, hard goods, or change of
21:04ownership? Just a question.
21:06Where do you think the most money is?
21:08>> What do you think is the most expensive?
21:10>> Between Yeah, is it is it in your
21:13restaurants? Is it in your public area?
21:15Is it your site work? Is it your guest
21:17rooms? Where do you think it may be?
21:19>> What do you think? Fire life safety
21:21maintenance stuff. What do you think?
21:22Safety.
21:25We have got one vote in here for
21:27fire life safety maintenance.
21:30>> What do you think? What?
21:32>> Any others?
21:33>> Probably Tuesday.
21:35>> What?
21:36Electrical.
21:40>> I I think guest rooms because they're
21:42it's normally just a larger area in
21:44general.
21:46>> Yep. Guest rooms are are the Guest rooms
21:49are your multipliers. So,
21:51if you have a
21:53a $3,000 item in a guest room that's
21:55multiplied over 150 or 200 or 300 guest
21:58rooms,
21:59that's the multiplier. That's where the
22:01cost begins to add up really quickly.
22:02So,
22:03as you're as you're looking at these
22:06pips, when you start underwriting these
22:08pips,
22:09you're the bulk of your cost are always
22:11going to be in your guest rooms. Those
22:13are going to be where your where high
22:14dollars are, and that's where you're
22:16going to try to value engineer as much
22:18as you can
22:19because that's your multiplier. Lobbies
22:21and bar spaces usually come in second,
22:23depending on the type of hotel,
22:26you start looking at your meeting spaces
22:28because your meeting spaces can become
22:30very large. And then, of course, life
22:33safety.
22:35And life safety is some of those where
22:37new standards are going in place and not
22:39everyone wants to comply with new
22:41standards
22:42for life safety. Nobody wants to have
22:45catastrophes in a hotel.
22:47So, then it goes on to public areas,
22:49meeting spaces, business center.
22:51And as you can see as you're reading
22:53through, but it talks about, you know,
22:56new equipment, new graphic wall cover,
22:59provided a
23:01new artwork,
23:02towel storage, trash receptacles. So,
23:05it's very clear on what they're
23:06expecting you to put in.
23:08And they're viewing this based on it
23:10doesn't exist in the hotel now, or if it
23:13does,
23:14it's completely worn out and needs to be
23:16replaced.
23:18Um
23:19and let's go to kind of guest rooms,
23:21like lobby
23:23areas, new
23:24new finishes, elevators, corridors, it's
23:27new mirror,
23:29uh artwork.
23:31And then here's where you start getting
23:32to the bulk of it.
23:34So, like an area where
23:36you would want to push back. Um Atlanta,
23:39and I know this because we work for the
23:40brand.
23:42All Holiday Inns now are putting in
23:44what's called welcome books.
23:46So, you can negotiate those in or out
23:48depending on size of room, configuration
23:51of room.
23:52And um
23:54um that's a little bit of pushback.
23:56Um approved countertops and casework and
23:58closets, we'll move them.
24:01Push back a little bit there.
24:03Do not disturb indicators.
24:06I'm [laughter] sorry.
24:07>> You're going to look for the big ticket
24:08items, right? If you're a seller. When
24:10you get this PIP, you go, "Oh my god, my
24:12buyers are going to all hit my purchase
24:14price cuz I have to put all this stuff
24:16in." So, the seller's going to first
24:17say, "I don't like this PIP. You need to
24:19take the the new case goods out, and
24:22they're fine. They work fine. Um you
24:24know, we don't need this, we don't need
24:26that." So, then there's a negotiation
24:28with the seller. And then you go through
24:30the process and then a buyer ends up
24:33being selected, and then the buyer goes,
24:35"Oh, well, here's this PIP.
24:37>> [laughter]
24:37>> I don't really like it. I want to
24:39negotiate this PIP." So,
24:41um the brand teams know they're going to
24:43see multiple rounds of negotiations from
24:45different parties.
24:47>> Yeah.
24:48And the other tidbit of of info that's
24:49good to know is
24:51always try to negotiate it out of the
24:53PIP before the license agreement is
24:54executed.
24:56Because if you don't, then you have to
24:58go through the waiver process and the
25:00waiver process is more difficult to get
25:03it taken out of the PIP. And if it's not
25:06taken out of the PIP, then you get
25:08dinged on it through your QA scores when
25:10they come back and inspect your hotel
25:12because
25:14there was not a waiver for something
25:16that was required in the PIP and you get
25:17scored negatively for that.
25:19>> Like every time they come to see you, so
25:22you can get fines again and again and
25:23again every time they visit you.
25:25>> Every single time.
25:27>> Yeah, that get that gets expensive.
25:29>> Yeah.
25:30So, guest rooms and then you have guest
25:32suites and then you have bathrooms. The
25:34second part of the pushback too, I'd say
25:37also is your bathroom because normally
25:38your bathrooms aren't all that bad.
25:40Most people want to have a nice clean
25:42bathroom that's well-lit and a lot of it
25:45is
25:46replacing the lighting with lighted
25:47mirrors.
