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Q+A: Kevin Lillis, CEO of Hospitality Alliance

Kevin Lillis, CEO of Hospitality Alliance, is a 20-year veteran of the Hospitality and Real Estate industries. He has held leadership roles for the majority owner of the iconic Plaza Hotel and Dream Downtown as well as Hampshire Hotels. Prior to turning to the Hospitality and Food & Beverage route, Kevin worked in real estate investment banking for nearly ten years.

We got Kevin to spill the beans on his “accidental” start in the industry, his favorite projects, and how F&B plays as an advantage for boutique hotels in competing with Airbnb.

Want more of Kevin Lillis? You can catch him at the ilc Roundtable and on our F&B panel this year at the Independent Lodging Congress.

INDIE Q+A

First thing’s first: how’d you get started in the industry?

I was deliberate in pursuing real estate as an industry, but was pushed into the hospitality side of things multiple times before realizing it was where I belonged. I started working in Real Estate Law as a clerk at 18. I am a life-long martial artist, which put me in a position to be a doorman on a security crew with some of my training partners. I was the least intimidating bouncer/doorman of all-time, and focused on having a fun crowd and when needed talking our guests into not fighting. To help make ends meet I moonlighted as a doorman, bouncer, and bartender for ten years.

I also produced networking events since the start of my career, the most notable being a “Fight Night” networking event series that often brings over 500 attendees from the industry. Most times the entire time between set-up to tear-down was less than 24 hours (often in raw spaces like the Lexington Armory). I have produced the series for over 15 years- and each time I make mistakes that force me to learn quickly. I make less mistakes than I used to, but there’s always at least one lesson learned each time!

Finally, I was the Executive Vice President at Hampshire Hotels (now Dream Hotel Group) in 2008 as the recession hit. We weren’t actively buying at the time, but many of our restaurants started to struggle or close. Food & Beverage became my focus for the company. I haven’t turned back from a direct Food & Bev focus since, and still sit at the intersection of hotels, food & beverage and real estate.

Can you give us an example in which your background in real estate capital markets or event production has made you think about a project in a different way?

The key to creating and operate spaces that offer a great guest experience, and are financially successful are being able to see the financials in the operation, and the operation in the financials. In other words- to stand on the floor of the operation and make the appropriate connections to the associated P&L from each decision and move; and in turn to be able to review the P&L at a computer and be able to envision how that operation is running. My event experience was focused on the “rubber meets the road” side of things, while the capital markets experience was focused on the financial analysis.

Setting up 250+ events in raw spaces taught me a tremendous amount about layouts. Like setting up a restaurant, we plan the space without people in it- and often learn once guests enter that their preference or behavior are very different than we envisioned. The countless facepalm moments are less frequent or obvious than they used to be, but they still continue to teach me.  The beauty with an event is that guests are usually more forgiving in that environment, and we get to tear it down after we learn our lesson. The challenge is that events are often so chaotic that it’s hard to see the numbers with so much happening in a space set up that day.

For real estate capital markets, we were pushed to create financial analysis models so frequently that we start to see the numbers in everything. The key is being able to connect that with the “boots on the ground.”

You’re spearheading our F+B panel this year and plan to explore the way restaurants and lounge areas connect hotels to the community. Can you give us a little preview of your vision and take on this idea?

The food & beverage spaces in boutique hotels connect the hotel (and its guests) with the community (and its residents) in many ways. They are the most significant space in communities that provide this, as they are designated spaces where visitors staying in the hotel will mix with the local community.

Additionally in today’s economic climate- it is very difficult to open any stand-alone restaurant with any focus other than driving a profit. As food is often what connects our cultures in urban centers (and to me Food is Culture)- Hotels remain one of the last opportunities for a Chef or Restaurateur to develop a concept or cuisine that is able to focus on anything other than laser-like focus on driving profits (at the expense of ingredient quality, dish experimentation or service standards). In that the Boutique Hotel F+B venues have effectively become one of the last sanctuaries for the (relatively) affordable luxury and unique experience that a great restaurant can provide.

