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Omni Hotels owns and operates its 60-plus properties in North America, unlike most other major hospitality brands with a pure marketing and management business model based on an asset-light strategy.
According to Peter Strebel, the new CMO and senior VP of sales at Omni Hotels since January, the value of direct ownership is proven by the fact that the brand ranks highest in the upper upscale category in the J.D. Power 2016 North America Hotel Guest Satisfaction Index Study.
“Our competition is very fragmented,” Strebel told Skift. “You’ve got REITs that own some hotels, and banks that own some hotels, and then there’s third-party ownership and third-party management, and franchise. There’s a hodgepodge of cultures going on in those hotel companies, so we feel that this model is a smart model, and we’re glad that our owner likes it.”
Omni has traditionally excelled in the U.S. meetings and conventions market, but it’s pivoted in recent years toward developing more experiential meeting opportunities. As Skift reported earlier this year, the brand’s growth strategy includes building more hotels integrated into cultural landmarks and sports stadiums to deliver turnkey group experiences and creative venue options for meeting planners.
The newest Omni developments are attached to the Dallas Cowboys and Atlanta Braves stadiums. The company is also in various bidding and development stages for new convention center hotels in Boston, Fort Lauderdale, and Oklahoma City.
We spoke to Strebel last week about Omni’s internal strategy behind the brand’s development pipeline. As well, the CMO is adamant to increase exposure around hunger in America. He stressed that Omni’s partnership with Feed America to support food banks in 42 communities is a significant brand differentiator, which he says is aligned with Omni’s direct investment in its assets and the communities where the company conducts business.
Skift: How does Omni Hotels’ development strategy combining convention center hotels with cultural and sporting venues resonate with meeting planners?
Peter Strebel: We try to really bring in something special in every market. Each hotel is different and unique to help position the property as a local experience. Planners love it. So we’re looking at instead of throwing in a complimentary cocktail reception, maybe we’ll throw in a local experience. Everybody is into experiences today. It’s funny, when you look at Facebook, no one writes down “I bought a new car,” or “I checked into this hotel,” but they all post their experiences, whether it be eating, drinking, dining, cultural activities. We’re really kind of in the experience business.
Skift: How does that translate for meeting planers considering the new properties connected to the Dallas and Atlanta professional sports stadiums?
Strebel: Our Dallas hotel overlooks the Cowboy’s training facility. So we’re actually doing a big event there soon where people can intermingle and get to meet some of the players and the coaches. We’re also going to be doing that with the Braves in Atlanta. We’re already attached to the Padres stadium, Petco Park in San Diego, so we’ve really got some cool tie-ins with sports and recreation.
Skift: Where is Omni planning to build next?
Strebel: We are working with Boston on a brand new hotel at the convention center there. We’re in talks with Fort Lauderdale for a convention center hotel, and we just got chosen by the city of Oklahoma City to build a convention center hotel, so we’re active. We have three hotels under construction right now so we’re still very much in the business of growing.
Skift: How far along are you in Boston and Fort Lauderdale?
Strebel: We’re still actually bidding in Fort Lauderdale. They chose a developer. The city is working to expand their convention center, and we are one of about five hotel brands that are all talking to the city of Fort Lauderdale. We expect to get to the next round.
Boston’s a little bit more advanced.
Skift: Can you talk about how advanced?
Strebel: No, not at this time.
Skift: Omni owns and operates its hotels. What are the benefits of that for meeting planners?
Strebel: Our model is very different. Since we own all our hotels we’re not a public company, so every dollar we make gets put back in the business as an investment, whether it be through renovations of existing properties, or building new hotels.
I think the owner likes the control. It makes our brand unique because we truly can own the experience. We have 22,000 associates and every one of them is employed by Omni, so we have the same culture, the same benefits, the same leadership. That’s why we win JD Power almost every year as the number one brand in the upper upscale segment.
Skift: Is that hotel ownership strategy part of your sales approach with meeting planners?
Strebel: Totally. When planners book with Omni, they don’t have to worry about a flag change. We’re not in the business of flipping hotels, so it’s not going to be an Omni today and a Marriott tomorrow. There’s consistency. We can do brand-wide deals. We don’t have to go to other owners and convince them that this is a good deal for them. It makes it a little bit easier to do business with Omni because it’s one owner, one contract. You don’t have to get involved with multiple management companies.
Skift: I’m not sure I want to use the word “small,” but compared to Marriott….
Strebel: We’re small.
Skift: Ok, do you position that as a benefit for planners, compared to having over 5,000 hotels?
