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The HotelTechInsider podcast interviews the top leaders at the convergence of hotels, travel and technology. Guests include founders, executives, top hoteliers and industry organization leadership. Find all of the episodes at hoteltechreport.com
The incentives are completely misaligned in our industry. You have the owner who has seen the value leakage go away from them to operators, to brands, to booking channels, and now even to VC backed software companies, and that's not sustainable.
Speaker 2:From Hotel Tech Report, it's Hotel Tech Insider, a show about the future of hotels and the technology that powers them. Today on the show, we have Sloan Dean, the former CEO of Remington Hospitality, which is one of
Speaker 3:the largest hotel management companies in the country.
Speaker 2:In this conversation, we discuss where AI is creating leverage for hotels, how the balance of power and hospitality could shift over the next decade, and what owners can do today to position themselves on the winning side of change.
Speaker 3:Sloan, thanks so much for joining us on the Hotel Tech Insider podcast today. It's great to have you.
Speaker 1:Yeah. Thanks for letting me be here, Jordan.
Speaker 3:Well, we really appreciate you coming on. We're really excited about this because you are obviously one of the youngest hotel management company CEOs, I think that I've ever heard of. And one that's really interested in technology, which is a unique characteristic for a management company CEO, is my legacy kind of this service real estate business. Can you talk us through a quick background of how you got into that role at such a young age and what you saw coming into it from a technology perspective?
Speaker 1:Yeah, so probably my interest in tech, if I rewind the tape, was I went to Georgia Tech. So I have a industrial and systems engineering degree and finance degree from tech. And so I've always been really interested. Actually, I used to be fluent in SQL code and could program in Java and C plus plus when I was younger. So there's always been that kind of interest, I guess.
Speaker 1:But fast forward, I was a senior vice president on the asset management team at the two public affiliate REITs, Ashford Hospitality Trust and Braemar Hotels and Resorts, Working for Ashford Inc, the c corp that now owns Remington, it didn't at the time, it was affiliated with it. And I was the lone insider considered to replace the president, Mark Sharkey, that was retiring at the end of summer twenty seventeen. So I was senior vice president on the asset management team. I've been there since the summer of twenty thirteen and raised my hand and went through a four month process that seemed like it drug out, drug out. And then walked into Monty Bennett's office 01/02/2018, he slid a piece of paper across the desk.
Speaker 1:Literally, that's how it happened. And he said, this is what I wanna do. And I was CEO and president for eight years and left at the end of last June.
Speaker 3:And when you came in, what was the scale of the business, business composition of managed franchise versus independent, kind of owned versus managed? Can you just talk a little bit about that to set the stage for the technology that you came into?
Speaker 1:Yeah. So when I took over running the company, we were around 6,000 employees, over 80 hotels. So I wanna say it was 84. All but one were owned by the affiliate REIT, so kind of like an owner operator affiliation. We managed one hotel on a long term lease structure for the Hilton Marietta that they still operate today.
Speaker 1:And then when I left, we had more than doubled the size of the company. We had done one M and A transaction, Chesapeake Hospitality. The REIT have been substantial net sellers for the last particularly the last three or four years, but really since post COVID. And both platforms have sold a good many assets. I think when I left, we were over a 150 hotels, but two thirds of the company and growing much faster was all third party.
Speaker 1:So when I was there, we did 20 to 30 new net unit deals a year, third party. So we were growing like wildfire in third party while the REITs contracted. If the REITs had not been a net seller when I left, we'd probably have been closer to 200 hotels. Yep. It was literally when I took over, we were just an affiliate manager and then we really transformed the company to be top five third party manager by the time I left.
Speaker 1:We're about $1.61700000000 in hotel total revenue when I was leaving.
Speaker 3:And the mix between independent and branded franchise?
Speaker 1:So we got up to about 20 independents under management out of that, call it 150. We had about 50 Marriott, mostly full service, about 50 Hilton, couple of Hyatt, IHE smattered in. So majority branded full service. Yeah. But then we also had some really amazing independent hotels like Bardessono in Napa.