Only when the profits are achieved elsewhere (elevated ADR’s, higher condo sales prices, higher luxury apt rents) is that strict focus on profits at all costs removed. By allowing a Chef to explore more creative offerings and provide higher service standards – the food & beverage operations at hotels are often the settings for the most exciting experiences that the industry can offer.

For the ILC Roundtable, you’ll be covering the value and limitations of Food Halls. Location is obviously a huge limitation. Why are Food Halls so hot right now and what are some limitations you’re seeing developers face?

Food Halls are the hot concept of today because of several factors. For the Chef or operator, they provide great exposure and potentially strong revenue with minimal start-up costs, and greatly reduced labor expenses. For landlords, it allows them to drive significant revenue from space that is less valuable to traditional retailers or restaurants (including lower level space). For guests, Food Halls provide a wide assortment of high-quality options under one roof, allowing members of a group to all have what they prefer.

The limitations of food halls are that they require a lot of seating, and that they are still primarily focused by guests as inexpensive to moderately priced lunch destinations. The challenge in making them successful is being able to push revenue towards the book-ends, with some operators focusing on strong breakfast programs and other focusing on evening and beverage business. Food hall guests can be rather price sensitive- so revenues will be limited by how many transactions can be accommodated (and how many can find seats) at those peak times.

Do you have a favorite project you’ve worked on recently? What was it and why did you love it?

For past projects I’d have to say The Plaza Hotel, and Dream Downtown- particularly the Electric Room there. For the projects I’m currently most excited about are the redevelopment of the Jersey City Waterfront, and The Mayfair Hotel in Downtown LA.

In Jersey City our client is Mack Cali, who owns the majority of the office and residential towers in the Harborside Waterfront submarket. We are creating a dining and shopping district which will include over 200,000 SF stretching across twelve buildings at the Exchange Place PATH Station. The demographics in Jersey City are very strong from both daytime population/worker and resident perspectives, and we are partnering with some great Chefs and operators. We’re working step by step to pick the concepts, the best operators in each, and then carrying out the vision. This will change the face of Jersey City and the daily lives of its residents and workers- and that’s very exciting to us.

For The Mayfair Hotel, we’re operating the five food & beverage operations at the 1924 hotel. The property has a rich history, including being the site of the first Oscar’s after-party – so we have a lot to work with branding-wise. We’ll have a three-meal restaurant with Chef Scott Commings, a library bar, an event space with exposed beams and brick walls, a 10,000 SF rooftop, and a hidden bar. It’s fun balancing new and old in the design and branding. Downtown LA is going through a massive revolution- so it’s great to be a part of that as well!

Look into your crystal ball for a moment. What does hotel F+B look like 10 years from now?

I think fewer restaurants that aren’t strictly profit-focused will be able to survive outside of hotels and high-end residential buildings. Rents for restaurants might start to decrease with all that’s happening with retail- but labor is always the biggest expense on our P&L. That will continue to increase, with major changes underway in NY, California and other states. This pressure will continue to make hotels among the rare spaces where a Chef or Operator can create a menu and service experience that isn’t entirely restricted by the demand for a strong profit.

Further, the F&B program is the rare area where hotels can really distinguish themselves from Air BnB. I think this will encourage more hotel developers to focus on F&B as a means to compete and not just an amenity for room guests.

What’s your favorite type of cuisine? Do you have a go-to restaurant?

Concept-wise I’m a big fan of shareable concepts and fine-dining operators executing moderately priced food. With shareable concepts- us as operators as able to really “help” our guests have a great night. We can provide ice-breaking conversation starters for an awkward first date or groups where some people might not know some of the group as well as others. Makes for great distractions for kids as well! Mexican in particular is great for this and some aspects can have a bit of a show to it, which is also great.

For my go-to, I’d say David’s Café on St. Marks. They just got “Burger of the Year” at Food Network’s Burger Bash, and is an example of a high-end Chef (David Malbequi) who has taken his experience and execution from many years in the fine dining world and is transferring it to great every day food.

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