As the industry continues to see signs of economic recovery, companies like Gansevoort Hotel Group are revamping their growth and expansion plans. Michael Achenbaum, president and CEO of Gansevoort Hotel Group, says his company is working on several deals to add hotels to its portfolio, which currently consists of three properties: Gansevoort Meatpacking NYC, Gansevoort Park Avenue, and Gansevoort Turks + Caicos. Gansevoort’s vision is to leverage established infrastructure, scalable operations, and flexible business models to develop and manage a collection of “urban resort” hotels in gateway metropolises and popular resort destinations. Achenbaum discussed Gansevoort Hotel Group’s plans for international and domestic growth with Lodging’s Managing Editor Megan Sullivan.
1. Megan Sullivan: What details can you share about Gansevoort’s project in Toronto’s distillery district? Will the company have an equity stake?
Michael Achenbaum: We are currently considering two deals in Toronto—one is in the distillery district downtown and another is a Queens West location. For both projects, we are currently working on the design trying to determine which is a better fit with our brand.
We specialize in full-service distinctive urban and lifestyle resorts that redefine the contemporary hotel experience and the Toronto hotel will follow this model. Each Gansevoort hotel prides itself on its ability to offer guests a superlative guest experience and service offering in a singular setting.
We are still in the process of discussing deal terms for the various developments. Though we own and operate both New York City properties, for the expansion our preference is to be asset light. Our goal is to leverage Gansevoort’s strong brand and management company capabilities to partner with real estate hospitality investors and hotel owners for ground-up development or renovation as well as reflagging of existing properties. We can bring capital to select projects; however, in these instances our preference is to be a minority investor to support our alignment of interest with the owners.
2. MS: Is Gansevoort working on deals in Europe and South America to bring additional hotels to the portfolio?
MA: Yes, we are targeting key international gateway cities and resort destinations where the model of branded lifestyle hotels and resorts appeals to international jetsetters. For urban targets, we look to establish presence in business centers with vibrant social life where we can appeal to both business/leisure travelers and local crowds. We are starting with the markets that are synergistic with the traveling needs of our current target customers. We try to choose locations that are “ahead of the curve.” Gansevoort Hotel Group is a global full-service hotel management company with established infrastructure and scalable operations. We aspire not to be the largest hotel brand with the most locations, but to be the most relevant to our customers in presence and product offering.
3. MS: Do you have other areas of interest for third-party management deals?
MA: Though we are methodical and targeted in the way we approach our expansion, we are also very opportunistic and innovative. We adapt our strategy to the ever-changing fast paced world we live in. Our primary focus has been on urban expansion. However, with the success of the Turks + Caicos property and the product and services offering we have established, we are also looking to expand our resort hotel portfolio starting with primarily Caribbean destinations as we can leverage our well-established East Coast presence and customer loyalty. We are targeting resort towns with style, a vibrant social scene, and direct flights from the U.S. and Canada. We are also targeting some European resort destinations to both address traveling needs of our target travelers and also to take advantage of operational synergies that can be established given the differences in seasonality.
4. MS: Why is this a good time for Gansevoort to expand the brand and how quickly do you hope to get these new projects underway?
MA: We had multiple deals in place in 2008, including Toronto, L.A., and Chicago, but our partners were unable to find financing due to the real estate market collapse. With some market recovery, we are now revamping our expansion plans to grow our brand. We are still focused on the key North American markets (including Toronto, L.A., Chicago, Dallas, Vancouver) but also aggressively pursuing international opportunities to leverage both growth in global affluence and lower existing brand penetration. Furthermore, we have an extensive network of distressed debt and value buyers that are looking to partner with the brand that has a significant potential for asset repositioning and enhancement.
On opening our first hotel in the Meatpacking district, we did not have a global or even national expansion in mind. We came to realize that such product is relevant and desired across large cities and resorts despite the plethora of hospitality offerings. There is still a void in the product targeting the 25 to 55 age group that provides lifestyle accommodations with top guest services and branded amenities.
Our goal is to grow fast but smart and only to the markets that make sense without compromising our brand standards.