Founder, president, and CEO of Crescent Hotels & Resorts Michael George has been a staple in the hotel industry for 40 years. He started in F&B, moved on to become an award-winning GM, and has held executive positions at Destination, Sunstone, and Interstate. In 2001, he decided to strike out on his own to found Crescent. Since then, the company has seen remarkable growth, currently operating more than 90 hotels, resorts, and conference centers in the United States and Canada. Specializing in upper-upscale and luxury properties in the Marriott, Starwood, Hilton, Hyatt, and IHG families—as well as independent and lifestyle hotels under its lifestyle division, “Latitudes”—Crescent works with everyone from REITs to private equity firms and major developers. George spoke with LODGING about Crescent’s latest projects, what makes a management company stand out in a crowd, and what he likes most about the hospitality industry.
When you founded Crescent, what type of company were you looking to build?
I founded Crescent in 2001 with the intention of providing the best hotel management firm for an institutional owner. Team Crescent and I have spent the last 16 years honing the Crescent business model to be user-friendly and accountable to our owners. A hotel is an investment vehicle that must produce for its investors. Present-day Crescent is an elite manager that has no agenda beyond providing for our owners. Crescent is not an owner, not an investor, not a developer, and not a brand. We are our owners’ employees and we understand that our employment depends on getting results, period. We’ve become a powerhouse manager by assembling many of the most talented specialists in the industry and empowering them to achieve great results.
How do you approach your position at Crescent?
I firmly believe that you need to be where the action is, so I’m on the road about 80 percent of the time, visiting our properties and getting to know our owners. I like being back of house, reviewing working conditions and interacting with the people who make things happen. I really try to emulate Bill Marriott in this respect. He is one of my professional idols and this approach helps everyone keep pace. You don’t get much accomplished sitting at your desk.
What differentiates Crescent from other third-party managers?
Crescent is quite simply a high-impact, pure-play, institutional-grade, third-party manager with a strong cultural bias to action. A key to our business model is that I control Crescent. I do not have to answer to a board or outside investors. I only answer to what is in the best interest of our clients and associates, period. There is no hidden agenda; rather, there is a powerful team that is laser focused on producing superior results for our clients.
What imperatives drive Crescent’s success?
I’ve always aimed to play in the major leagues, so I’ve been very focused on hiring the best players. Top talent is the competitive advantage for a hotel management company. Talent also means specialists who are able to tap hard-to-identify potential. Throughout my time in the industry, I’ve found that the generalists who wear many hats are simply unable to provide these high-level, specialized services. There are many in the industry who are good at talking the talk, but few who can walk the walk on a consistent basis with complicated assets—which are our specialty. Great hotel management hinges on an obsession with top performance. If you perform, you will take share and win. This very hard to do 24 hours a day, seven days a week, 365 days a year. Crescent isn’t perfect, but we are driven by this philosophy.
How does this philosophy impact Crescent’s growth?
Crescent is under no mandate to grow for the sake of growth, and our growth vehicle is largely organic from existing clients. When an opportunity arises outside of our current portfolio, I personally interview the potential new partners and inspect all hotels under consideration. If someone is not a good fit, we pass with no regret. Also, hospitality lifers know that this industry is first and foremost a relationship business and your reputation is the key to success. If a company starts with a foundation of integrity, trustworthiness, dependability, responsiveness, and accountability, then layers on great talent and systems, it will stand out. Our clients hire Crescent because they know we are skilled hotel doctors who thrive on repositioning complicated assets. We are unique in that we excel in hotel openings and have expertise in hard brands, soft brands, and pure independents. The business pillars of Crescent revolve around client and associate satisfaction, reputation management, hotel quality, and smart growth. You do not need to be fancy, but you do need to be passionate and focused.
Broadly speaking, what should hoteliers be looking for from a third-party management company?
It’s very important that hotel owners peel back the layers of a management company and understand the ownership capital stack. If they do this, many owners will find that PE firms control larger management firms. Additionally, these management companies may have ownership in numerous hotels, are competitors on the buy side, and have other lines of business that create distractions for the third-party management side of the business. In my experience, this can be a major problem for a hotel owner who hires this type of management firm because a firm that is controlled by a competitive PE firm will prioritize the hotels in which they have an investment. Additionally, management company executives controlled by PE firms are pushed to grow short term NOI, which can compromise the quality of talent and services.
Do you think this age of industry consolidation is going to start impacting management companies as much as it’s impacted big brands?
Having lived through acquisitions and mergers in a prior life, I am not a proponent of management company mergers. I believe that at Crescent, our culture is our product, and culture is the first to be negatively impacted by mergers and acquisitions. There is much about what the brands are doing that makes good business sense, but a management company is a different animal; the consolidation to accomplish growth has no benefit to the owners of the hotels.
Let’s talk about one of the newest additions to your portfolio: The Duke Hotel Newport Beach. What do you like most about the property?
More than anything else, I love that the Duke is a bulls-eye hotel for where Crescent excels. It’s a large, luxury, and complicated asset that offers our company an opportunity to develop a repositioning strategy that includes new branding, management, extensive capital enhancements, and product reconfiguration. What more could a hotel doctor ask for? The more complicated a hotel is and the more moving parts it has, the more impactful the Crescent machine will be. Currently, The Duke is going through a transformative journey of de-identifying from the Fairmont brand and management. It’s operating effectively as an independent lifestyle hotel on an interim basis and it’s in the midst of substantial capital improvements. We will be reopening the property at the start of 2018 as the Renaissance Newport Beach.
The Duke is managed under Crescent’s lifestyle division, Latitudes, Lifestyles by Crescent. When did Latitudes come into the picture? Why is it beneficial for Crescent to have a separate lifestyle division?
Crescent has always been a leader in the independent, lifestyle and wellness space. With my background and many Crescent leaders, we have continued to ramp up our focus on differentiating Crescent in this space. So, in 2016, we launched Latitudes, which is a defined operational, design and programming strategy for our clients with unique hotels and resorts. Today, more than half of Crescent’s development portfolio is associated with Latitudes, including a luxury wellness resort on Singer Island, a mega-resort outside of Austin, and luxury urban lifestyle hotels in New York City, Dallas, Chicago, and Los Angeles. I love operating independent hotels and resorts. Crescent has a major foothold in this space and we are all excited about the potential of Latitudes to produce superior results for our clients.
What do you enjoy most about being in the hotel industry?
First, that it is a team-based business. Building great teams and accomplishing great things together is simultaneously incredibly challenging and satisfying. As a corporate athlete, I thrive in this type of environment. Second, the relationships you can establish and the legacy you can leave motivates you to perform with the highest level of integrity. Third, it is a very competitive business and hard to be successful long term. I love the challenge of constantly strategizing to outperform the competition. Additionally, I am blessed that I can pick and choose whom I want to work with and be of service to.