Nimble, creative deal-makers concentrate on building, operating hotels

Eric Watson explains how MasterBUILT Hotels’ business strategy allows the company to succeed in challenging times

Eric Watson is president of MasterBUILT Hotels.

Eric Watson

Tell me about MasterBUILT Hotels – the history of the company, the number of hotels and where they’re located.

Watson: MasterBUILT Hotels was formed in April 2011 by two prominent Calgary business leaders and friends – Jay Westman and Marc Staniloff – with the mission of developing 75 Microtel Inn & Suites by Wyndham hotels in Canada by 2036.

I was brought on in January 2012 to help realize on this vision and so far, so good. Our business model is to invest in, develop and operate branded ground-up hotels to create long-term, sustainable cash flow for our investors.

To date, we have focused on our development partnerships with Wyndham Hotels & Resorts and Marriott, two industry giants. As the owner of the territorial development rights for Microtel by Wyndham in Canada, we receive a share of the royalty fees for every Microtel that opens in the country. The royalty fees, combined with our ongoing hotel management fees, provide a tremendous annuity business for our shareholders.

Of course, this success doesn’t happen overnight and every new hotel that goes into the ground presents unique challenges that we must overcome.

Today, we have 20 Microtels open/under construction in six provinces throughout Canada, three Marriott branded hotels in Alberta, and three restaurants that we own/lease out to operators. We are the largest developer of ground-up hotels and one of the leading operators in the country with 16 hotels under management.

Microtel is owned by Wyndham Hotels & Resorts, the largest hotel company in the world (by number of hotels) with 17 other iconic brands that include Super 8, Days Inn, Ramada and Travelodge, just to name a few.

Microtel is positioned as a midscale limited-service hotel, competing against familiar brands like Holiday Inn & Express and Hampton Inn & Suites. Microtel is modern, efficient, comfortable and functional, providing guests exactly what they need – no more or no less – for a successful business trip or their kid’s hockey tournament.

What’s on the horizon in the near future for future hotels for the company?

Watson: We anticipate 2019 to be our busiest year ever with four hotel openings and up to 12 new hotels breaking ground across Canada. As a real estate developer, this is a direct result of the efforts our team has put into building our business over the past couple of years. Most of our projects over the next two years will be in B.C., Ontario, Quebec and the Atlantic provinces.

Sadly, due to the economic realities that we are facing in Alberta, we don’t have a single hotel on the books to break ground in our home province (though we have a couple of locations we are targeting).

We have a high-profile Microtel by Wyndham opening in January 2019 in Mont Tremblant, Que., which will provide tremendous exposure for our core brand. Later in 2019, we will have our first Microtel open in the Greater Toronto Area (Aurora), which is very important to the brand. We also have Microtels breaking ground in Greater Montreal, Kanata (Ottawa) and Toronto Pearson International Airport, which will bring the brand to the forefront in key halo markets.

Our TownePlace Suites by Marriott hotel will open this coming March in Fort McMurray. This is somewhat of a monumental opening, as it represents the rebuild of the Super 8 that burned down two years ago during the Fort Mac wildfires that devastated the town. It’s also Marriott’s first hotel in the market.

We are very bullish on northern British Columbia and plan to add a long-stay apartment style hotel beside our Microtel in Kitimat.

How would you describe your company philosophy?

Watson: Our vision is “to be the leader in the entrepreneurial development and management of branded hotels within Canada.” I think the word “entrepreneurial” truly defines what we are about as a company. We are nimble, creative, deal-makers who never lose sight of the importance of building enduring relationships with our employees, partners and investors.

We also believe strongly in alignment and being invested in our deals. There is a big difference in the relationship you have with a client/partner when you have real skin in the game. If things go off the rails a bit, people know we can stand behind them to get things back on track. We’re also constantly striving for excellence and growth, both for the company and our people. While it may sound cliché, in our business we are only as good as our people. Attracting and retaining the best talent is critical to our success.

What’s the hotel business been like in the last three years considering the challenging economy?

Watson: Akin to Charles Dickens’ famous line, “it’s been a tale of two countries … it’s been the best of time, it’s been the worst of times.”

In northern B.C., Alberta (Calgary included), Saskatchewan and Newfoundland, hotels have been battered by the downturn in the energy markets. It’s been really tough, and I don’t expect to see a turnaround any time soon.

While the macro-economic climate is a significant contributor to the pain, a large amount of the blame could be assigned to the hotel industry itself. For example, the glut on new hotels at the Calgary airport makes absolutely no sense and I know owners are hurting badly. Despite this, more new hotels are coming. Insanity!

In the rest of the country, particularly major centres like Vancouver, Toronto, Ottawa and Montreal, hotels continue to realize record profits. The major mountain resorts of Whistler, Banff/Canmore, Jasper and Mont Tremblant would also be included in this group. In these markets, hotel owners couldn’t be happier.

As a national hotel company, we’ve felt the good, the bad and the ugly of Canada’s juxtaposition. With that said, we believe strongly in our business strategy, geographic diversity and unique business model that enables us to succeed in challenging times like these.

What trends are you seeing in the business when it comes to what customers want?

Watson: Fast, reliable and free Internet access is far and away the most important amenity our customers want and continue to have rising expectations for. It doesn’t matter if you are running a small independent inn or a large five-star resort, you need to provide great Internet access. This is also the foundation for the tremendous degree of technological innovation that will enhance the guest booking and on-property experience in a myriad of ways in the near future.

Another big trend in the industry, which is a response to a customer want, is what we call “soft branding.” Today’s travellers are increasingly seeking authentic experiences on their terms. As a result, boutique hotels and alternative accommodations are rising in popularity. In my opinion, Airbnb’s surge is an expression of this desire/customer trend. In response, the big hotel chains have gotten into the market in a big way by creating independent/boutique hotel concepts and acquiring vacation rental companies, and then backing them by their powerful reservation systems and loyalty rewards programs. In effect, they are trying to provide the customer with the best of both worlds.

– Mario Toneguzzi

masterbuilt hotels

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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