TRAVEL - INTERVIEW
Monday, June 24, 2019
TRAVEL - INTERVIEW
by Melisa Kaya
Competition in the hospitality industry is increasing day by day, making process management much more difficult. In order to increase profits, hotel owners have to increase sales or reduce costs, but even achieving both at the same time will bring great results. With its extensive network of suppliers, a wide range of marketing channels, and process management know-how, third-party management companies direct the hospitality industry. Kokua Hospitality, in partnership with hotel owners, offers services that will take them to the next level. With the awareness that each hotel owner has different needs, Kokua Hospitality team believes that a different strategy should be developed for each hotel they work with and offers customized solutions to their clients. Under the leadership of Kirk Pederson, who has been interested in hospitality since his childhood, Kokua Hospitality has been providing hotel and resort management, construction and renovation, revenue management, sales and marketing to many hotels from Hawaii to New York. I talked with Kirk Pederson, President of Kokua Hospitality, about to learn more about their services and the basics of third-party hospitality management.
Kirk, before talking about Kokua Hospitality, could you tell us about yourself? Who is Kirk Pederson?
Well, I’ve always been the “hospitality kid.” My mom taught me how to cook, and my dad taught me how to flip omelettes, so I used to stand on my little stepstool next to the stove to make breakfast for my whole family on the weekends. I was also always into sports, and before I knew to work in hotels and resorts was actually something I could achieve, I had grand visions of being a professional something -whether it was baseball or basketball. I still love to cook, and I enter BBQ competitions every year (I won four years in a row). I’m still very involved in sports – whether it’s my son and the sports he loves to play or my exploration into all sports, including extreme sports. Now I’m big on a lot of golf in the summer + snowboarding in the winter.
How did your interest in the hospitality industry has begun? Please tell us about your journey to Kokua Hospitality?
I really had the itch for travel and hospitality since day one – as a family, we stayed a hotel in Waikiki Beach when I was ten, and that’s when I officially caught the bug. I knew I wanted to be in the hotel business. When I was in high school, we all took placement surveys to help us decide what we wanted to do. I went in to get my results, and the advisor said, “Well, there’s no question about what you’re going to do.” The top five results were all hospitality-related. I started researching top colleges for hospitality, spent my undergraduate years at the University of Nevada, Las Vegas, and have been in the business ever since.
The Axiom Hotel - Library
You have joined The Chartres Lodging Group in 2011, and you became the President at Kokua Hospitality in 2016. How did your previous experiences contribute to your success at The Chartres Lodging Group?
I always wanted to learn every side of our business. So many people invest in hotels that have never worked in hotels – and it’s pretty evident that they don’t get it. Numbers are numbers, but there’s a tangible component to service, and all these things that have to be done right in order to produce good numbers. For my first job in hospitality, it was as simple as the fact that I didn’t want to wear a suit and tie – which drove me towards operations. I ended up excelling in finance courses in college, so I decided to minor in finance, and then went directly into operations after school. In order to be a successful leader, you have to be able to connect to your employees’ experiences. I’ve worked in banquets and catering, I’ve washed the dishes, I’ve cooked on the line. This is industry is not as simple – it’s not as black and white – as the numbers folks make it seem. The core of this business is people – and that’s a place I’ve always been lucky to excel. The well-roundedness of experience in every aspect of the business. Unless you’ve done it, you can’t tell your employees how to do it or train them how to do it right.
The Axiom Hotel
Could you tell us about Kokua Hospitality and your team?
Part of my job at Kokua is that I get to go out and make deals, and in doing that – I get to brag about my people. The great thing about the senior members of my team is that many have been here at Kokua 10+ years and I think the top two reasons they joined our team are because they wanted to be part of something entrepreneurial and they wanted to have a say. It’s not always about the money; often, it’s about feeling like you can make a difference. Hard work is always hard work, but if you feel like you’re making a difference, that changes things. They take a lot of pride in what they do – so they don’t need their hands held. Looking at some of our new recruits here, too – the main reason they’ve joined after being with larger companies for so long is because they want their voice to be heard.