25:48Um cleaning the tile if the tile is
25:51dingy or dirty. Um
25:54you can acid wash it wash it and clean
25:56it, but if it's in good condition,
25:57you'll pull it out start over.
26:00Um and that's the extent of of kind of
26:02the PIP on
26:04a holiday.
26:05Um
26:06let me show you just another one which
26:09is
26:10Marriott's PIP again.
26:13Same sort of format. You know, it talks
26:15about the dates.
26:17Um
26:18who wrote it.
26:20Few remarks, how long is you know, your
26:22completion dates.
26:24Then some general stuff, some ADA
26:27requirements, technology. Then they
26:29start doing the same format similar
26:31format. You got your site work, you got
26:33your exterior
26:35of the building, your parking area.
26:38Your landscaping.
26:40Um
26:41again, just all the way around the
26:42building then you start going into the
26:43inside of the building.
26:45Um I hear must implement must recent
26:47decor package of time of implementation
26:49or submit a custom decor package from
26:51Marriott.
26:53So, there's design guidelines and
26:55standards you can look at.
26:57But then it just begins to list
26:59everything you have to do it, whether
27:00you have to replace it, re-image it.
27:03This one like 29, re-image the
27:05fireplace.
27:08Can anyone tell me what that means?
27:11>> Is that even a word?
27:13>> It's probably not, but
27:16>> [laughter]
27:16>> but but the point is they don't like the
27:18fireplace, but they give you
27:21the latitude to make changes,
27:23but you don't really know what you're
27:24doing, but it's got to fit with this
27:26overall
27:27most recent the core package. So,
27:30there's design guidelines that sort of
27:31help you
27:33understand what that may or may be,
27:35which is goes back to you have to submit
27:37your plans and drawings to
27:40the brand team, so the brand team can
27:42sign off on your design aesthetics.
27:45Again, it's very subjective.
27:48>> David, well, I mean, it's a lot of work,
27:50and and if Marriott knows what they have
27:52in mind, will the brands give give an
27:54estimate of what this will cost?
27:57>> The brands have what's called brand
27:59calculators,
28:01but I would tell you use those
28:03with extreme caution, because those
28:05calculators are not accurate.
28:09Case in point, we have three projects
28:12right now that we used brand calculators
28:15for two different brands,
28:17and they came in about
28:2040% less than what the actual cost were.
28:23And so now now we're having to explain
28:26to an owner
28:28that we used the brand calculators
28:31and explain to them why there were
28:32differences.
28:34Um fortunately for us, it was they also
28:36changed scope on us and didn't tell us
28:38they changed the scope. So, that added
28:41cost. Like when you're in the guest
28:43rooms and
28:44you know, your typical guest room may
28:46have
28:47uh
28:48you know
28:49one
28:51uh
28:52lounge chair and ottoman.
28:54But now they're putting two in it
28:55because of the size of the room.
28:57That adds cost and then they start
28:59adding other pieces of furniture that
29:01are adding cost. So those types of
29:03things start start changing. But you got
29:05to look at these things
29:08very carefully and compare. One of my
29:10mentors early on said
29:12you have to pick
29:14the fly out of the pepper. That's
29:17how granular you have to be because all
29:19that stuff begins to add up.
29:21And I know Landy, you're kind of shaking
29:23your head going, "What does that mean?"
29:24>> What does that mean?
29:25>> [laughter]
29:26>> Think
29:27Think of like pepper. When you grind
29:29pepper
29:30>> Mhm.
29:31>> think of the how small and minute
29:33uh fly is. Like a fly lands on it.
29:36It's I mean you've got to get that level
29:38of detail to understand what the nuances
29:41are
29:42because if you're not careful, you'll
29:45you'll agree to something that you don't
29:46even know what you're agreeing to
29:47because you don't understand it. Like
29:49you said,
29:50"What does re-image a fireplace mean?"
29:52You've got to ask the questions. You've
29:53got to go back to the brand. You've got
29:55to negotiate.
29:56Um
29:57so again, kind of going back on further
30:00down, you know, you're back in the
30:01restrooms and then to the restaurant,
30:04the fitness center or does
30:06uh
30:08retail meeting spaces and
30:10guestrooms.
30:11So as you can see, they take they take
30:14the same similar format.
30:16They're calling out the same similar
30:18types of things that they want to
30:20replace or repair
30:23as you can see. Um
30:26And so
30:28and then then you get down to the back
30:30of house area.
30:31Here's the fire protection, which
30:33Marriott is a stickler on fire
30:35protection of any brand out there.
30:38Marriott is the most stringent when it
30:42comes to life safety requirements.
30:45Um
30:47and second to that probably be Hilton
30:49and then third probably be a toss up
30:51between
30:52IHG and Hyatt.
30:54Um those are kind of your bigger flags.
30:57But Marriott sets the standards and I
31:00think a lot of franchisees and other
31:02brands try to follow Marriott standards
31:05because Marriott spends a fortune on
31:09life safety.
31:10They are not going to have accidents in
31:12their hotels and if they are
31:15their guests and their employees are
31:17going to be protected. So always think
31:19about that.
