Roundtable: Regional hotels Jim Beley, Manager, The Umstead Hotel & Spa Pete Byers, General Manager, Residence Inn Raleigh Downtown Bill McCallen, General Manager, Embassy Suites Raleigh Durham Research Triangle East

®oundtable:

Regional hotels

Hospitality leaders discuss the impact of COVID-19 and the recovery timeline.

Jim Beley

Manager The Umstead Hotel & Spa

How would you describe the state of the hospitality sector in the region? It’s changed dramatically. The fact is our business mix has drastically changed. Historically, corporate travelers made up the bulk of our weekday occupancy but with company travel restrictions still in place, it has been slow to return. Fortunately the leisure travel segment has been stronger than ever with the increase of domestic vacations. This high demand has pushed leisure guests into the lower rated weekdays to avoid the high demand weekends. That has allowed the luxury and resort markets to thrive achieving revenue numbers comparable to pre-COVID numbers by filling the corporate void with higher rated leisure business at lower occupancy levels. This shift has not come without its own set of challenges, with more guests occupying each room and each wanting to utilize our restaurant, spa, and pool outlets. For our type of property, that gets concerning in terms of questions surrounding if we have enough availability in the spa, pool or dining room. People want the full experience when they come to our hotel. We’re adjusting to what our guests expect when they come to a luxury hotel but it’s very different than before.

What is your outlook for the next 12 to 18 months? Without any setbacks, I believe that in 2022 we will most likely be back to the levels that we last saw in 2019. That’s my forecast. What could hinder that situation is if companies continue to mandate the amount of business travel. But from what I hear, business travel is going to come back in a very solid way in the third quarter of this year.

Pete Byers

General Manager Residence Inn Raleigh Downtown

What innovative hiring methods are you using? The labor issue is highly prevalent in the hospitality sector. The past year has provided little incentive or motivation for anyone to come back to work. We have used all of the traditional routes when hiring associates: online job postings, brand job postings, job fairs, websites and so forth. We’ve used signing bonus offers and have increased wage scales for existing associates in an effort to retain those we have and to help attract new talent. We’ve had members who have gone down to the local Walmart with flyers and handed those out in an effort to get people interested. Is this innovative? No, but it’s just getting your feet on the ground, trying to do your best to find folks who are interested. What we’ve found is that folks aren’t as readily available right now for different reasons.

When do you anticipate the return of leisure and business travel to the Raleigh area? We are already seeing economic trends turn upward this year. Raleigh is a big festival town with many large events throughout the year. One of our biggest festivals involves the International Bluegrass Music Association’s World of Bluegrass festival, which is returning this September. The event is one of Raleigh’s biggest, bringing more than 200,000 visitors in 2019 and accounted for an economic impact of over $18 million. The return of Bluegrass and many other festivals will continue to be key in moving the economic needle over the next two years. I also believe we will begin to see our business travel ramp up this fall at a slightly greater pace than has been projected previously. It will take more time to regain historic levels but we’ll start to see it increase.

Bill McCallen

General Manager Embassy Suites Raleigh Durham Research Triangle East

How is your hotel adapting in a post-pandemic world? Ultimately, the health of our staff is our first priority and the health and wealth of our guests is right behind that. Our challenge will be to provide a workforce to ramp up in the same way as the business is to capture it and keep our guests happy. Many customers are coming back, expecting what they had before. But as everyone is learning, things are different now. Still, they have pretty high expectations despite the fact that we are in a different world.

What trends in hospitality have emerged? Some emerging trends in the hospitality industry are the use of digital keys and digital check-in. For us, trying to be ahead of the next catastrophe is pivotal for our operation to stay competitive and to stay on the front side of it. Our leadership is very attuned to steering us as an organization in those different directions and the different ways of providing services for our guests.

What is your outlook for the Triangle market’s hospitality sector? We are very optimistic that the hospitality sector in the Triangle market will recover and get to a more efficient, brighter and better place, strictly based on how my vision of hospitality has always been. If we can take care of people and focus on that, the business side of it will happen.

As long as we are able to keep our focus, we’ll be fine as an industry. We may not have as many co-workers and relationships as we had but they will be stronger, better and more reliable in terms of guests and associates. How have you been mitigating the labor shortage? The biggest challenge we’re facing now is the labor shortage. We’re not the only ones that have this issue. We’re all struggling to find help. It’s now all about what we pay each individual and what incentives we offer to potential candidates.

We are working with the community and other properties to find solutions. Having North Carolina State University in our backyard, we created an internship program with the university that allows us to get young students to work for us and experience the hospitality business.

What are the benefits and challenges of being located on NCSU’s campus? Being on campus and having the university in our backyard does have its advantages. We do get the majority of the NCS University business at our hotel, such as graduation day, parents day the NCS football team. Our case is unique because in a situation like ours, being out of the city, people can get away from the city. Guests come to our property to relax and spend their days with their families.

What are your guest demographics and what is your near-term outlook? Our business has shifted after COVID-19. We see much more leisure business, especially on the weekends, with very little corporate business during the week. However social events have increased. We see more weddings returning. We believe this trend will remain until the end of 2021 and then slowly returning to pre-COVID-19 business conditions in 2022.

Schack von Rumohr

General Manager The StateView Hotel

RDU’s revenue from its Top 10 routes dropped by $150 million in 1Q20 Y/Y

( ) stations, and air filtration systems — were installed. Service was reduced, with nonstop flights going from 57 destinations to 38, and, in December, an average of 223 departures a day in 2019 became an average of 102 departures in 2020. Unsurprisingly, these reductions have had an effect on revenue. Of routes at RDU, the Top 10 revenue generators accounted for $416.9 million in the first quarter of 2019. The equivalent number for 2020 was $267 million, a drop of nearly $150 million.

But a recovery is in the works. In February 2021, JetBlue announced seven new routes out of RDU. Despite good news such as this, budget woes are expected to continue for some time due to reductions. And even if domestic picks up, international (once a promising growth area for RDU) is expected to lag behind domestic for some time. In some cases, examples of the decline can be especially concrete: a longer primary runway at RDU, three years in the planning, has been reduced in scope in keeping with the reduction in traffic. The runway was initially designed to be 11,500 feet long — capable of launching Asia-bound flights — but will now be reduced to 10,000, with the possibility of extending at a later date. The money that was to be used at the airport will be needed in other areas to make up for budgetary shortfalls.

Arts and culture The decline in tourism naturally also had a great effect on Raleigh-Durham’s cultural institutions. In a tally of 760 North Carolina cultural organizations, there was a median expected loss of $23,000, with 61% expecting severe economic impact and 9% expecting to not survive at all. Institutions such as museums had to ( )