If there is one industry that has probably been hit the hardest by the COVID-19 pandemic, it would be arguably the hospitality industry. With social distancing and isolation in place, traveling has easily become foreign for many of us. Talking about the hospitality industry’s state, in this episode, is an expert in the field, Davonne Reaves, the founder of The Vonne Group. With over fourteen years of experience in hotel operations, asset management, hotel development, and more, Davonne offers some unique insights into the industry’s struggles and the opportunities that can be found in this interesting asset class. She joins host, Monick Halm, to tell us more about what is happening and how it is looking in terms of real estate investment.

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The State Of The Hospitality Industry: Struggles And Opportunities In This Pandemic With Davonne Reaves

I’m excited to have with us, Davonne Reaves. She’s an expert in the hospitality industry. We’re going to talk about hospitality, which is an interesting asset class now with what’s going on with COVID and people not traveling as much. There are some struggles in that industry. There are also a lot of opportunities. Tony Robbins says that in times of greatest pessimism is when you can make the most money. When other people are running in the opposite direction, then there are opportunities galore. We’re going to explore with Davonne about what’s going on in her story, and also what’s happening in the industry.

She’s a hospitality industry professional with over fourteen years of experience in hotel operations, asset management, hotel development, feasibility studies, and has managed hotel portfolios totaling over $1 billion in assets. In 2017, she founded The Vonne Group, a consulting firm that specializes in premier hotel consulting, cutting-edge market research and innovative brand positioning. She added another accomplishment to her resume. She co-authored the book, Tidbits for the Emerging Pineapple Professional, which is a guide for emerging hospitality professional. She has co-founded Epiq Collective, a commercial real estate investment fund that specializes in hotels. She knows this industry. Welcome, Davonne.

Thank you for having me, Monick.

It is my pleasure. Tell me, how did you get involved in this? How did you get started in real estate investing and in hospitality?

I got my start off in the hospitality industry as a front desk agent while I was in college. I love the industry. I love the perks of being in the industry. I love being in operations and probably even after I graduated from college because I was a full-time college student and full-time front desk agent at the time. After six years, I wanted to stay in the hospitality industry, but I wanted to do something different. How I got into real estate investing on the hotel side or learning more about it is I took an unpaid internship. This was after graduation while I was in the front office. I was working in the morning at my internship. It was at a hotel development consulting firm. Then I was working at the hotel at night for three months, and I fell in love with it. I loved the transactional side, the ownership side, the development side of it. I left the operation side of the hospitality industry and I got into hotel investing.

As I was sharing, you’ve done over $1 billion of transactions, which is awesome and incredible. Tell me more about what types of hotels and what types of things are you doing in the hospitality industry?

My focus is on education and educating new hotel owners. The Vonne Group, my consulting firm, I’m a pathway to hotel ownership expert. I particularly work with first-time owners to help them strategize and help them navigate and to help them put their team together. That is my expertise. I’ve always been good at that, and that comes from selecting the right management company to operate your hotel. Identifying the right brand for your particular hotel if you want to do development. Help you with your brand strategy and as far as investment strategy helping you with your portfolio. I do get a lot of clients who want to develop an independent or boutique hotel. I guide them through that process. I believe in having a solid A-team. Some people call it a dream team or A-team, as long as we get to the finish line, that’s all that matters to me. That is my goal and that is what I focus on as far as for my clients and to make sure that they have the right team to get their hotel close.

I don’t stop there. After I get you the keys to your hotel or get your hotel up and running after a development project, if you need assistance as far as putting systems in place and operating, because again if I’m working with first-time hotel owners, they know nothing about the industry. They know that you check-in and check out, but they don’t know the nuances behind it, meaning the technology, the accounting, the reservation systems, how to keep people in the hotel, and also thinking of it from an owner’s perspective.

From an owner in real estate, we care about the NOI. We care about what the numbers look like after that service. I’m here to help the owners not only to understand what it looks like, but how to process and to guide them and educate them. A lot of the clients that I do have are real estate experts. They know real estate, they own real estate, but they’re getting into the hotel side. Educating them on the real estate side, I don’t have to worry about that too much because they get that. It’s more of educating them on the hotel side.

Do you own hotels as well?

I have been an investor. When we sold the hotels, I sold my shares. It’s time for me to get back in it because it is the right time to own hotels. I’m actively looking for projects. I’m looking for limited or select services or even economy hotels.

