Omni Hotels Is Investing Heavily to Become a Luxury Brand

Omni Hotels & Resorts isn’t your father’s hospitality group — literally and figuratively speaking.

• Robert Rowling recently passed the day-to-day oversight to his youngest son Blake Rowling via their Texas holding company TRT. The younger Rowling (rhymes with “bowling”) aims to move the Omni brand further upscale into the luxury category.
• Last year, Kurt Alexander became president of Omni, replacing Peter Strebel, who moved to the role of chairman.
• The company, with a portfolio of more than 50 properties, ended 2022 at the top end of “upper upscale,” meaning that its average rate as a brand was “very close to $300 a night.”
• It will launch a brand refresh this year along with roughly $250 million in renovations to justify even higher nightly rates.

Omni represents a contrarian play.

• Omni owns and operates the majority of its hotels and resorts. That’s in contrast with names, such as Marriott, Accor, and Hilton, which have disposed of their properties to become “asset light.” (For context, see my earlier column “Hotel Group Faith in Asset Light Model Opens Gap for Upstarts.”)
• Omni is heavily invested in convention hotels. That’s in contrast with how many hotel companies aren’t building new large complexes with ballrooms.
• It keeps its debt low, which is unusual in the sector.
• Omni claims to hold its own against the bigger names in hotels with much bigger loyalty programs. A heavy tech investment this year may help it further.

Omni has been crawling up the chain scale in quality and reputation for a few decades.

• The Rowling family bought the brand at an auction in early 1996. The reported $500 million deal included nine hotels and management contracts for 26 others. Most of the properties needed renovation, and the brand’s reputation was uneven.
• Around 2013, the holding company bought a half dozen properties, mostly golf resorts, from KSL Capital Partners for a reported $900 million.
• In 2021, Omni sold and de-branded five suburban hotels to double down on conventions, resorts, and landmarks. Today some observers believe it probably needs to shed a few more of its older properties to have a consistently upscale property profile.

Omni is on a building spree.

• Its development work includes Omni Tempe Hotel at Arizona State University (ASU), a $125 million property set to open in April, and Omni PGA Frisco Resort, a $520 million property slated to open in May. Also in the works are Omni Fort Lauderdale Hotel and an Omni in Pontoque, Mexico.
• Omni Hotels & Resorts has been refurbishing and renovating this year. Key restorations and major redevelopments include The Omni Homestead Resort (a $140 million renovation), Omni Austin (it ripped out and replaced guest rooms and the lobby and moved and enhanced the restaurant and bar), Omni Charlottesville Hotel (ongoing), Omni Severin Hotel in Indianapolis, Omni Tucson National Resort, Omni Interlocken Hotel in Denver, and Omni Orlando Resort at ChampionsGate.
• “Our goal is to get our portfolio all at the same quality as our new builds within the next two years,” said Peter Strebel, chairman.
• Its new-build properties aim for a contemporary, higher-caliber look. Its new build openings have been in Fort Worth (2009), Dallas (2011), Nashville (2013), Louisville (2018), Oklahoma City (2021), Boston (2021), and the upcoming Tempe (2023).

Omni has leaned into building venues to attract large groups at a time when its larger rivals are pulling back from building 1,000-room properties.

• “We are still building big hotels,” Strebel said. “The PGA Frisco we’re building is a 540-room hotel. We have an 800-room hotel under construction in Fort Lauderdale. Florida has never had a truly dynamic convention center, but Broward County’s billion-dollar expanded one will be. We believe in certain markets there’s demand for higher-end group-focused hotels.”
• Strebel argues that as other players haven’t invested in the space, Omni has become a darling for its reliability for group bookings.
• “We’re seeing a lot of last-minute large corporate business bookings,” Strebel said. “For instance, Dallas downtown, a thousand-room hotel, had a massive cancellation about eight weeks ago. We refilled it with a big group just as good on rate right away.”
• “We’ve seen the corporate group demand for our PGA course resorts be off the charts,” Strebel said.

Golf is another theme for the company that has helped it with word-of-mouth marketing.

• Bob Rowling had considered a career as a pro golfer, and his bet on golf to support the company’s expansion has paid off while other brands focused on other sports. It feels like you can’t attend or watch on TV a professional golf season without exposure to the Omni brand.
• His firm has done major renovations to Omni Tucson National Resort and Omni Homestead, each home to championship courses.
• The company’s now finishing the development of Omni PGA Frisco Resort will be opening in partnership with PGA of America alongside their headquarters to create the new modern home of golf.
• Omni has marketed heavily with live and broadcast professional golf, matches, which has helped with its brand recognition among business travelers.

Supposedly, small hotel brands like Omni can’t thrive in a world of Marriotts with hundreds of millions of members in their loyalty programs driving consumer demand, often via co-branded credit cards.

But Omni believes that technology can help it level the playing field somewhat.

• “We’ve seen our share of our direct bookings definitely increase in the past few years,” Strebel said. “We’ve lost share in the third-party websites, but we’ve overcompensated with bookings via omnihotels.com.”
• “For years, our tech stack has been fragmented,” Strebel said. “We’re doing a tech refresh. Our goal is that, when you book a spa, when you book a golf course, when you make a hotel reservation, and when you make a dining reservation, it’s all going to be put in one big database. We’ll learn about who you are and add to your guest profile.”
• Omni is adopting Oracle’s cloud-based property management system and its cloud-based point-of-sale system for food and beverage sales.
• Omni is adopting Agilysys’s ResortSuite to get its ancillary sales of spa, golf, and retail in the cloud, too.
• In a few months, it will roll out a new booking engine from P3.

Omni is looking beyond tech and physical building upgrades to help command higher rates from consumers. It’s also retooling its staffing and marketing.

• “We’re right now rolling out a whole brand new training program for our associates to elevate our levels of service,” Strebel said.
• “We’re also at the same time reevaluating all of our amenities and towels and sheets and pillows and blankets, our staff uniforms, etc.,” Strebel said.
• “We’re revamping our marketing and the story we tell,” Strebel said. “In the next four months or so, we’re coming out with a whole new brand logo, a new brand look and feel, and a new brand story.”

Omni has kept its debt load down in an industry that typically gorges on debt.

• It has funded all of the current buildings under construction out of its cash flow.
• “The beauty is that we have owners that reinvest the money into the business so we don’t have to go out for borrowing,” Strebel said. “We can be strategic in timing our new builds and renovations for optimal times as opposed to when interest rates are in better shape.”
• “We do have some debt,” Strebel said. “We basically need to pay about 10 percent of our current EBITDA [earnings before interest, depreciation, taxes, and amoritization] that goes to pay our current debt, and some of that is coming due in the next couple of years.” It may look to roll over the debt later this year.
• “We didn’t lose money in 2020,” Strebel said. “That’s partly because we had full control and little debt. We could shut down within two weeks and offer good compensation plans for our associates. Then in late April, when we saw demand coming back for resorts, we could put a plan in place and open every resort by the end of May. We had a gangbusters summer partly because we hung onto our associates because we could have direct control in treating them well.”

CORRECTION: I originally said Blake was the eldest, instead of the youngest, son. Sorry.

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