Loews Hotels Plays Contrarian, Invests in Asset-Heavy Strategy
The hotel landscape is facing increased levels of consolidation that are leading to hyper competition as well as the embracing of new business models, as many companies work to find ways to separate themselves from their peers.
Loews Hotels is definitely among the group trying to do so by employing a different, somewhat contrarian strategy. This New York-based hospitality company, which is part of the larger and more well known Loews Corporation, is eschewing the tact being taken by larger competitors that are going asset light. This strategy is one taken up by many of the giants in the space, including Marriott, Hilton, Red Lion Hotels Corporation, and Wyndham, most of which have made the asset light approach a cornerstone of their current business strategies.
Since 2015, Loews Hotels has only sold two hotels and opened seven. These are small numbers, by any metric, but its next three hotel projects all across the board involve development and ownership by Loews Hotels', marking a diverging strategy from many of the other businesses that operate in the space. Another thing that sets Loews apart is that it's both an owner and operator, which is a business model that is becoming increasingly rare within the hotel space. Loews top execs have said that this model makes their company an attractive partner for major stakeholders such as developers, immersive destination owners, and municipalities alike, who are all well aware that the company owns what it is working on at every step of the way and has a special incentive to create a lasting and beneficial partnership.
"Why have we focused more on building versus buying? It's simple," said Loews Corporation CEO James Tisch during the company's third quarter earnings call on Monday. "First, when you build something, you get exactly what you want. Second, we think the returns are great."
The popular asset-light hotel real estate strategy isn't new within the hospitality space. It is, however, considerably more popular than it has been in the past because adding franchise agreements does not require massive amounts of capital, yet they do often yield immediate profits. Essentially, there are no startup losses and brands aren't nearly as exposed to capital requirements of real estate. It's low investment, stable and high margin, which makes the investment community very much willing to pay for higher valuations. With an increasing emphasis on scale, this tact is a no brainer for many in the hospitality space.
Loews Hotels & Resorts has the following projects in the pipeline:
AVENTURA HOTEL AT UNIVERSAL STUDIOS
Soaring sixteen stories above Universal Orlando Resort, Aventura Hotel will offer a modern, sophisticated experience, with a moderate price point to fit any budget [MORE INFO…]
LOEWS KANSAS CITY CONVENTION CENTER HOTEL
Loews Kansas City Convention Center Hotel will showcase guestrooms, a lobby bar, signature restaurant, three meal restaurant, indoor lap pool and 60,000 square feet of meeting and event space [MORE INFO…]
LOEWS PORTOFINO BAY HOTEL AT UNIVERSAL ORLANDO RESORT
Universal Orlando Resort and Loews Hotels & Resorts announced the expansion of Universal's Cabana Bay Beach Resort Monday [MORE INFO…]
More information about Loews Hotels & Resorts can be found on TOPHOTELPROJECTS, the specialized service provider in the exchange of cutting-edge information of hotel construction in the international hospitality industry.
Jule Grass
Marketing Manager
+49 4261 4140 309
TOPHOTELPROJECTS