Let’s talk about that in terms of what is happening now. Tell us a little bit about the state of the hospitality industry in this COVID era. I know a lot of places in the hospitality sector are hurting and you’re telling me that there are certain places that are doing well. Where are the places that are not doing so well? Where’s the opportunity?

There are opportunities in limited, select service and extended stay.

Describe those for people who don’t know what those mean.

Limited and select service, for those who don’t know, they are hotels that have limited or no food and beverage options. I’m sure you probably heard of a Hampton Inn by Hilton or you’ve heard of a Courtyard, or a Holiday Inn Express. If you notice what makes that hotel different from you staying at a Hyatt Regency or a Marriott Marquis or Hilton, those types of properties have full-service restaurants, meaning they serve breakfast, lunch and dinner. They have a spa. Some hotels have room service, some hotels they’ve drifted away from it but either way, it’s an extra amenity. Limited or select service, they don’t have those options. Those particular guests are more for families who maybe are cost conscious or business travelers who want to go in and out and they don’t care about breakfast or depending on the area.

The reason why I like to focus in that sector is that I don’t want to say that they’re recession-proof, but more than likely people are willing to stay at those types of hotels because of the cost. The first thing that as far as with your expenses, you cut unnecessary travel. If you’re a business traveler, if your business cuts travel, you can’t expense it. Therefore, you don’t really travel. I also believe in diversification. I don’t like to focus on hotels that focus on one particular segment, meaning that 80% of their business comes from groups. I wouldn’t want to invest in that. I particularly wouldn’t advise any of my clients to invest in those as their first-time hotels. The reason why is my prime example.

Hospitality Industry: First-time investors should focus on something smaller and more attainable. That way, you can understand how the hotel business works.

During economy or time such as these, groups are the first thing that cancels because meeting planners are canceling the business and canceling the travel arrangements. Those hotels, it was on their books for 80% of their hotels to be occupied by group business, and the next thing that was closed. They’re relying on that 20% to cover the rest of the business. That’s why a lot of hotels are struggling right now. As far as my strategy of what I do and what I advise my clients to look at diversification as far as making sure that you have more transient. It’s more of a mix. It’s not solely dependent on one particular type of guest. I have a client who has a hotel that primarily caters to the business traveler because it’s in a business district. Now, that business district isn’t doing well and they’re hoping that the occupancy rates are 20% maybe. That’s not sufficient enough to hold the hotel, especially when they’re budgeted during this time that their occupancy levels were going to be high.

The things that you’re looking for is a diversified clientele, lower-priced hotels, more budget hotels where people are more likely to be able to afford it. Whereas they might’ve gone to a nicer hotel when the purse strings get tighter, then they go to the down budget ones with a variety of different travelers or some business, some personal, but not groups. That’s where the opportunities are.

Exactly for people who are just getting into it. Big box hotels perform well when the economy is strong especially the hotels that have over 1,200 rooms and they have over $100,000 a square foot meeting space because they’re able to bring in many groups at the same time. They’re able to charge. They have many different outlets and different amenities. Those hotels do perform well. Typically who own those hotels are larger private equity firms or REITs, or even sovereign funds or even Fortune 500 companies who own those hotels. As I mentioned before, that’s why I recommend for first-time investors to focus on something smaller and more attainable. That way, you can understand how the hotel business works.

Who do you find is most interested in having a hotel? Why would somebody go, “I want to have a hotel?”

I know some of my clients have been people who own the building, they own the commercial space. They wanted to do something different and they looked around their neighborhood and they looked around the market and the market is changing. They can put a hotel there. I’ve gotten clients that way who own the space and they want to do something different. I have a client who invested in multifamily. I noticed that they’re transitioning into hotels and vice versa, hotels and multifamily to making that switch. Sometimes people just want to own a hotel one day. I did a masterclass and it was a seven-year-old little girl who said that she wants to become a hotel owner.

Even when I was younger, I wanted to become a hotel owner. I didn’t know what that means. I didn’t know what the process was. I didn’t know the pathway to get there. It wasn’t like a concrete pathway, but I’m starting to notice more and more people of color are starting to want to become hotel investors and hotel owners. A lot of times, people don’t know that you can own a hotel. I think a lot of times, people didn’t think that it was possible because they thought a lot of the brands own the hotel. To be quite honest, the brands like Marriott, Hyatt or Hilton, they own less than 2% of the hotels and their portfolio are owned by them. A lot are franchised out by other companies.

