"As we looked at the various growth opportunities where we could apply our hotel turn-around and repositioning expertise, we realized that our own backyard was ripe with possibilities,” said Si Sloman, principal MJS Hotels. “Few markets have suffered as much as the Phoenix Metroplex and, to a slightly smaller extent, the state of Arizona. While we are a national company with 35 hotels under management, and offices in three cities, including Phoenix, we believe the opportunities are right here in Arizona. Because this is one of our home bases, we are able to deploy our resources with more effectively than operators that are not located in this market.”
According to PKF Hospitality’s Research Econometric Forecasts of US Lodging Markets, Revenue per Available Room (RevPAR), a key indicator of a hotel’s financial health, remains down nearly 25 percent from its 2007 peak, currently ranking 16th out of the top 25 markets. While occupancy improved in 2010 and is on target for further improvement in 2011 after two consecutive years of double-digit losses, Phoenix continues to lag behind other major cities. Phoenix ranks 21st out of the top 25 markets in year-to-date occupancy, besting only Detroit, Virginia Beach, St. Louis and Dallas.
“We have extensive experience in the Phoenix Metroplex and Arizona markets, having successfully turned around seven local hotels in the past 24 months,” he noted. “Owners of six hotels we operated retained us to turn the hotel around so they could be sold. At one hotel we increased RevPAR by 266 percent in the first 10 months. At another, we moved the hotel from third in its competitive set of five to first in 120 days. In part due to substantially improved operating results, all six were sold within six months.”
Even in today’s difficult operating environment and current over-supply of properties, investors can earn a good return on their Arizona hotel investments with the right strategy and management team, according to Sloman. “We have a proven track record and fully understand what works the best in this market to attract guests and control costs,” he said.
Sloman pointed to the Nautical Beachfront Resort, Arizona’s only beachfront resort, in Lake Havasu City, which has experienced a significant turn-around over the past eight months under MJS’s stewardship. “We have a unique, proprietary approach to reach and attract the Internet customer, which resulted in an eight percent increase in RevPar in July at the resort, and 19 percent increase in August alone.”
Sloman noted that the outlook for Arizona hotels holds promise:
- Since 2009, domestic and international visitors have generated some $17.7 billion in revenue in 2010. Canadian tourism is up 16.5 percent from 2009, and overseas visitation is up 15 percent, according to the Arizona Office of Tourism.
- Travel Leaders Group, a Minnesota-based travel firm, listed Phoenix/Scottsdale in its list of top 10 domestic destinations.
- CBRichard Ellis, a national commercial real estate broker recently opened a dedicated hotel practice to capitalize on investors’ renewed interest in the market. Hotel prices are 40-60 percent below their 2006/2007 peak.
- The Westin Downtown hotel opened in March, and three others are teed up to open in the next nine to 12 months, which creates both opportunities and challenges to existing hotels.
- The Phoenix hotel market bottomed out in 2009, and though the increase in RevPAR (revenue per available room) is still weak, it is forecast to continue an upward trend, according to PKF Hospitality Research.
About MJS Hotels
MJS Hotels is a national, full-service, owner and third-party management company with offices in Phoenix, Ariz., Danbury, Conn. and West Palm Beach, Fla. The company currently manages a portfolio of 35 hotels under the industry’s leading brand families, including Marriott, Hilton, Intercontinental Hotel Group, Hyatt, Starwood and LaQuinta, as well as independent boutique hotels and resorts. www.MJSHotels.com