Executive view: Arash Azarbarzin

Arash Azarbarzin is the president of SH Hotels and Resorts (Baccarat, 1 Hotels, Treehouse).

Arash Azarbarzin
Arash Azarbarzin

This is a big election year for us in the U.S., and the U.K. is divided over Brexit. I think those two factors are going to have some impact on the economy on a global level. And we've got a trade war with China, which is always a wild card anyway. Still, I don't think any of these will be a major mover for the economy in 2020.

All our hotels around the U.S., and now in Mexico and in the U.K., are predicting an increase in year-over-year RevPAR. We don't see double-digit growth, but we see solid growth in all our segments, in every hotel. New York was a little soft this year from a RevPAR perspective. Supply keeps coming on, and thankfully, the city is big enough to absorb it, and 2020 should be better because there are not as many new hotels opening there.

But London, for example, is seeing a surge of new hotels opening in 2020. Usually, it reflects a development cycle. It takes three years to open a hotel from the ground up, by the time you've designed it, got the titles and permits and then built it.

I feel Miami will have a strong 2020. The Super Bowl is going to be in Miami, and the convention center is fully open. Los Angeles is going to have a strong year. San Francisco has seen some softness due to the convention schedule and new hotel openings in the market.

But I'm an optimist. I don't see any indication for a recession from all the data I look at. When you're in the luxury hotel segment, nobody is ever recession-proof, but we have a very, very astute revenue management team in our hotels. You have to watch rate and occupancy on a daily basis. Ancillary revenue from bars and restaurants is important, but our goal at every hotel is to really make sure that guests enjoy their surroundings as much as they are enjoying our hotel. We have fantastic restaurants and great spas, but we never try to have a guest eat every meal at our hotel. It enhances their experience if they get big, big, big-picture experience. [Ancillary] revenue should grow proportionately to rate and occupancy, and there's no new way for us to capture more, because we want them to spend some time outside the hotel, as well.

We have three solid brands right now. Baccarat is a very, very special brand, and we've been given the responsibility and opportunity to interpret it and translate it into a hotel experience. It is opulence and grandeur but also fun and exciting. We have two new projects we expect to announce early next year. Both are in Asia.

1 Hotels is really our core and our being. Barry [Sternlicht, CEO of SH Hotels & Resorts] really wanted the best of the best  the service, the energy, the food, the most comfortable bed, the softest sheets  and he layered on top of that the sustainability and being green and ecofriendly. One of our goals is to be carbon neutral -- watch for an announcement. We track energy usage on a daily and sometimes hourly basis to make sure that we don't see any leakage of energy anywhere. We weigh our trash to see what's going in and what's coming out. We want to get to the next level in taking care of our environment. Our customers have become such loyalists because they know we're not giving them lip service and that every decision we make is ecofriendly. In return, we have been financially very, very successful on a top- and bottom-line perspective and for developers.

We opened in West Hollywood in August and announced a project that will open next August on King Street in Toronto. Our Cabo and Sanya [China] projects are launching first quarter next year. We announced London a couple of weeks ago, in Mayfair right on Piccadilly across from the Ritz. Paris has been announced and is already under construction. Mission Bay [in San Francisco] was announced. We're doing a 1 Hotel with the Golden State Warriors that's going to be really cool, right next to their new Chase Center.

The third brand is Treehouse, which we launched in November in London. Barry thought about the Treehouse brand seven years ago as a sister to 1 Hotels, so we had the name, the intellectual property, all the work done. When this location came to our attention, we thought, "It's small, it doesn't have all the amenities a 1 Hotel should have, and it doesn't have a spa, but it's a perfect project to bring the Treehouse brand to life." It's the top five floors of an office building, so it kind of looks like a treehouse, and it has a rooftop, panoramic terrace.

We think that Treehouse can have the power to be three times bigger than 1 Hotels, maybe four times bigger. It is more approachable. It is easier to build, and it's a fun, flexible concept. I could see a Treehouse in the tertiary and suburban markets in the United States. It was a risk to launch the first one not in our backyard, but we've put together a great team, and it's been very well received. I'm working on seven or eight Treehouse projects as we speak, from Bangkok to Seattle to Dallas to all over Europe. There's one I'm working on in Paris, but, you know, none of them have been assigned, announced or finalized yet.

We're not ready to announce a fourth brand, but we discuss it. The luxury segment is getting more crowded every day, and every month I see a new lifestyle brand, a new boutique brand coming up. So I think the opportunity really is in the limited-service world, in the tertiary markets or even the airport or drive markets, for a different and more fun and approachable brand than what you currently see being built every day right next to each other.

I don't think we have aspirations to be a thousand-hotel company, like Starwood was. And we're not for sale, that's for sure. We have an incredible pipeline, and want to grow organically, but I wouldn't take anything off the table, including making an acquisition. Or taking over or buying a hotel company. We're ready for growth. We'll have 30 hotels in four years with just what's in our pipeline. But we want to make sure we don't lose our DNA, our culture, why we started doing this. We're a for-profit operation but will take advantage of every possibility to educate and change the way people think about what it means to be sustainable and be ecofriendly. And we're ready to grow leaps and bounds.

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