I know of three girlfriends that have hotels and all different ones. One has a Hilton Curio resort, one has a hotel in Nashville and the other one is a smallish hotel in Santa Cruz. All are having various levels of success or challenge right now. I’m in the vicinity of hotels. I love my Airbnb that we have. I guess with the right systems, I’m more of a hands-off investor. I want to have a lot of property management that I have to deal with. I have property managers, that’s like a pseudo passive. I like the passive side of real estate investing. I love traveling, so maybe a hotel is in my future.

Do it as a passive investor. You don’t have to be an active investor.

If the systems are in place and it makes sense, then I would be open to it. I’ll ask you personally in terms of being an investor, what was your biggest mistake and what did you learn from it?

My biggest mistake is not starting sooner. My biggest mistake was while I was in college. I had a lot of access to hotel ownership and ownership in general, but I didn’t have the right mindset. People in my family owned homes. My grandmother owned two homes, no debt and she was able to create generational wealth and left it to us and everything. At the time when I was younger, I didn’t understand it. Nobody explained it. I didn’t have that drive forward that I do now, maybe because I have a son. I want to create more of a legacy for him. My biggest challenge would be that I didn’t start sooner because if I would have started years ago, I had a little bit more hotels and mostly family. My balance sheet will be a lot different now if I did.

The best time to invest in real estate, it’s like planting a tree. The best time was twenty years ago. The next best time is today.

That’s why no excuse now.

What are you most proud of?

It’s something a little different than I started. It’s called Next Generation in Lodging. It’s more of a network that I started with a group of industry professionals, my hotel colleagues. It’s more of a network for lodging professionals under the age of 40. We created this because there’s nothing in a lodging industry for that particular age group. When I was under 30, I was Chairwoman of the American Hotel Lodging Association under 30 gateways. I’m over 30, it’s like nothing there for you. We created more of a group and we created a network. Since it was our thing or our brand, we were able to talk about difficult conversations that a lot of people probably wouldn’t necessarily talk about it in the industry.

One of them was we did talk about diversity. The title of the webinar was Unicorn. We were able to share our stories that we probably wouldn’t have shared before as far as how we were discriminated against because we were a part of different brands. Since we have our own brand, we could speak on it and people were able to share their stories. What I’m proud about is that we had the conversation right after Mr. George Floyd was killed. We were one of the first groups that had the conversation after his passing. We set the stage and it opened for more groups.

We called some people out too, as far as to open that dialogue and to open that conversation. That is something that I’m proud of. We had two episodes. The second episode was hacked by white supremacists. They hacked our Zoom call. It was crazy in the show and they tried to harm us, but it did more good than harm because it opened a lot of people’s eyes. They saw it for themselves. The director of my hospitality school was on and she saw it. She couldn’t believe it. It forced people to see something. I hate that it happened because we’re on a call and I hate to watch it and the people had to see it.

Hospitality Industry: Big box hotels perform well when the economy is strong.

It wasn’t a good look, but it did more good than harm because we’ve got a lot of support from a lot of people in the industry. The episode was re-aired on Long Live Lodging, which is an industry media platform. It was blogs and different discussions. I’m proud of that. When I first started in the industry, I couldn’t wear my hair natural. I am proud to be black in the industry. I’m proud of educating more women to become hotel owners. That is a goal. I want to see more women. I want to see more women who look like me to become owners and to become asset managers and be decision-makers.

I’m proud of you too. To what do you attribute your success?

I’m not complaining. I had this motto that is if you want to complain, then you do something about it. For example, if you’re complaining about the current climate of the country, then vote. You want to do something. That’s how I’ve always been. If I go to this event, I’m like, “I don’t like how it was done. “Davonne, you’re a part of the organization, be a leader on the board and make a change.” I started doing that more and more. It helped my career tremendously because by me being on different boards, I was able to build a lot of personal and professional relationships, which led me to get into the ownership side of hotels. It led me to talk about and form the group that I was talking about, Next Generation in Lodging. It opened my mindset.

It all started from not complaining. If you’re going to complain, then do something. I’m not big on, “I’ve got to be this. I’ve going to be that.” I’m more of things that have to get done. I’m more of an executioner. I’m like, “Things have got to get done.” Next thing, I had been voted to be president. I’m like, “I didn’t ask.” That’s ended up happening because I wanted to see a change. I attributed a lot of that to my success, to have that personality, to have that go-getter and want to lead and want to make a change and want to make a difference.

Don’t complain, do something. If you see something, change it yourself. What advice do you have for a woman who’s starting out, who wants to get into the hotel field?