31:21>> Yeah, a while back the person in charge
31:23of fire and life safety at Marriott was
31:25a former fire marshal.
31:27Um so he was very specific, but there's
31:29also been in the history where there was
31:32a fire and guests were killed and
31:36Marriott was sued along with the owner.
31:39Um
31:40and so Marriott's very protective. They
31:43don't ever want to see the name of the
31:45hotel and have it say that someone died
31:46in a Marriott hotel. So it's one of the
31:49reasons they're so so specific on it
31:52above and beyond even what local
31:54regulations will require. So
31:56>> Yeah, Mr. Marriott said there would
31:58never be another death in my hotel
32:00related to fire and life safety.
32:02And so they go above and beyond and
32:05I think they've got a lot of great
32:06standards.
32:07Um but again
32:09just also keep in mind
32:11you have to hire the right design
32:13consultants
32:15that understand Marriott's life safety
32:17standards like the back of their hands
32:19because there are many ways to skin the
32:22cat
32:23to achieve the same objective.
32:26So keep that in mind. There's not just
32:28one way of doing it. There's multiple
32:30ways of doing it.
32:32But hire the right the right consultants
32:34that understand
32:35um
32:37the Marriott life safety standards.
32:39>> And there are I mean people who work
32:41with the hotel brands all the time, the
32:44ones who have actually done those
32:46projects and you know, not just worked
32:49on a pretty design but actually lived
32:51through the renovation and got it
32:52approved. Then you kind of find out, you
32:55know, if Marriott's happy, if the design
32:57what what things they'll approve in the
32:58design, what things they won't. But also
33:01the other person I think is really
33:02important is to have a good estimator.
33:05When we work on a hotel we're looking to
33:07buy, we have our favorite estimator and
33:09we have him always look at these PIPs
33:12and help us price them out.
33:14Um and you know, you find your person
33:16that you think is pretty accurate and
33:18does a good job for you and has had a
33:20good history and and that's the person
33:22you end up probably going to. Um and you
33:25got to pay them to do it but if you're
33:27in diligence, we always uh will spend
33:29the money to have them do the estimate.
33:31Maybe even before diligence, maybe we
33:33won't even uh in the bidding phase. If
33:35it's a big project with a lot of work,
33:36we might um pay for it. You know, just
33:39serious about it you all.
33:40>> Yeah.
33:41So so just kind of a recap uh
33:44and I've got some notes I'm looking at
33:45on the screen over here. So
33:47um the three different kinds of PIPs we
33:49talked about were soft goods, hard goods
33:51and change of ownership.
33:53Um
33:54there's also another one that's called a
33:55voluntary PIP which is a one that
33:57typically wants to spend on more money
33:59in the hotel
34:01to do things that are off cycle and
34:03usually the brand will allow you to do
34:05it if you get brand approval to do it.
34:07Um
34:08but yes, there's wiggle room but you
34:10have to know where there's wiggle room.
34:12We talked a little bit about where they
34:13are.
34:14Um scope and schedule
34:16is typically negotiable. Um
34:20things that are set in stone, we talked
34:21about life safety. We didn't really talk
34:23about some of the brand standards and
34:25brand hallmarks
34:27that are not negotiable meaning if you
34:30go to
34:31um a Holiday Inn Express, it has very
34:34specific blue lights on the outside of
34:36the building. It's going to always have
34:38blue lights on the outside of the
34:39building, whether you like it or not.
34:40You can't get away from those things.
34:42But, there's certain things that
34:44are brand hallmarks that they will not
34:47wave on, like the behind the front desk,
34:50there's always a logo of the brand,
34:52there's always certain
34:54naming signage of the brand. They're not
34:56going to back off on certain things like
34:57that. Um, but you got to ask the
34:59question.
35:00And then, you know, the calculators, use
35:02those as guidelines.
35:04Don't hang your hat on those. Take the
35:06advice that Lan just mentioned to you.
35:08Go hire a a cost estimator.
35:11Go talk to people.
35:13Keep in mind,
35:14there's lots of people that are going to
35:16say, "I'll do that for free. I'll do
35:17that for free. I'll do that for free."
35:19We all know what happens when you get
35:21things for free. They're not always as
35:24concise as you want them to be.
35:27So, just be leery of that. Getting a
35:29free price from someone who wants to win
35:32the work from you is probably going to
35:34lowball it to win the work from you. So,
35:37I always say it's better to pay someone
35:39to do it for you.
35:41At the same time, get a couple of free
35:43ones while you're out there and just
35:44sort of compare them. You want more than
35:46a single source until you can find
35:48someone that you really trust.
35:50And then, when you found someone you
35:51trust, then you can sort of go bank on
35:52that.
35:53>> Yeah, what we normally do is we'll pay
35:55for him to do the estimated estimate uh,
35:58you know, when we're bidding, um, and
36:01then, if we get the deal,
36:03um, you know, he'll include that, you
36:05know, already in the cost as he
36:07continues to work for us cuz he already
36:09knows those numbers are good. He can
36:10kind of pick up where he was and move
36:12on, so it does save money.
