As they grew up, Drew Sims and his brothers didn’t see the nearest motel as a place to stay overnight, they saw it as a place to live. In fact, they lived in a house next door to the family motel in College Park, Md. “My brothers and I all grew up at the motel—there was a house adjacent to it,” Sims recalls. “For the first 10 years of my life we lived there, and then we worked there throughout our teenage years. We call ourselves ‘hotel brats.’”
That motel was a modest 12-room property. Today, Sims sees a lot more of larger hotels. He serves as president and CEO of MHI Hospitality, a REIT that owns upper-upscale and upscale full-service hotels in the mid-Atlantic and southern United States. That Sims would end up running a hospitality business is a natural outcome. He’s part of a legacy of hoteliers, starting with his maternal grandfather, who opened one of the first motels between Baltimore, Md., and Washington, D.C. He also opened a second motel between Baltimore and Philadelphia, Pa. “They were little roadside cabins,” Sims says.
The family business continued when Sims’ father graduated from law school. “My grandfather encouraged him to go into the lodging business and he bought the motel in College Park in 1957,” Sims says. That deal set the stage for Sims’ upbringing and his apprenticeship into the hotel industry. “We washed dishes, cut the grass, worked at the pool, worked the front desk, made beds, pretty much anything you could do,” he recalls of his and his brothers’ work.
It was a humbling beginning that led to a successful career for Sims. After graduating from Washington & Lee University in the early 1980s, he and his brothers began their own hotel operations business. “We bought a second hotel, then a third, then a fourth, and kept growing,” Sims says. “By the late 1990s we had about seven or eight properties and we completely turned the portfolio over. We were in limited-service hotels and we started full-service properties with the purchase of a couple of Hilton hotels.”
MHI Hospitality Corp. operated as a family business until 2004 when the brothers took the company public. Nowadays it’s listed on NASDAQ. Drew Sims runs the REIT, while his brothers run Chesapeake Hospitality, an independent management company. Today, MHI has 11 assets and approximately 2,400 rooms. The properties stretch from Philadelphia to Florida.
“Our value proposition for our company is that we try to buy hotels at a low basis and will renovate them and reposition them,” Sims says. “By doing that we can usually keep our basis at a fraction of what it would be if we went out in the market and purchased a hotel at retail. That’s what we’ve been doing for the last 20 years—buying distressed assets and turning them around.”
Sims says that at the beginning of the downturn the company got caught in a couple of renovation projects. “A whole bunch of our product was under renovation. We completed all of projects on time and on budget, but the ramp-up has not been as fast as we would have hoped because of the recession,” he says. “So what we’ve done for the past two years is take market share and we continue to do that. I would say that for the last four quarters we’re the only public hotel company that has an increase in RevPAR. All those things were building for us while other companies, until the last two quarters, were seeing rapid declines.”
Having made a life out of the hotel industry, Sims has seen a lot of changes over the years. He points to the growth of brands as a huge change. He says when his grandfather and father owned hotels independent operations were commonplace.
However, he says the fundamentals of hospitality remain the same. “It’s still about point of guest contact and making sure that you deliver friendly, caring service to your customers,” he says. “I think the brands have influenced that, and the brands we operate with are very focused on delivering customer service.”