Speaker 1:Mr. Sees then was independent now as a branded hotel with Hilton in Beverly Hills, Pier House. So some really iconic real estate. So the quality of the portfolio was quite exceptional, particularly on the independent side.
Speaker 3:And if you were buying or building a hotel today, would you rather own a branded hotel or an independent from an economics and returns perspective?
Speaker 1:It entirely depends on the real estate itself. But I would say, if I were an investor in a hotel, I would only invest in upper upscale or luxury because we're very much in a k shaped economy and that's going to continue. The haves will continue to have more And we have a growing or a grow and expanding top 20% in The United States and the 80% are struggling. For that 80%, we're the first generation in a couple millennial where our kids are not as wealthy as the parents. And so that's gonna continue.
Speaker 1:I think I would own an independent luxury hotel. There's more risk in that on the equity side, but all the best deals I was ever involved with were very unique real estate independent hotels.
Speaker 3:And do you think the brand value proposition as a whole, the franchise flag model, obviously the last innovation is really this asset light model for them. But it seems like the fee structure, the services offered, do you feel like they've evolved materially with so many technological changes since software, OTA, since AI now? Do you feel like that's evolved enough for the owners of those assets? Or do you feel like there's still kind of changes that need to be worked out?
Speaker 1:Well, so it's a self correcting loop. I had Chris Silcock, the president of Hilton, on my podcast. And I've asked Tony Caffuano this, who's on my podcast, Not Done with Sloan Dean. And they all agree there's too many brands. Yeah.
Speaker 1:And even the people that work for the company, they're confused much less the consumer. But until owners stop signing franchise agreements, why would they change? Yeah. They have fiduciary responsibilities to the shareholders. So they're kind of doing what they're structured to do.
Speaker 1:Yeah. Create this value leakage that goes away from the hotel owner. Yeah. I don't think that stops until owners say we're gonna stop signing twenty year terms with liquidated damages. I do think that the incentives are completely misaligned in our industry.
Speaker 1:You have the owner who has seen the value leakage go away from them to operators, to brands, to booking channels, and now even to VC backed software companies. Yeah. And that's not sustainable. And something has to change. I don't think it's just the brands.
Speaker 1:The brands have gotten the most attention because of the skiffed article recently, and there's a concerned owner's letter going around privately from 30 of the largest franchisees that Marriott has. So the brands know they have like an upset owner community. The, hey, owners listening in, it's not gonna change unless you stop signing franchise agreements. Yeah. It's a capitalistic self correcting loop.
Speaker 3:So Marriott flagged properties don't have a different rate than random hotel down the street?
Speaker 1:Oh, their take rate is the lowest in the industry. Yeah. So, yeah, OTA's commission on a merchant or a hotel collect averages out to about 11 and a half percent, whereas an independent hotel may be paying 22%. But the published rate the consumer sees is the exact same.
Speaker 3:For sure.
Speaker 1:And I think the OTAs want that. I think it gives validation to their customer set. I mean, I think if you look at the OTAs, they've actually materially outperformed everyone that's publicly traded. I mean, okay, so fifteen, sixteen, 19%. That is Expedia, that is then booking.com and then Airbnb's.
Speaker 1:Yep. You won 2026 revenue growth year on year. There's no other travel companies. Hilton and Marriott were six and nine. I forget which one was six, which one was nine.
Speaker 1:So the OTAs have been up into the right and have been crushing everyone else. So if you look at it purely on the market capitalization, to back to your original question, I would say the OTAs seem to be getting it right all the time.
Speaker 3:At some point does Marriott become an OTA if they get enough scale though, and they have soft brands and now they're loosening owner requirements to join their distribution network?
Speaker 1:Yeah. So in some ways, the OTAs are just a marketplace. K? There's technology marketplace. And they basically, in long term game theory, were smarter, more clever in thinking about how the consumer evolved over time.