36:13>> The next step as you're beginning to
36:15look at these things that you'll want to
36:18think about in these PIPs, um, and I'll
36:20share with you a budget after you go
36:23forward. You put together a budget for
36:25underwriting. I'll share that with you
36:27very quickly.
36:29>> David, while you're looking that up, let
36:31let me ask you about standard guest
36:33rooms. Like Courtyard has a standard
36:35guest room.
36:37Are you required to buy the furniture
36:39from them? Is that like one way that
36:41they make money? Is they'll sell you the
36:44furniture? Like how do the brands
36:45normally handle it when they design?
36:48>> So, Lana, there's a couple of ways of
36:50doing it. It depends on whether it is a
36:52prescriptive brand or not.
36:55So, what I mean by that is if it's more
36:57of your select serve limited service
37:00brands or your extended stay you got
37:03like a Courtyard, Holiday Express,
37:05Holiday
37:06they have particular design guidelines
37:08they want you to use. They got
37:10particular vendors they want you to use.
37:13And you're pretty much stuck using those
37:14vendors.
37:16Not much leeway
37:18when you're looking to buy case goods
37:20from another manufacturer. When you
37:21start getting into more of the full
37:23service
37:24you you get the ability to go more
37:26custom.
37:27Like a full service Marriott or a full
37:29service um you know InterCon
37:32or a full service Hilton, you can begin
37:34to use other
37:36um
37:38case good manufacturers. They're not as
37:39prescriptive.
37:41But I think what happened early on back
37:43in
37:44in the 2010 downturn is
37:48brands stepped back and relaxed their
37:50standards and let owners go off and do
37:52what they wanted to do. And then they
37:53realized they started allowing product
37:56to come in that was not of quality. That
37:58started wearing out
38:00within a couple of years. And then you
38:01started seeing your
38:03QA scores going down. You started seeing
38:06your
38:07occupancy levels going down because
38:10guests were starting to rely very
38:11heavily on
38:13social media and Tripadvisor and they
38:15were bouncing to newer refreshed hotels.
38:18So, then the brands went in and said in
38:19order for us to do this, let's put some
38:21standards in place and require you to
38:23buy
38:24from any one of these three or four
38:26manufacturers that we've negotiated
38:28deals with.
38:29I think that kind of rubbed the the
38:31hotel ownership um
38:33a little bit wrong because they didn't
38:35have the ability to
38:37seek better pricing. Some of the pricing
38:39was better and the quality was better.
38:41So now I think we're sort of migrating a
38:43little bit back to where they're giving
38:45us a little bit of flexibility, not
38:47much. They still want us to use the same
38:49factories
38:50but they're a bit open to using some
38:53others because of the supply chain issue
38:55that's kind of gotten in the way. They
38:56can't deliver the product as fast so
38:58they're starting to relax their
38:59standards a little
39:01>> And so you're not buying case goods
39:03through the brands. They basically
39:05negotiate a price. They have a couple
39:07manufacturers.
39:08You can go to them but you're buying
39:09from those manufacturers. You're not
39:11buying through the brands. The brands
39:13get a a cut of it or anything like that.
39:16>> Right.
39:17Right.
39:18With the exception of the new brand
39:19Spark which is the new Hilton brand.
39:21You've got If you're going to do a
39:22Spark,
39:23you're going to use their design firm
39:25that they recommend. You're going to buy
39:27from their suppliers. I.e. you're going
39:30to buy directly from Hilton.
39:31But that's just Spark.
39:33>> That's I've never I've not seen that
39:36before. So that's that's a new
39:38a new thing.
39:39>> It's a conversion brand.
39:41>> Yeah.
39:42>> So let me show you back on the PIP. The
39:44other thing that you'll start to see and
39:46here's what we do with the PIP.
39:48Um
39:50>> This is where it gets scary. When I
39:51bring the PIP to David and he prices it
39:53out and then we see the number and then
39:55that's when I have a heart attack.
39:57>> Yeah, that's when David's called the
39:58deal breaker.
39:59Um so you'll All these are
40:02everyone does these about the same but
40:05what you see is you kind of break it
40:06down in the beginning in the in the
40:08early on you you break it down
40:11based on the categories.
40:13Um
40:14the contractor fees, taxes, contingency,
40:16freight,
40:17ID fees, PM fees, purchasing free soft
40:20cost and then you get the total. Um but
40:22then this is where the PIP comes in. I'd
40:24recommend as you do this
40:26convert the PIP into the same form or
40:28the the same format
40:30as the PIP shows so you can follow
40:32lines.
40:34So when you read this verbage right here
40:36in line 29 repair any weathered steam
40:39building signage
40:40noted on south building facade
40:43that is the same language that shows up
40:45in the PIP. So it's easy to track that
40:49when talking to your client or you're
40:52talking to the sign firm you can refer
40:53to it. I normally number these so I can
40:56refer to line 25 or line 37 or whatever
40:59it may be.
