In the latest episode of The REIT Report: NAREIT's Weekly Podcast, Ed Walter, the former CEO of Host Hotels & Resorts, Inc. (NYSE: HST) and the 2013 NAREIT Chair, offered his thoughts on some of the transformative events in the REIT market and hotel business during his career.
In terms of changes to the lodging sector, Walter pointed out that views on the experiences of guests “evolved in a very significant way.” In the 1990s and early 2000s, hotel REITs focused on improvements to guest rooms, including upgrading bedding and installing flat-panel televisions. Now, companies are focusing on “creating more of an experience throughout the hotel, especially in the lobby,” according to Walter.
“That notion of making the lobby and the other facilities and amenities that are part of that a more important part of the hotel experience helps make the hotel more memorable and the travel more fun,” Walter said.
In making the transition to the role of chief executive, Walter said he was surprised by the amount of time he dedicated to working with the broader REIT industry. These efforts included interacting with policymakers regarding issues such as supporting the terrorism insurance market and labor regulations. Walter also noted that his time in leadership roles at NAREIT showed that chief executives in REITs and publicly traded real estate companies are committed to working together for the betterment of the industry.
Regarding the biggest challenges he faced as CEO of Host Hotels, Walter reflected on the global financial crisis that began around the time he started the job. “Nobody really anticipated that liquidity would dry up as rapidly and as comprehensively as it did,” he said. At the same time, Corporate America came under fire for spending on travel and company events, which hurt business at Host properties.
“We couldn’t even predict what the year was going to look like,” he recalled. “For about a 15-month period, every forecast that we got from our properties was worse than the last one.”
Walter also pointed to the financial crisis as Host’s greatest success during his tenure.
“We looked for opportunities where we could take advantage of the dislocation in an intelligent way,” he said. “Collectively, the different steps that we took… put Host in the position to not only ride out the downturn—even in the volatile business we were in—but to really position ourselves to outperform.”