Exclusive Q&A: Lowe Enterprises CEO Rob Lowe Talks Hospitality Trends

Lowe Enterprises CEO Rob Lowe's choice to build experience from the ground up gave him the insight he needed to today oversee a company with more than $8B of commercial, hospitality and residential assets nationwide. Rob is among the all-star panelists scheduled to speak at Bisnow's Lodging and Innovation Series event April 28 at the Sheraton Downtown Los Angeles.

Lowe Enterprises has 20,000 employees and manages 90 hotels through its hospitality subsidiary, Destination Hotels. The company has developed, acquired or managed more than $24B of real estate assets over the past 43 years and is currently responsible for more than $8B of assets nationwide, with $1.5B of commercial projects being planned or developed.

Rob always had wanted to work in the industry, but chose not to initially work for the family business, wanting to first prove himself at Copley Real Estate Advisors in Boston instead. It was a course in graduate school that helped Rob change his mind.

Bisnow: Why did you choose to work for another company first before joining Lowe Enterprises?

Rob Lowe: When I was graduating from college (Stanford University), I assumed that the best thing for me to do would be to prove myself in the industry and then join the family business (Rob is pictured above with his wife, Suzanne, and their children, Robbie, Henry and Tatum). I went to work for a real estate investment firm in Boston and had a great experience. I then went on to graduate school (UCLA Anderson School) and took a class on organizational behavior and did a paper on this very topic. I learned that all of the research showed the better way to join the family business was to start as early as possible, at the lowest level, and earn your stripes inside the firm. So that’s when my father and I made the joint decision that I should join the family business.

Bisnow: What was your first role at Lowe Enterprises?

Rob Lowe: My first day on the job, we were beginning the underwriting of a resort in central Oregon called Sunriver, which we still have 25 years later. I flew up to Bend, OR, and spent my first two weeks there helping to underwrite the opportunity. I had not planned on focusing on the hospitality component of our business, but I enjoyed so much the combination of real estate and operations that hospitality offers that I decided to stay focused there.

Bisnow: How did you become CEO?

Rob Lowe: I had an interesting path to CEO. As I mentioned, I began in acquisitions and underwriting. Soon thereafter I migrated to project management on small hotel and resort renovation activities. This lead to larger ground-up resort development and ultimately becoming president of our hospitality development business. Then in 2007, I became the CEO of the entire hospitality company, both the development side and the management business, just in time for the market to crash in 2008. It was just last year that my brother and I were named co-CEOs of Lowe Enterprises and my father stepped back to the chairmanship role (that's Rob, below right, with his brother and co-CEO, Michael).

Bisnow: What would you say is the most challenging thing about the industry?

Rob Lowe: The hospitality business is a unique challenge in real estate because it combines both real estate and operating businesses. In traditional real estate companies, the focus is primarily on only the real estate and you don’t typically have lots of employees. In the hospitality business, you’re running a business inside the real estate that is highly people-intensive. In fact, in the 90 properties we manage, we have almost 20,000 employees. Further, the operating component provides you more ways to differentiate an asset than if you are just in the real estate.

Bisnow: Do you think another recession will happen in the near future?

Rob Lowe: We’re always preparing ourselves for a downturn that might surprise us, but we believe the next recession is more likely to be shorter and less deep than average, quite different from the Great Recession we just experienced.

Bisnow: What are your future goals for your company?

Rob Lowe: As it relates to the hospitality business, at the end of January we merged Destination with another management company, Commune. Our goal is to create the strongest and most powerful hospitality management and branding company that is focused on the independent and lifestyle spaces.

Bisnow: What do you think the future of the hospitality industry looks like?

Rob Lowe: In general, the future of hospitality is very strong. Within the US, the experience of travel is becoming an ever more important component of people’s lifestyle, particularly for those in the demographic segments that travel most often. So they’re less focused on using their success to buy tangible goods and more focused on using it to have great experiences in their lives. Travel is a critical component of this. Further, outside of the US, you have countries from the emerging world that all of a sudden have lots of people being introduced and have the means to travel, and as a result international travel is growing at a rapid clip. So we believe demand for travel will continue grow very strongly over the foreseeable future.

Bisnow: Do you anticipate any challenges coming up for the industry in the near future?

Rob Lowe: The way our customers access the distribution system and learn about our properties has been changing very rapidly and is going to continue to change. (Rob is pictured with his dog, Admiral.) Staying on top of those rapid changes is going to be the major challenge for every hospitality management company. Twenty years ago, people picked up the phone and called their travel agent and the travel agent made the reservation. Now there are so many different mechanisms out there for people to learn about your property and make their reservation. It’s changing every year, so staying on top of that is probably the biggest challenge.

Bisnow: How do you choose the properties you acquire?

Rob Lowe: We look for properties where we believe we have a competitive advantage in creating value, ones that are particularly suited for our management platform and where we see the opportunity to create value through repositioning, particularly through renovation and other capital investment. In addition to the hospitality business, we’re a diversified real estate manager and developer, so we also are active in the mixed-use and commercial business, largely in California, the Pacific Northwest, Phoenix, Denver and the Washington, DC, metro area. For our hospitality business, we have largely been US-focused, but now have two properties we’re managing in Mexico, and we are looking to get into the Caribbean market. That’s a goal we would like to have happen this year.

Bisnow: What trends do you see in the industry?

Rob Lowe: I think the most significant trend is that there’s a growing percentage of leisure travelers that when they go on vacation, they want to feel like they’re slipping into the life of a local—having an experience where they are participating in the local culture and environment. (Rob is pictured above with his family in the Loire Valley.) So properties that are able to deliver that experience are benefiting. As a result, many companies are trying to figure out how to do that right now. But it’s very different from the traditional, cookie-cutter approach of the hospitality industry and as a result many companies are not well-suited to serving this trend. I think that’s the most important trend in leisure travel today.

Bisnow: What are some of your favorite hobbies outside of work?

Rob Lowe: Attending my kids' sports activities, travel, surfing, running.

Hear more from Rob and our other panelists at Bisnow's Lodging and Innovation Series event April 28 at the Sheraton Downtown Los Angeles. Sign up here!