41:00But
41:01we put our unit cost in on the
41:03construction side up here
41:05then we put an FF&E cost in and then we
41:07total it. It's a running total for every
41:10area
41:11subbed out because you want to know by
41:13areas because owners always want to know
41:14why how much did the guest rooms cost
41:16me?
41:17And if you scroll to the guest rooms it
41:18tells you overall guest rooms you're
41:20spending $913,000
41:23on guest rooms
41:24on 151 keys.
41:27So they always want to know those types
41:29of things or that one I'm sorry that was
41:31for overall areas.
41:33You're spending $2.2 million
41:35on guest rooms which is the
41:37the new case and as you can see
41:39the new case good package is about
41:41$10,000
41:43is what we budgeted for case good
41:45package on this particular hotel so
41:48$2.2 million
41:49if you really look at the guest rooms
41:51you got
41:52913 plus 2.2
41:55is call it 3.1
41:58round number 3.2
42:00add another that another 600 that's
42:03bringing it up to what 3.
42:05uh 3. 3
42:093.4
42:10but uh you're 4.9 right
42:134 and a half million so that shows that
42:16the guest rooms are
42:18the the multiplier here. That's where
42:20the big money is.
42:22And so, every owner that does this
42:24probably as good as everyone else does,
42:26they take this and they go to column J,
42:29scrolling for column J and you're
42:30getting the big numbers.
42:32What is this big number mean? Well, why
42:33do I have to spend $113,000 on
42:36new hard ceiling? You probably don't.
42:39So, we can talk about that.
42:42New window treatments. Maybe you can on
42:44the treatments, but
42:45you go through and you look for the big
42:47numbers. So, again, so that takes the
42:49PIP and then it's broken down in the
42:51same format. It's broken down between
42:53construction costs
42:55and FF&E costs.
42:57It puts in your GC fees, your sales tax
43:00for the area.
43:02Um
43:03your contractor fees and contingency. We
43:05leave it out for right now. This
43:07happened to be
43:08a PIP that we put together to a Holiday
43:10Inn um in Amarillo.
43:12It's the It's the seller putting
43:14together the PIP and he's trying to make
43:16the PIP as low as it can possibly be.
43:19So, he's taking out contingency and he's
43:21taking out PM fees because cuz he
43:22doesn't want to scare off the owner
43:25saying, "Oh my gosh, this is a This is
43:27going to be a
43:29eight or nine million-dollar PIP."
43:31Well,
43:32then you got to renegotiate to retrade
43:34the sales price.
43:35Any questions on any of that? I know
43:37it's a lot. I've spoken a lot. I've
43:39talked a lot.
43:40>> It's really time-consuming and it just
43:42is very detail-oriented work. You just
43:45got to sit and work through each
43:46individual one.
43:47Um
43:48and sellers and buyers will get into it.
43:51Like, you didn't do X, Y, and Z and this
43:53is what it's going to cost me to do it
43:55now and that's a negotiation. It's
43:57deferred maintenance, but also you want
44:00to be able to do that with the brands
44:01and to be able to say this nook that you
44:03want me to put in is going going me X
44:05dollars, right? I've had it estimated.
44:08And so that helps you have the
44:09discussion on cost. David, could you
44:12touch on building hotels
44:16ground up versus buying and converting?
44:20>> Yeah. So, PIPs are only required on
44:23existing projects that are being
44:25renovated, whether it's of the different
44:28types that we talked about. That's when
44:30a PIP is required. A new build doesn't
44:32require a PIP. A new build
44:34um requires brand standards and design
44:37standards, so you focus on those. So,
44:41the wild card of the two, if I had my
44:44choice which ones I would pick, whether
44:46it be a new ground up
44:48or whether it would be a renovation.
44:51I love renovations because I think
44:54that's where challenges are, and I'm
44:55always up for a challenge.
44:57Um new builds to me are pretty boring
45:00unless they're big new builds.
45:02But, I think the first thing is,
45:04you know, you got to secure some funding
45:06commitments. You need to know how you're
45:08going to pay this.
45:10Then you got to develop a preliminary
45:11budget.
45:13Um such as how big you want the hotel to
45:15be,
45:16what what's your How are you going to
45:18write it? What's your occupancy going to
45:19be? What's your ADR going to be?
45:21Um so and so forth.
45:23Um after you've found sort of the dot on
45:26the map that you assume you want to be
45:27in, then I would recommend you hire a
45:28qualified management company.
45:30The management company can help you
45:32underwrite the deal and select the right
45:35brand.
45:36Um you're starting off first with
45:39Here's I've got I've got a pile of
45:41money.
45:42I've got some commitment to build a
45:43hotel in Cornfield, USA,
45:46and
45:48it's going to cost me about X to do
45:49that. Here's what my my returns are
45:51going to be.
45:52Now, the the management team can help
45:54you find the right brand. Do you want to
45:55be a Marriott brand? Do you want to, you
45:58know, fall within any of their like 35
46:00or 40 brands that they have these days?
46:02Or do you want to be an IHT and fall
46:04within their 20 brands? Or do you want
46:05to be a
46:06uh a Hilton and fall within their 20
46:08brands?
