IT WILL BE DIFFICULT FOR SMALLER COMPETITORS TO MAKE MONEY AND OPERATE AS EFFICIENTLY AS BIG COMPANIES .
DAVE JOHNSON
and assisting owners in PPE loan applications and lender forbearance negotiations .
Because of its scale , Aimbridge has been able to support owners where other management companies have fallen short over the past year . Johnson says the company has been approached by major brands looking for Aimbridge to step in for owners who are unhappy with the services their current managers are providing . He has also heard directly from disgruntled owners working with downsized management companies who question the value of the contracts they signed .
Johnson and others expect the third-party management landscape to look different when the dust settles . “ Unfortunately , a lot of companies in our space don ’ t have the balance sheet to make it ,” he says . He thinks owner / operator developers typically have a strong financial position and good relationships with investors and lenders , but suspects that small , pure play management companies will struggle to survive .
Not surprisingly , Johnson expects consolidation among management and hospitality companies to continue . “ It will be difficult for smaller competitors to make money and operate as efficiently as big companies ,” he predicts .
Aimbridge will be on the lookout for acquisition targets , either distressed portfolios or strategic assets . The pending deal in Mexico , for instance , is a strategic play because it will introduce the company to Latin and South America . Most recently , the company took on management of 31 Jupiter Hotels in the U . K . Potential deals in the Middle East and Asia Pacific are also in the works .
PPE loans and forbearance helped many owners survive 2020 , but those options are less available , which is likely to increase the opportunities for Aimbridge to grow on several fronts . As Johnson points out , “ a lot of money has been raised to deploy into distressed real estate ,” and investors will look for help turning them around . Another potential area for expansion is providing lenders and special servicers solutions for troubled assets .
“ Almost half the CMBS loans are in some type of default ,” Johnson says . “ Something has to give .” Aimbridge established a receiver services platform to provide legal , operations , financial reporting and franchise negotiations . A team works with lenders , servicers and owners on foreclosure , bankruptcy , workouts and receivership strategies . Aimbridge already has contracts with lenders for more than 20 distressed hotels .
MAKING TOUGH CHOICES Aimbridge is big , but it hasn ’ t escaped side effects from the pandemic . More than 40,000 of the company ’ s 62,000 employees were laid off last year , a decision Johnson calls one of the hardest of his career . The corporate management team also took a 20 % pay cut for the last half of 2020 .
“ The good news is we are starting to bring people back ,” he says . By February , Aimbridge had rehired about 7,000 team members .
Johnson says throughout the pandemic , he has tried to be the best leader he can be , and that means commuting to the office every day — a show of solidarity with the team members on the front lines at hotels . And he ’ s proud of the US $ 1 million fund Aimbridge established to help assist furloughed employees , something he says has created tremendous goodwill .
Like many , Johnson remembers how 9 / 11 and the Great Recession hurt hotels , but both pale next to the pandemic ’ s toll . Normally an optimist , he says devastation from COVID-19 has been discouraging .
“ In Texas , we ’ re open , and I can go out to dinner every night . But then I look at some places I travel to , and they are really shut down ,” he says . He also worries about the legions of travel and hospitality workers who are out of work .
But the arrival of vaccines has given him some hope . “ Every state continues to get better , NFL owners are talking about having more people in stadiums in the fall , airport traffic is up ,” he notes . “ There ’ s definitely light at the end of the tunnel .”
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