Jamie Sabatier
Colorado-based hotel collection Destination Hotels and
Resorts traditionally has targeted mainly group and leisure business, but in
recent years has begun focusing on corporate transient travel. President and
COO Jamie Sabatier recently spoke with Business
Travel News lodging editor Michael B. Baker about the company's urban
growth and the impact it has had on its participation in managed corporate
travel programs.
Why do you see Destination's business mix changing?
Historically, we've been known to have great success in driving group demand and leisure demand. We're now showing the ability to drive the corporate demand. Destination had a great year last year on several key metrics. It was a record-breaking year in terms of revenues and profits. We gained considerable marketshare. We brought on almost 2,000 new rooms, and when you look at our strategy, a key part is growing our urban footprint. Our success in growing our urban footprint is dependent on working with capital partners who are focused on the key cities in the U.S., as well as growing our outreach to the corporate transient and corporate consortia side of the business. We've made great progress in that area. We've gotten new hotels in Miami, Washington, D.C.—right at Dupont Circle—San Antonio, New Orleans and a resort in the suburbs of Chicago. The more we grow on the urban side, the more we're going to drive that corporate transient demand, and we have made considerable progress in terms of building on what we think is a very strong relationship with American Express and are working with some of the other large travel providers, like Carlson, and others to have preferred partnerships with them.
Have you received more corporate requests for proposals as a result?
If you look at both consortia and transient potential—contracts, leads and RFPs—we're up 40 percent year over year. Acceptance—consortia and transient corporate clients who accepted our proposals and contracts—is up by about 20 percent. We're making tremendous progress in this part of the distribution chain.
Have you been adding personnel on the sales side?
We've brought on a new person, [director of travel industry sales] Linda Plopper, who has been a great addition in driving our corporate consortia and corporate transient business. We've also brought in a new leader who Linda reports to, [vice president of sales] Ed Simon, who is helping to further position us effectively in the transient marketplace. So, we've brought in new people to help and it's already had a pretty significant impact, as you can tell by the growth. We continue to bolster our resources on the marketing side as well. We brought in a new head of marketing [Marie Torres] toward the end of last year. One of our goals in 2014 is to have the consumer better understand Destination and who we are, not just our properties.
What's your business outlook for this year?
Our expectation is we'll have a pretty strong growth year. We've got a strong pipeline of opportunities around the country, a significant number of urban opportunities. We feel like we've got a lot of momentum behind us, and we're very excited about the team we have and how we're performing. I would expect our revenues to grow approximately by 20 percent or so this year.
What are your selling points when reaching out to the corporate transient market?
Especially in urban markets, the level of interest and receptivity to independent properties amongst corporate travelers has never been higher, and the ability to navigate social media and the reputational management tools like TripAdvisor, to be able to figure out where you want to stay, has never been easier. Corporate travelers have become much more comfortable and desirous of staying at independent properties. The business traveler still wants things to work well, still wants that functionality, wants to be in a well-located hotel, to be able to do business during the day and kick back during the evening. So you need to be able to deliver on those essentials, and all of our properties do, but the separation point that I'm seeing is they're also looking for more than that. If they're in Chicago, they want to feel like they're in Chicago. As you think about a chain experience, in terms of some of the larger chains, the product is going to be more similar from city to city, and that's [good] for some people, but we're seeing more and more in terms of the upscale consumer who are looking for something different. We're also seeing owners starting to migrate their thought process and embrace the independent model. Three of the five properties that we took over this year are properties that will have moved from a chain to an independent, so that's a pretty significant sea change.
Why is that happening?
We've been able to provide owners with the ability to have greater flexibility with their hotel operator. In doing so, it allows us to be more focused on delivering for them as owners as opposed to worrying about complying with certain brand standards or guidelines that require capital or require people at the property who aren't necessarily going to help the property performance. It gives them greater profitability, and it allows them to have a little more flexibility in terms of having a property being less encumbered with the 40-year contract.
Does Destination have a loyalty program?
We have Destination Delivers. The program has about 275,000 members today. We doubled the size of it last year, and we expect to double the size of it again this year. It's a program that focuses on recognition. We think our upscale customers are a little less points-based and a little bit more recognition-based in terms of getting upgrades and special services or treatment.
CORRECTION, Feb. 7: A previous version of this interview incorrectly listed Sabatier's title. He is president and COO of Destination Hotels and Resorts, not CEO.