46:09Then you got to meet with the brands to
46:12determine their interest to see whether
46:13they want to have a dot on that map at
46:15that that location.
46:17Then you begin to finalize your budget,
46:18then you execute your license agreement.
46:21Then you finalize your funding.
46:23And then you go out and you start hiring
46:24your project management firms, who will
46:26then go out and hire your qualified
46:28consultants.
46:29And your GCs and execute the project.
46:32And then you get to celebrate at grand
46:33opening.
46:35That process takes a very, very long
46:38time.
46:39Give you an idea on the complexity of
46:41the project. When I was running design
46:44and construction for Gaylord Hotels
46:47back in 2000, 2004,
46:50we were working on
46:52the Gaylord in San Diego.
46:54That project is just now moving forward
46:57and
46:5820 years later.
46:59So, it's been 20 years in the making
47:02to try to get that project off off the
47:04ground.
47:05But, that's also a billion-dollar
47:08development, 1,500 hotels. That's a
47:11massive hotel. Some of your smaller,
47:13limited-service hotels that are in the
47:15150 to 200 key range,
47:18those take two to three four years start
47:20to finish
47:22because there's just not land sitting
47:24there. You got to look at other things
47:25called
47:26Have you Have you heard the term AO,
47:28which is your area of protection?
47:30Just because you want to put, you know,
47:32a Marriott Courtyard on this corner, you
47:34may be told by the brand you can't do it
47:36because there's already a Marriott
47:37Courtyard
47:39in the close vicinity of the one you
47:40want to build. So, there's just a lot to
47:43to
47:44to consider. I'm going to share a thing
47:46with you that I think is really helpful.
47:48Um
47:49but
47:50again, for me, I I prefer renovation
47:53projects. I've done many, many, many
47:56ground-up. At one point in time my CV
47:59showed that I had built like $3 billion
48:01of hotel rooms in my career and it was
48:04like close to two or three hundred
48:06thousand hotel guest rooms.
48:08I had no idea I was at cuz I didn't add
48:10all that. I mean that
48:12didn't really matter to me.
48:14But it's just it's a fun business to be
48:16in and I think you'd gravitate towards
48:19one or the other. Um
48:21land probably has a very
48:23keen eye as to whether she wants to be a
48:25new builder or renovation, but you're
48:26always going to lean towards one or the
48:27other.
48:28Because it's it's about interest, it's
48:30about um
48:32challenge, it's about
48:34converting things and rebuilding things
48:36and I think what you're finding out is
48:38there's lots of buildings that are out
48:40there that are being converted, you
48:41know, change of use. You You just got to
48:43find
48:44sort of what sparks your passion and
48:47chase it. That's the fun stuff.
48:50>> Yeah.
48:51>> So there's
48:52again lots lots to consider.
48:54>> Yeah, risk is part of it, too, right? So
48:56as an investor, for me, it's riskier to
48:58build ground up than to take a hotel and
49:01renovate it. Not only the time, you
49:02don't know how long it's going to take
49:04you. You don't
49:05things hurdles you'll encounter along
49:07the way.
49:08Um so it's much faster and if the
49:10hotel's already cash flowing, that's a
49:12lot better than buying a piece of land
49:14that you have to get permission to build
49:16it and then start building it and you
49:18know, it could be two to three years
49:20before it's um making a profit. So I
49:22always like
49:23buying a hotel that's already up and
49:25running.
49:26>> It It also costs less to get into the
49:28hotels
49:30when you're buying an existing hotel
49:31that's already cash flowing versus
49:33the unknowns.
49:35>> Yeah, absolutely.
49:36>> lots of unknowns, especially on some of
49:38these larger projects where
49:40city councils change, planning and
49:42zoning commissions change, and people
49:44move in and out.
49:45You were approved to do something two
49:48years ago, but now the P&Z commission
49:50has changed and there are new people
49:53that don't like you. There's a lot of
49:54risks.
49:55>> A lot of risks. Let me switch gears,
49:57David, and talk about what's a typical
50:00day for you.
50:04>> I'm a firefighter. No, I think a typical
50:06day for me is I'm always thinking about
50:08how can I solve problems and be a
50:11creative problem problem solver. Cuz
50:13everything we're dealing with is a
50:15problem.
50:16It's never a quick phone call to say,
50:18"Hey, you're doing a fantastic job."
50:20There's always
50:21"I need this" or "I need that" or "Why
50:23didn't we do that?" So, I'm constantly
50:25solving problems for owners.
50:27And what I'm wanting to do is just help
50:31them achieve their objectives.
50:34And nine times out of 10,
50:36it's reading between the lines of really
50:39what is it you're looking for
50:41and having those candid, courageous
50:44conversations with owners.
50:46That's my typical day in the office is
50:48solving problems for my owners
50:50and kind of putting out fires. Um
50:54and then
50:55the key that I like to do is I block my
50:57calendar a lot because I I need to have
51:00time. Land knows me.
