GLOBAL UPDATE better for real estate as long as overbuilding doesn ’ t lead to a collapse ,” Kukral says .
In addition to non-hotel real estate in the United States and Europe , Northwood Investors will focus on growing its longterm hotel portfolio , improving the assets and benefiting from their cash flow . That is , unless pricing becomes too aggressive , in which case the company could exit some assets . “ We ’ re still a net buyer ,” Kukral says . “ Hopefully we ’ ll be able to build up a longerterm portfolio here and we can continue to work the assets and benefit from the cash flows going forward , but if we feel the market gets too aggressively priced , we will take our capital off the table and sit and wait to reinvest another day .”
Managing assets One asset Northwood Investors acquired in 2011 is the famed New York Palace Hotel , which it bought for US $ 400 million from an entity associated with the sultan of Brunei . The property , managed by Northwood Hospitality , is undergoing a US $ 140 million renovation that includes each of its 899 guestrooms , during which time the hotel has remained open .
“ The guestrooms really hadn ’ t been touched since 1996 — you walked into them , and it was a throwback ,” Kukral says . “ Those rooms were in desperate need of reinvention , and I think the design team came up with a great look that will be accepted well by the market .”
Although Manhattan is seeing an influx of supply , Kukral says he does not expect that to drag down the historic hotel ’ s performance , as the property ’ s location and the potential for select high-end guestrooms to boost revenue give it a competitive advantage .
“ While everyone focuses on overall ADR and RevPAR , at the Palace all we really have to do is sell those better guestrooms for higher pricing , and it will move up our average ,” Kukral says .
While he acknowledges loyalty programs offered by the big brands present a competitive challenge for Northwood Hospitality ’ s city-center properties like The New York Palace and the 358-room Revere Hotel in Boston , Kukral says Northwood Hospitality ’ s food and beverage initiatives help level the playing field .
“ Our guys are playing above the rim with food and beverage ,” Kukral says . “ They have come up with some great uses of space to provide a real , modern , quality product that people want , especially for banqueting in Boston and New York .”
INVESTORS COULD BE WHIPSAWED BY DEBT , AND
SHORT-TERM OWNERS COULD SEE CAPITAL RATES
WIDEN OUT . — JOHN KUKRAL
A recently renovated guestroom at The New York Palace www . hotelsmag . com July / August 2013 HOTELS 9