Strebel: Oh, I think so. We have 60 hotels and all of the sales people really know our properties. If the client comes in and says, “Tell me about Omni La Costa in San Diego,” the sales executive can sit there and have a detailed conversation to help them with La Costa. Our competition, it’s so big. Marriott is selling something like 30 brands and 6,000 hotels. I don’t know how you really intimately get to know somebody. So I think our model resonates well, and the proof is in the pudding. We’ve got about a 108% RevPAR (revenue per available room) index over all of our comp set, so we over index basically in every market. Our customers like us.
Skift: What’s supporting the increased pipeline growth?
Strebel: We’re smart at being in the right places at the right time, but what drives our pipeline is really that we have money and we’re investing in these deals. Since all the other brands do not own real estate, they’re not putting investments in, and part of that is because they’re dealing with other owners. It’s much more of a convoluted model. Especially working with cities and doing a joint venture with a private-public partnership, we can bring in the cash right away. Again, every dollar that Omni makes, it gets put right back in the company. We have a lot of cash because we’re not distributing to other owners, and we’re not distributing to Wall Street.
Skift: What’s your take on the Marriott-Starwood merger? How does that impact you?
Strebel: I think in some respects it’s going to help me. I think our model will stand out even more. If you kind of look at the trends in culture today, people seem to want to do more local. They want to have stronger relationships. If you kind of look into the head of a Millennial, smaller businesses seem to be more valuable than bigger businesses. But then again, Marriott is a powerful force to be reckoned with, and they’re going to have a lot of inventory that they control in markets.
Skift: The bigger hotel companies push out a lot of content to drive digital engagement around their brands, but we tend to not see a lot of storytelling from Omni. Is there ever much internal talk about shifting that?
Strebel: This is the year that we actually changed our marketing. I’m new in the CMO role since January, but I’ve been with Omni for a long period of time. We traditionally were a brand that focused communications mostly on two segments: the meeting planner and the business travel manager, so it was more B2B (business to business) communication. But about three years ago, we purchased six very large resorts, so now we’ve moved into the leisure business.
This summer, we pushed a whole new ad campaign in major lifestyle publications like Bon Appetit, Food & Wine, Esquire, Town & Country — so all of the upscale luxury publications. We’ve also tripled the size of our social media department. I think you’re going to start seeing a lot more messaging about us and our brand.
Skift: In terms of digital communications and marketing, what keeps you up at night?
Strebel: Channel management. I think that Google and the way people search for your brand is changing. Organic search is becoming more difficult. Paid search is becoming more difficult. The way to distribute your product is getting very expensive, and there are a lot of doors to get through to a hotel. That’s probably what keeps me up at night because the cost of acquiring customers is very expensive.
Skift: You personally have been a strong advocate for Omni deepening its commitment to staff volunteering and community support programs to help feed the hungry. In June, Omni launched the “Say Goodnight to Hunger” program in partnership with the Feeding America network of food banks. What does that program look like, and what was the motivation behind it?
Strebel: When everybody was rolling out their “book direct, get a discount” programs, we decided we didn’t want our brand to stand for discounts. We thought that was kind of a quick, knee-jerk reaction because brands guarantee the best rate no matter what.
So we came out with a corporate social responsibility message where you book direct to feed a family of four for a week. It really has taken off. We rolled it out June 21 and we’ve already delivered over 3.3 million meals locally, so it affects the 42 communities where we have hotels. And then on top of it, we have our associates volunteer hours in the food banks, so in addition to the money, we’re also very hands-on. Then we ran a promotion in September at Omni saying that we fed a family of four for every room that was booked. We extended it into October, and I may be rolling that out as a brand initiative for Omni.
Skift: Is there a correlation there where Omni is saying it invests directly in its hotels and its communities? And is that messaging resonating with your customers?
Strebel: It’s resonating well with the customer but I didn’t get as much messaging out there as I thought. Basically, we’re looking at how we further differentiate ourselves from the competition. In Peter Strebel’s marketing mind, I want people to know us as being a great brand with better service and more local experiences. And I also want that thread of giving back, and that there’s a brand out there fighting to alleviate hunger.
The more research I’ve done and the more work I’ve done with these food banks, it’s a big issue in America right now. Forty-two million Americans are challenged with where to get their next meal, and it has nothing to do with being homeless or not. It’s people like you or I that lose their job, or their car breaks down, or their wife gets cancer. All of the sudden, they have to pay their rent and the last thing they have is money for food. I think every brand has a corporate responsibility component, but we really want it to be a part of our brand architecture.
Skift: And so the direct ownership model makes it easier to deliver that at all hotels, day-to-day, right?
Strebel: Day-to-day. When we were looking for a charitable organization, we chose food because we feel like, “Well, we’re in the food business.” Our owner said, “I don’t mind donating the money, but how do I get my employees into the communities?” That’s why we partnered with Feeding America, who send food to 200 food banks. And also, we’ve already donated 5,000 hours so far. We pay our employees. When they do it, they get paid. It’s just a good thing, you know?