51:02I'm not very quick in responding to an
51:04email. I want to think it through. I
51:06want to do my homework. I want to do my
51:08research. And then I want to provide the
51:10answer
51:11that gives an owner
51:13the ability to make a decision based on
51:16the comprehensive
51:18information that is given to them.
51:21Um and when you've been in the business
51:22so long,
51:24when people ask you things, there's
51:27always other stuff that goes along with
51:28it that they don't ask you.
51:31But you've got to provide that
51:32information to them. You just can't take
51:33it for granted and tell them the sky is
51:35blue cuz they really want to know
51:37what's the weather going to be like in
51:39the next 2 weeks or so. So, you got to
51:40anticipate some of those questions, but
51:42asking the right questions.
51:44Um
51:45and then the thing that that I think
51:47probably gives me the most energy
51:50is mentoring. I just I get so much out
51:52of mentoring, whether it's mentoring my
51:54staff,
51:55whether it's mentoring my boss, whether
51:57it's mentoring peers,
51:59owners, or clients, always trying to see
52:04them achieve their goals. I get so
52:06excited by it. Give you a
52:08a quick story. I happen to be Well, two
52:11stories.
52:12I was asked to moderate a panel hotel
52:15conference
52:16this um
52:17about 3 weeks ago.
52:19And one of the panelists turns out to be
52:22one of the guys that was on
52:24my staff at IHG
52:27that I was promoting moving up through
52:30the ranks.
52:32And he came to me afterwards and said,
52:35"I am so glad that we were on the panel
52:37together." I said,
52:38"I am just so happy to see where you've
52:40gone in your career."
52:42Giving them the opportunity and pushing
52:44and nurturing.
52:45That's That's That's rewarding. And then
52:48I met a young lady
52:50who
52:51called me while she was in graduate
52:53school. I accepted her phone call. I
52:56talked with her.
52:57I reviewed her portfolio. I gave her an
53:00intern opportunity. I then hired her.
53:02She then went on
53:04and now she's in a very successful role
53:07with a hotel management company that
53:09actually owns and operates and develops.
53:12And she said, "I would have never gotten
53:13the opportunity if you didn't
53:15answer my phone call."
53:17But she said, "I don't even know how to
53:19pay you back." And I said,
53:21"You pay it forward. That's how you pay
53:22me back."
53:24So again, how do you help people? That's
53:26what That's what the business is that
53:28we're in.
53:29And I'd say surround yourself around
53:31people that are like that.
53:33>> That's an amazing story.
53:36Da- David, can you share Do you hire
53:37people out of school? Like if people
53:40want to do the kind of work that you do,
53:42what
53:44you What do you look for
53:46in someone coming out of school?
53:48>> The first thing I look for is attitude.
53:52You have to have the right attitude. The
53:54second thing I look for is passion.
53:57You have to be passionate about
54:00what you're chasing
54:02and where you want to be.
54:04And then, you know, good communication
54:05skills and good listening skills.
54:08And to me, it's more about those
54:13attributes versus your technical
54:15abilities cuz
54:17I can teach technical abilities. I can
54:19teach you how to design hotels, what to
54:22look for.
54:23I can't teach an attitude. I can't teach
54:25passion.
54:26So, you got to find something that
54:27you're very passionate about and you got
54:29a great attitude and the attitude is to
54:31learn.
54:32That's That's it.
54:34>> You don't need to be an architect or
54:36have a
54:37degree or anything to do that?
54:39>> No. In fact, I would probably tell you
54:41not to be an architect. If you find
54:42something that
54:44you really believe in
54:46and you chase that, the money will
54:49follow you. You find something that you
54:51want to chase the money,
54:53I'll tell you right now, you're going to
54:54be miserable.
54:55You're not going to be happy, so find
54:58something that you're passionate about.
55:00Uh but no, you don't need to be an
55:01architect or an engineer or contractor
55:04because I think what is interesting
55:07about the industry we're in, man, you
55:09know many people
55:10um in the industry is
55:12we all have totally different
55:14backgrounds, but we all have the same
55:16passion for the industry.
55:18>> Yeah. I'm going to do some quick-fire
55:20questions with you. What is one thing
55:23that makes you say pass when you see a
55:25resume?
55:27>> Um when my name is misspelled.
55:30>> Oh, that's not good.
55:31>> And that happens a lot.
55:33>> A lot, right?
55:35>> My pet peeve is misspelling people's
55:37name. I always say triple check their
55:39names cuz if anyone's ever had their
55:41name misspelled, it kind of doesn't feel
55:43good. What's one thing that makes a
55:45candidate stand out to you when you're
55:47interviewing?
55:49>> Um
55:50again, their attitude and their passion.
55:52Um cuz what I what I'm interviewing for
55:54is
55:55I can read your resume very quickly and
55:57I can tell whether you have the
55:59technical ability to do the job. I want
56:01to get to know you. I want to get to
56:03understand what drives you. Where do you
56:05want to be? How can I help you achieve
56:07your goal?
56:08And some people are in it for the wrong
56:10reasons and some people it's just the
56:12fits not there, but
56:14the way I hire people is not really
56:16based off of the resume.