Speaker 1:And they basically flanked hotel owners, operators, and the brands. And that ship has sailed. Now they're more powerful and worth more. Booking.com is worth more than any of the hotel chains. I believe, yes.
Speaker 1:I think what you'll see in hotel brands, you'll see much more M and A. It's a mature market. So you're gonna have Marriott, Hilton, Hyatt, Bai, others. They may be the last three standing before you get into, you know, the European Trade Commissions as well as the United States FTC trying to say it's, you know, monopolistic for any m and a. Yep.
Speaker 1:And they'll just get bigger and then they're a marketplace. You know, I mean, that's basically what Bonvoy is, is like Bonvoy is a currency that they keep diluting the currency of. Is it all that different of a marketplace than per se an Expedia? And that's where they're going. And that's why they're adding on experiences.
Speaker 1:You know, you got Ritz Carlton Yachts. You then have Marriott Media that is launched. So yeah, I think the answer is yes long term. They just become another marketplace.
Speaker 3:We'll get more into some of these structural questions later. I wanna jump back to the tactical side, like coming in as management company CEO at a young age, technology background, what did you see from a technology perspective? Where did that sit in your priorities in your first ninety days because you're already at the company already? Where did it stack up against priorities? And what was the state of affairs at Remington since you have independent chain, different franchise flags on it?
Speaker 3:How did things stand? How did you think about technology from day one?
Speaker 1:So I did like a ninety day listening when I came in and just I met with as many people as I could. I observed, I brought in a company to do employer branding. I didn't like how we were getting our data for associate opinions because it was not pure data. It was basically just telling the former officers what they wanted to hear. So I brought in a new Yeah.
Speaker 1:A new company. And I had three strategic imperatives that I set around my hundred day mark. That was really focused on people and culture. And that's where Room to Thrive kind of came out. And that was kind of our slogan that, you know, thrive is for the long term, not just for one quarter, not just for one year, for a long period of time.
Speaker 1:Then secondly, a focus on process training, really making things scalable because I knew in the future we wanted to go into third party and we couldn't just act like a regional owner operator. And
Speaker 3:then
Speaker 1:the third was technology, what I said to bring those three together. And so Remington, when I took over in 2018, was very much a laggard in a laggard industry. So, you know, you look at hotel operations, it is, I mean, in the bottom quartile of using technology in innovative ways, being ahead of the bell curve and adopting new ways of doing business. We are an industry that is a laggard because we're a physical real estate capital intensive business first and foremost and people intensive. And then you throw on then Remington was even further behind the industry.
Speaker 1:And part of that was, you know, a no knock to the former president who I took over from. He just didn't really value that. He was a little more old school and did a lot of great things over his tenure. But that definitely had been neglected, you know. And so for a good example, we didn't have a labor management system.
Speaker 1:We didn't have a learning management system that we were still doing a submittal of PTO via paper instead of like automating and just going into ADP and submitting for your time off. And I could go down and down the list. And so my priority for the first two years until COVID hit, you know, 2018, 2019, was not revolutionary change. It was, let's get to where we're at least in the median of the industry, which is still way behind other industries.
Speaker 3:Yeah.
Speaker 1:Because when you come into an organization that has thousands of employees, and I was 36 at the time, I'm 45 now. And what all young leaders tend to make a mistake is that they want to move fast and do sweeping change. They have like this big grand vision, but to move an organization that is thousands of people and you're a staffing company, you know, that's what an operating company is. That it's you're coming into the organization and you can't be so different that the body rejects you like a cancerous organism. Yeah.
Speaker 1:And so you have to come in and think about change management, training processes, what and it's that delicate balance of how fast can I go and how do things get absorbed? And then cost, of course, you're you know, implementing certain technology solutions is very expensive. So I weighed all that and it was a lot of what I'd call tech adoption that was nothing revolutionary that we should have done over the prior decade. And we did like a two year catch up. So that when we went into COVID, were we the best in technology in the industry?