Educate yourself and don’t be afraid to ask questions. Go to different organizations. There is so much information on the internet. You can google ‘how to become a hotel owner’ and all these different things come up. Be a part of different organizations. Ask questions. When I was growing up, I was raised, I don’t know if you were raised the same way, but you couldn’t question adults. That was a no-no. I look at it now and it’s like a hindrance because as I was moving up throughout my career, I was afraid to ask questions because that’s how I was raised.

It’s okay to ask questions as long as it’s appropriate and as long as it’s clear and you’re getting your point across. Because if you don’t understand it or if you don’t speak up, then how will anyone know? My recommendation to young women, not only in the hotel industry but in general business, don’t be afraid to ask questions. Don’t be afraid to be curious. Curiosity killed the cat, but that’s all right. You can still be curious. I was curious. I remember when I was a front desk agent at the hotel, I went directly to the CEO and I told him I was going to own a hotel. I had no idea anything about it, but I told him that I was going to do it. I was curious and that’s one thing that didn’t stop me, but I wish I would have asked more challenging questions.

Don’t be afraid of who you are. Don’t change who you are or compromise yourself to please others. You’re unique. You have your own fingerprint. You have to be the best version of yourself. Nobody else can be you better than yourself. Don’t compare yourself to anyone else, “This person has more Instagram followers or their balance sheet looks better.” Don’t worry about theirs. Why are you worrying about theirs when you could be focusing on yourself? That’s my recommendation. That’s something that I had to learn. It’s helped me along the way and it’s made me stronger. It makes me more confident. I believe in confidence in speaking in your truth and it’s okay to make mistakes. It is fine. The world will continue as you can see. It is okay as long as you learn from them. It’s different if you are making the same mistake, but as long as you learn from your mistakes, as long as you seek advice, have a good team, have a good support system around you. If you’re the smartest person in your group, then you need to get another group.

Before we get into our famed end of the show Trinity, which is a brag, gratitude and a desire, tell people how they can connect with you and find out more about what you do.

You can connect with me on my website which is www.TheVonneGroup.com. You can find me on Instagram, @DavonneReaves. I’m also on LinkedIn, Davonne Reaves.

It’s time for our Trinity. What is one thing you’re celebrating right now? What’s your brag?

My brag is the launch of my new hotel ownership investing course. You can find that on a website. For those who want to get into hotel investing and you’re not sure which way to go and you want to learn, or if you’re closer to the hotel ownership side, I have a management course on how to help you find your management company. I also have a course on how do you select your asset manager or how do you understand asset management, which is crucial. Also, I have an investment analysis for those who want to learn about underwriting and I also have a course in a hotel investment school. The information is all on my website.

What’s one thing you’re grateful for?

I am grateful for my son. I love him so much. My child changed my life. My baby gives me purpose and he’s changed me. He’s motivated me. He put the drive. He put that push and kick that I needed. I thought I was something else before until he came. I have a whole different mindset. He makes me want to work harder by 300,000%. I love him to death. I’m so grateful. He’s healthy. He’s responsible. He’s the loving baby. Everybody loves him. He’s a good baby.

What’s one thing you desire?

I desire abundance. I desire abundance for myself. I desire abundance for my friends and family, my son in generations to come. I desire an abundance of love, an abundance of wealth, an abundance of everything.

So shall your desire be or so much better than you can imagine under grace and imperfect ways. Thank you. This was wonderful. I appreciate it. You all can connect with Davonne at TheVonneGroup.com and you can connect with me at REIGoddesses.com. Join our community on Facebook, our sisterhood of women from all over the world and come to our virtual real estate event, which is happening on September 18-20, 2020. We are bringing in women from all over who are crushing it in real estate right now to share what they’re doing in this economy to be successful. Different asset classes bringing in team members who you need on your team from the financial side and the other side. It’s going to be fun, fabulous and life-changing. I invite you to join us there. You can find that information on our website. Subscribe to the show and join us for another episode. Bye.

Thank you so much for having me.

Thanks for coming.

Important Links:

• Davonne Reaves – LinkedIn
• The Vonne Group
• Tidbits for the Emerging Pineapple Professional
• Epiq Collective
• www.TheVonneGroup.com
• @DavonneReaves on Instagram
• Facebook – Real Estate Investor Goddesses

About Davonne Reaves

Davonne Reaves is a hospitality industry professional with over 14 years of experience in hotel operations, asset management, hotel development, and feasibility studies and has managed hotel portfolios totaling over $1 billion in assets.

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