Tony Davis is the CEO of the leading hospitality company in Alabama, PCH Hotels & Resorts, the chain of resort hotels associated with the Robert Trent Jones Golf Trail. The Retirement Systems of Alabama is the owner of both the hotels and the Trail, and that, says Davis, is a key to the performance of PCH’s hotels compared to the industry average. The RSA’s long-term view of its investments, he says, accounts for above industry-average expectations — based on the RSA mission that the properties are meant to enhance visitors’ expectations of Alabama.
Davis has been with PCH for 10 years and has been CEO for a year and a half.
PCH is a management company that is focused only on RSA assets. That gives us the traction to really drive the levels of expectation that the ownership is looking for. And we have the unique situation that we work directly with RSA as a management company, and that gives us strength in managing the properties.
Financing is one of the obvious advantages of our relationship with the RSA. Capital improvements need to be made occasionally, and having that source of capital is an advantage. It’s also an advantage not to be distracted by multiple ownership. They have one voice and a clear message. And their level of expectation continues to outpace those of the Marriott and Renaissance brands. Those brands give us a great platform, but that is not where we stay. It’s bigger and better than Marriott really requires.
It’s a hard thing to balance in other hotel companies that are focused on meeting short-term goals. They are striving to hit a stock price, and it’s easy to lose balance and focus on who you are and what you need to get done when you’re chasing short-term gains. We continue to maximize profits now, but not at the sacrifice of future returns. We’ve got major maintenance renovations going on at both the Marriott Shoals and the Renaissance Ross Bridge. Both are multimillion-dollar projects. The projects are renovation of soft goods — all the things that go into guest rooms, from carpets to paint on the wall. Typically, you do that every six to seven years. It’s a pretty big deal, keeping things fresh.
We are on a par with the industry average revenue growth, about 6 percent, and for us that is a pretty strong accomplishment. Being Alabama-centric, we don’t have diversity outside of the state, and we are not in high-density markets. Being Alabama-centric, we know Alabama and have built that into the models. Our dynamic is focused on being here for the long term.
Our RevPAR (revenue per available room) — a hotel metric that measures total revenue in relationship to rooms, a combination of average rate and occupancy — compares very strongly with the national average, especially considering the food and beverage and other businesses we manage under our umbrella.
Food and beverage has a much lower profit margin historically than the margin for rooms. But that’s something else that is unique with our ownership. They are interested in driving food and beverage, which adds to the hotels’ ability to change the mindset of what Alabama is.
These hotels that the RSA owns each provides a great amount of exposure for the individual locations. In every place where the RSA has a hotel that we manage, the local people are extremely proud and very appreciative of having these hotels in their cities. We try to be the employers of choice in each location. Our guest services score well above average in the Marriott brand. In the Shoals, we are number one in all of North America. And because we get the people travelling to Alabama, they see that in our employees.
In the hotel industry, there are products that are called full service and selected service. We do nothing but full service. We do a lot of association business: a lot of Alabama associations but also some from other states. Groups are a primary focus for us. And then we have the transient customer, people coming for vacations and holidays. We do a healthy mix of both of those demographics.
We leverage as many points of distribution as possible working with the Marriott brand. That is why we pay the franchise fees. We leverage that brand endorsement, a big piece, also co-marketing with the Robert Trent Jones Golf Trail and the RSA’s ownership of media outlets.
We had those market corrections in 2008 and 2009, but— if you look at Smith Travel Research, the leading index for the industry — overall the industry has definitely come back. The degree of recovery is really based on your geographic location. If you’re in New York City, it’s gangbusters. If not, it’s good but not like some of the metropolitan markets. The industry as a whole is doing better, but tempered with the idea that it might not be long lasting and not as fast as it was at first. At first, the recovery was fast and furious, but now it’s more gradual than they initially thought.
I tend to look at the long range. I’ve rolled out to my team PCH 2020, trying to focus on where things need to be in 2020. And as I look back on where we’ve been and where we’re going, it will be slow and steady. I’m excited about the great foundation of an ownership that has the long-range perspective. That’s a great strength for these hotels. It’s going to give us fuel for the fire, for our guests to come back. They leave with the best possible experience, and you can’t do that if you’re shortcutting the process. We’re focused on the guest, and that makes sure they leave with a great experience that will generate their return, if not immediately, down the road. 2013 was good, and 2014 is shaping up. But the biggest thing we have is that we are focused on a multi-year strategy and not a 365-day strategy, and that is what makes us different.
Chris McFadyen is the editorial director of Business Alabama.
interview by Chris McFadyen • photo by Todd Douglas