Speaker 1:No. But we were at least better than half of the industry. And I would say moving towards and then COVID hit and then we did a lot more changes after that. But that was how I approached the business coming in. Think too many young leaders come in and try to dramatically change the business.
Speaker 1:And if you're in a moderately successful business, that can be really detrimental.
Speaker 3:And so you came in labor management and learning management were like viewing this company as this staffing organization, service organization. Labor management and learning management were two things that were not being done digitally. How did you approach those?
Speaker 1:Man, I just mentioned those. We didn't have a online forecasting budgeting system. We did not have an RMS at the independent hotels. So I basically advised there were kind of 10 or 12 technology priorities. And then I would have a business leader own project manage one, and then we had a sequencing document that kind of went across the gamut.
Speaker 1:And so in hindsight, even though a lot of that was catch up, it was probably too much in hindsight. I mean, I burned out some people. I got feedback at the end of nineteen that the amount of technology change was overwhelming for people. We installed our first PO system. We went through a whole transformation with ADP and our payroll and LMS.
Speaker 1:We then went through the independent hotels installing revenue management. We then went through and installed Hotel Effectiveness as the learning management system. And there was about 10 or 12 substantial installations that we did. I just happened to mention a couple.
Speaker 3:Yeah. Were there a couple installations that were you just look back on it and you're like, there was that wow moment. We installed this, maybe not day one, but as it got ramped up, it got disseminated through the team, that you really saw that concrete result that anybody who's running a business of this scale that's not using this or even an independent is kind of foolish.
Speaker 1:I think for sure, if you're a mid sized to large operating company and you do not have a sophisticated labor management system, that it will pay for itself in spades. So that's one. Just because you probably meaningfully don't know how you're doing productivity wise to your standards, how you compare to industry standards, you probably even have a hard time fully tracking and in a real time impacting overtime usage. And in a lot of cases, contract labor is hidden wages because you get billed invoiced aggregately and there's actually a lot of fraud in contract labor. And so it allows you to shed a light on these things that you naturally wouldn't, even if you have a pretty good financial ERP.
Speaker 1:I think also having a really best in class RMS, particularly independent hotels, again, pays for itself in spades because you just you get more automation, your pricing, and you'll get in the hotel faster iteratively throughout the day. There's a few of those that were just like huge home runs that were like, of course, the install, there's always issues or training start stops. But those are probably two that really stand out that was just like a no brainer.
Speaker 3:As you think about the next five years due to AI, do you see structural changes? Maybe more outsourcing of functions like revenue management the same way that we outsource to marketing agencies. Do you see any structural shifts that will fundamentally change or opportunities that people aren't looking at that will change that dynamic and make it a better world to own hotels in?
Speaker 1:Well, if you look at where businesses have become commodities, their value has leaked away from them. Or said in a different way. If they're not close to the customer and they don't control the data, they've all seen value leak away from them. You say in the ecosystem hotels, what are those categories? That's the hotel owner and that is the manager.
Speaker 1:And there's thousands of owners and thousands of managers often self managed in The United States. And I think they're the ones that will be upended in this cycle of AI because the brands are only getting bigger and are becoming marketplaces. The OTAs are already huge data companies and massive marketplaces. Now you could argue maybe the LLMs eventually pose a risk to both. We all are booking via AI agent at some point.
Speaker 1:You know, how does the OTA model evolve? How does the brand model evolve? There's there's some of that. But I think over the next five or ten years, you have all these service businesses, not just hotels where the incumbents are gonna be put out of business. And there's gonna be a new way of doing hotel operations, looking at real estate ownership.
Speaker 1:And you have all these incumbents that are basically commodities, you know. And so I'm placing judgment on owners and operators throughout the hotel industry. And I think a lot of the incumbents in that space, even big, big companies are at substantial risk of being circumvented by smaller startups, new way of thinking AI really massively. They all think it's gonna benefit their business. What they don't realize is they're not innovators and they're commodities.
