Photo: Ina Sophia Nichols
If you ever want to start a conversation with Peter (Pete) Nichols, ask him about his deft hotel-crisis-management skills. The 30-year industry veteran will give you just some idea of what it takes to be a player in the lodging arena.
With years of crisis management, operational and brokerage experience, Nichols now leads more than 80 hospitality investment specialists as VP/national director for California-based Marcus & Millichap’s National Hospitality Group (NHG), which provides advisory services and investment sales of hospitality assets on behalf of individuals, developers, partnerships and major institutions. In the past year, he has marketed upwards of 200 hotel transactions valued at more than $1 billion. He also provides his team with market insights, training and development of client relationships.
Nichols moved to Marcus & Millichap last year from Richfield Hospitality. where, as SVP/business development, he managed a team on acquisitions, underwriting, due diligence and hospitality investments.
Among his career highlights, Nichols served with Promus Hotels [now Hilton Worldwide]; founded and helmed Signature Hotel Group, which targeted boutique hotels; and spent 10 years as VP with Hodges Ward Elliot, working on transactions ranging from select-service to luxury properties, as well as portfolio transactions and financings.
In 2015, you were tapped by Marcus & Millichap to lead the NHG following the move of Greg LaBerge from that post to chief administrative officer. What was your vision? Greg did such a tremendous job of putting a great team in place. My focus has been to build upon that great work, to expand into markets that present the greatest opportunity for growth and to solidify the position of the NHG as the dominant player in the industry, providing hospitality brokerage, finance and advisory services to our private clients within the economy, midscale and upper-midscale segments of the market.
Last year was considered a robust period for transactions. Has the pace changed? We are experiencing a transition from a period of very rapid growth in terms of sales volume and pricing to what appears to be a plateau with still-high levels of sales. The U.S. economy continues to expand at a modest but healthy pace, hotel supply-demand is in balance with few exceptions, hotel yields are attracting capital, interest rates remain at or near historic lows and lenders are providing debt. The slightly lower pace of transactions in the first half of 2016 relative to that of H1 2015 can be viewed as an adjustment to the evening pace of growth.
What sort of headwinds and/or tailwinds have you encountered? We have had tremendous success in partnering with our investors to help them achieve goals and execute business strategies. As with many organizations, one of the biggest challenges has been bringing the right people into the organization and putting them in the best positions to be successful. As we continue to increase our market presence, expand our back-office platform and embrace technology, we continue to put our focus on what’s most important; keeping our clients’ needs as our number-one priority.
What kind of activity are you seeing in terms of type of hotel being sought or sold? We are currently seeing strong interest in select-service hotels in markets with multiple demand generators. Hotels that would benefit from a repositioning or brand change also have been a high priority for our clients. Investors remain very opportunistic in terms of markets, seeking out strong demand markets that may not yet have experienced an influx of new supply.
Is there a sweet spot for the Group in terms of its inventory? We are focused largely on the private-investor segment of the market. The NHG was the number-one broker of select-service hotel transactions in 2015 and we remain focused on those private investors. As many of our private investors have grown and expanded their businesses, Marcus & Millichap has grown with them. We have successfully executed on a number of institutional-quality hotel assignments in the past year and are working closely with our investment partners to execute on several more deals in 2016.
Who’s coming to the NHG? Industry newbies, multi-brand owners, investment groups? We are fortunate to have relationships with these investor types. That being said, we are seeing first-time hotel owners who have migrated into the space from another asset class. For example, we recently closed a hotel transaction with a long-term client of Marcus & Millichap who was in the multi-family housing segment.
What does the financial landscape look like from the Group’s perspective for those looking to get deals done? Financing is always an integral part of the success of any deal. Overall, we are seeing lenders remaining disciplined and focused on the underlying fundamentals of the deal. Underwriting remains conservative, but good deals are getting done.
You have decades of experience in the lodging industry, and you spent one of those with Hodges Ward Elliott (2003-2014). How has the brokerage arena changed? One of the most unique things about my current role is I am more of a coach than a broker now. I don’t compete with the NHG brokers at Marcus & Millichap; I partner WITH them and the other members of the management team to promote their businesses.
What’s your level of optimism heading into 2017, and in particular, for what the NHG does? When we look objectively at the current market metrics we can identify strong occupancies and near-record-high ADRs, interest rates that remain at or near-record lows, new supply levels that only now are approaching the long-term, year-over-year average and a consistent pace of economic growth. When I take all that into consideration, I am optimistic that 2017 is going to be another good year. HB