56:18I want to have a discussion. I want to
56:20talk to the person. I want to understand
56:21the person.
56:23Um
56:24and help you achieve your goal. That's
56:25that's what I do. I know people probably
56:28look at me like I'm crazy,
56:30but when I took over
56:32my prior role, there was a employee
56:35engagement score of 45
56:37and I turned it around to 85 and I held
56:39it at that for 5 years and I grew the
56:41team. I doubled the team size from 60 to
56:43120.
56:45So again, it's about finding the right
56:46people. You can teach the technical
56:48skills.
56:49You can't teach the attitude.
56:52>> David, what if someone's coming out of
56:54school and is interested in traveling to
56:57hotels and working on PIPs, what does
57:00that sort of job pay?
57:03>> Uh that's an interesting
57:05The pay range right out of school is
57:07between and again, this is based on
57:10region because each region's a little
57:11bit different,
57:12but typically somewhere in the 75 to 100
57:15range
57:16um is what I pay because I'm trying to
57:19be realistic. Um
57:21New York's going to be higher, San
57:23Francisco, LA's going to be higher, but
57:26really you try to find
57:28between 75 and 100.
57:31Um which is not that bad.
57:33Um,
57:35but again,
57:36I think the next question you're going
57:37to ask is how do you progress the
57:39career? So,
57:41if you're willing to put in the extra
57:43hours, and learn, and ask the questions,
57:46have the right attitude,
57:48have a plan in place, within 3 to 5
57:52years, you can be in the 125 to 150
57:55range, managing multiple projects at the
57:57same time, and have a small team
57:59that's uh that reports to you.
58:01Um,
58:02but again, it's it all depends on the
58:05person.
58:06I'm also the type of person
58:09that's going to promote you
58:12if I don't see a spark or interest in in
58:16yourself looking to improve
58:18and and grow.
58:20>> I should have come and applied for a job
58:22with you when I when I graduated. I
58:24assumed I needed an architecture degree,
58:26so now I know. I would have made a lot
58:27of money a lot faster. That's so sad.
58:30>> Well, it's it's interesting you got one
58:32of the questions in here. It's like, you
58:34know, what's one of the things I wish
58:36someone would have told me when I
58:37started my career.
58:38>> Yeah.
58:39>> Um, my response was to be an attorney.
58:42>> Be an attorney? That would have been so
58:43boring.
58:44>> And not and not an architect.
58:47>> [laughter]
58:47>> But no, I think I think
58:49I think the real answer there is um to
58:51be a servant leader and be humble.
58:53Um,
58:54but
58:55I I think if you're always if you try to
58:57project that you're always right,
58:59I think you're going to end up losing a
59:00lot of friends and people along the way.
59:03When you're wrong, just admit you're
59:04wrong. Made a mistake. Let's move on.
59:06It's my problem, and let's move on, but
59:09you need to be humble, but I think you
59:10also need to
59:12surround yourselves around um
59:15really good mentors, and talk to people.
59:18I mean, I I'll give you another story.
59:20My daughter in the equestrian industry
59:22was following this lady um who's also a
59:25new freshman
59:26in the same town here in the DFW Dallas
59:29Fort Worth area.
59:31And she reached out to her via LinkedIn
59:32and said, "Hey, can we have coffee one
59:34day? I just want to talk with you. I
59:35just want to get to know you a little
59:36bit. I follow what you do."
59:38The lady called her back about a month
59:40later and said, "I've got this position
59:41that's open. I've been looking for um a
59:44while. I've I've reviewed hundreds of
59:46resumes. I've interviewed people. I
59:48would like to meet with you. I've gone
59:50through your LinkedIn profile. I've seen
59:51it. I like
59:53Long story short, my daughter ended up
59:54leaving her job to go to work for her.
59:57Just because of who the lady was. And
1:00:00not being afraid to ask for
1:00:04an opportunity to have coffee.
1:00:06It's amazing. I will tell you the one
1:00:08thing in the hospitality industry,
1:00:11I can say probably 90% of the phone
1:00:13calls you make asking for help or
1:00:16guidance,
1:00:17or could you mentor me on this?
1:00:19You're going to get a return phone call.
1:00:21We will like you know, if any of you
1:00:25reached out to me and wanted to career
1:00:26advise or
1:00:27we're more than happy to.
1:00:29I I I ignore my day job to take care of
1:00:33these types of conversations because
1:00:34it's so important to me.
1:00:36You have to give back.
1:00:38That's what's what it's all about.
1:00:40>> Absolutely. That is a great place to
1:00:44stop. But I I did want to first thank
1:00:46David for joining us today. So I
1:00:48appreciate you sharing your wisdom. And
1:00:51over the years I have been the very
1:00:53happy recipient of your wisdom many,
1:00:55many times. So I'm really glad to be
1:00:57able to to share your knowledge with the
1:01:00students.
1:01:00>> Thank you Thank you for the opportunity.
1:01:02And I wish you all the best of luck in
1:01:03your career.
1:01:05We have Our paths will cross.