Speaker 1:And so anyone who's not the innovator and is a commodity in the business processes, innovation tends to eat them.
Speaker 3:Are there any other tools or technologies that you think are really exciting that you've loved, that you've seen great results from? I know an advisor for a few technology companies. How do you think about who you advise and what are you excited about from the technology perspective and software, even though I know there's maybe some structural issues that you have with the ecosystem as a whole?
Speaker 1:Yeah. I mean, I help advise Frontline Performance Group and Ponte. Both are AI businesses, one through Front Desk and Food and Beverage, that's Frontline. And then Ponte is for HR and recruiting. And I'm very bullish on both.
Speaker 1:I think I'm also bullish on anyone trying to bring AI in a novel way to reimagine how we can run hotels better, more efficiently and increase the customer experience. You know, to your original question of like other technology or things that I use that I think are clever, I ultimately think software becomes pretty commoditized. And so I'm a Claude co worker heavy user, done some Claude co, but I'm not a computer programmer these days. And so it is a curious question of, you know, as these systems, these frontier models get better, better, better, what eventually happens to software in general? I'm also really bullish though on the long term benefit for hotels on robotics.
Speaker 1:I do not think we will see a meaningful arbitrage between labor and robotics for the next two years in The United States. I think you look at China and their first, you know, whereas The United States is first mover on venture capital and AgenTek technologies, their first mover in robotics. But I do think in five to ten years, we're gonna see physical work, which hotels have a lot of, be substantially changed by robotics. And I think there's some really cool kind of frontier things happening there. But it's gonna be a couple years until that's cost effective or it's in hotels at scale.
Speaker 3:Yeah. Is the biggest one, I guess, housekeeping in your opinion?
Speaker 1:Well, the largest department in most every hotel in the world is housekeeping. So if you just look at it from a volume perspective, yes, I think it's housekeeping for sure. I think you then throw on laundry, certain engineering facilities. And then eventually, I think, like what they're doing in quick serve restaurants, you won't have robots in a kitchen, you will have the robotic kitchen pre built. So, you know, you go to a quick serve restaurant now, all the equipment is built with the automation in it.
Speaker 1:It's not like you have a humanoid running a typical gas grill. And I think you'll over a period of time, you know, you fast forward fifteen, twenty years, the kitchen of the future in a restaurant or a hotel will be very purpose built with automation. It's almost like when you go to a car manufacturing facility. Right? Like, it's all purpose built in.
Speaker 1:That that would definitely happen in the kitchen for sure.
Speaker 3:Awesome. Well, Sloan, I appreciate you coming on. I know we have so much else to talk about. I'd love to have you back at some point.
Speaker 1:Yeah. Thanks for having me.
Speaker 3:Where can our audience find you? I know you have a podcast not done yet and
Speaker 1:Yeah. I'll do a shameless plug. Yeah. You can find me on Apple, Spotify, YouTube, LinkedIn. It's called not done with Sloan Dean.
Speaker 1:Yeah. Check it out or I'm Sloan Dean on LinkedIn. That's how you can find me.
Speaker 3:Awesome. Well, thanks so much again, Sloan, and great to have you.
Speaker 1:Hey. Thanks.
Speaker 2:That's all for today's episode. Thanks for listening to Hotel Tech Insider produced by hoteltechreport.com. Our goal with this podcast is to show you how the best in the business are leveraging technology to grow their properties and outperform the concept by using innovative digital tools and strategies. I encourage all of our listeners to go try at least one of these strategies or tools that you learned from today's episode. Successful digital transformation is all about consistent small experiments over a long period of time, so don't wait until tomorrow to try something new.
Speaker 2:Do you know a hotelier who would be great to feature on this show, or do you think that your story would bring a lot of value to our audience? Reach out to me directly on LinkedIn by searching for Jordan Hollander. For more episodes like this, follow Hotel Tech Insider on all major streaming platforms like Spotify and Apple Music.