What does Third-party Hospitality Management mean?
It means you are an owner advocate. You are engaged by the owner to execute the owner’s business point. That’s what we’re hired to do. We don’t subscribe to the theory that we have a management process that we’re going to prescribe to every single owner that comes to us. We do subscribe to the theory that every owner deserves a custom management process. The third-party management business gets pretty cutthroat – we don’t really operate in that way. If we partner well with an owner and are truly operating in partnership, the numbers will come. We structure a unique management program and plan for every property we work with.
The Axiom Hotel - Cloud Lounge
Which services do you offer to your clients? What are the missions and responsibilities of Kokua Hospitality while managing a hotel?
It all starts with an initial introduction and a vision. What’s important for us and our process is that we get to understand our client and our owner. We can essentially offer every aspect of hospitality -pure management, development management, concepting, programming, and more, but we don’t offer every suite to every owner. Therefore, we end up being most successful in the areas where the projects have soul, character, vision, and creative ideas that drive revenue. It’s important for us to stay more focused on revenue than expenses. Expense management is critical, but you don’t create and ally through expense reduction, you create and ally through revenue production. Revenue management, contract, brand negotiations, property management, purchasing – we can bring all of that to the table.
The Axiom Hotel - Lobby Lounge
What is the way to work with you for hotel owners who want to reduce their financial and operational costs? What features should their hotel and management structures have?
If you really want to reduce costs, there are two different paths to go. Cost reductions – which are put in place to reduce or minimize the guest experience or the value proposition. These expense reductions are generally short-term or reactionary. These are activated when people aren’t willing to pay higher rates and are almost always going to be short-lived and in response to a market dynamic. The other kind of cost reductions – productive cost reductions – often come with capital investment. Technology today has the ability to reduce cost in operations. Sometimes, we’re not at the point where an owner can be engaged in capital improvements to reduce costs over time. Technology at the front desk and in the guest rooms, policies, and procedures that all provide a similar or better service with less bodies. We have to shift when the market or economy shifts, and that often means we have to adjust the pricing model or consider those short-term reductions. However, if you have a relationship with your operator where you can creatively brainstorm and talk through options together – you’re going to win no matter what. When ownership isn’t aligned with management and doesn’t want to work collaboratively, it’s a recipe for disaster.
The Axiom Hotel - The Turn Cafe
Could you give us brief information about the changes that you made when you took management of a hotel? How long does it take to complete the integration of a hotel that wants to work with you?
Every hotel is different. We’ve taken over hotels that are infested with bed bugs and running 15-20% occupancy and the impact is immediate, but there’s also a much more impactful long-game. Some hotels have poor pricing strategies that end up taking 30 days to make an impact, because it’s about changing the messaging and overhauling a pricing structure. Then we have hotels that are running well but need a new vision and or need to tell a different story – the impact then takes more around a year. For some properties, just changing their website or their photography immediately makes an impact. There is a right way to do things in hospitality – there are things that need to be done on a daily basis and they have to be done right. Kokua tries to go beyond that. It takes someone that cares to create a truly impactful hotel experience.
The Axiom Hotel - Fitness Center
Could you tell us about the properties you are managing?
We see a real opportunity in the soft-branded and independent hotel space, especially over the next twenty years. Consumer expectations are constantly changing, and, brands, while they will always play a large role in the industry, are becoming less popular due to rising consumer access to different lodging experiences. Consumers know how their options have grown by leaps and bounds. Separating yourself from the pack is where we see a real opportunity in this business. It goes back to marketing, marketing, marketing, and we’re really leaning into that more and more. How you are viewed and what others say about you matter. It matters to those hard, black and white numbers, and it matters to the guest experience. There’s real growth in experiential lodging that we strive to be at the forefront of.
Thank you Kirk for your time.