When a hotel owner puts a property in the hands of an operator, cultivating a positive working relationship is vital to the performance and long-term success of the asset. But it isn’t always easy to achieve a balance that’s equitable for everyone involved. For David Duncan, president of Denihan Hospitality Group, his company’s success largely depends on cultivating long-standing relationships with property owners. The fact that Denihan has ownership in 60 percent of the 14 properties it currently manages helps foster these solid business partnerships.
Denihan has grown from six to 14 upscale properties since 2006. Its client base of hotel owners ranges from publicly traded companies to private equity funds, and they provide a wealth of valuable information, such as benchmarking data and current industry observations. “We use this as a mirror every day regarding how we are operating our hotels,” Duncan says.
As part of Denihan’s business model, the family-run management company deems it essential to have its own capital, specifically allocating funds to fuel growth and further solidify its alliance with the property owners. “Having our own capital is a key to our success,” Duncan points out. “If we invest alongside of our owners, then our relationship is successful because we truly are partners. We work closely together, and together we determine the right allocation of capital and resources to maximize the real estate value of the hotels over time.”
In addition, Denihan’s ownership base is comprised of seasoned hotel industry pros who are tech-savvy, forward-thinking, and committed to continually enhancing the company’s initiatives. “The interesting part about our business is that our Internet presence is not only important to the guests but to the owners as well,” Duncan notes. “They can go on their iPads, laptops, or smartphones in the middle of the night and see how their property looks to the world, validating their confidence in our company’s ability to properly market and position our hotels.”
Currently, siblings and co-CEOs Patrick Denihan and Brooke Denihan Barrett are at the helm, and they are committed to the company’s philosophy and views about key management-owner relationships. Today, Denihan’s portfolio of boutique lifestyle hotels features 11 New York City properties, including The James, The Benjamin, The Surrey, and several Affinia locations, as well as The James Chicago, The James Royal Palm in Miami, and the Liaison Capitol Hill in Washington, D.C.
Duncan says the company is committed to doubling its size in the next five years. Growth plans involve a major U.S. expansion to the West Coast, where Denihan opened an office in 2011. The company is pursuing between 200 to 500 key urban core, conversion, and repositioning opportunities in major destinations such as Seattle, San Francisco, Los Angeles, San Diego, and Portland. “We will be adding new properties—but only if they are the optimal partner, location, or extension of our brand,” Duncan says.
Having an ongoing, quality relationship with an owner is just one element that bolsters a management company’s success. There are also the guest relationships. “We spend an incredible amount of time educating our 2,500 employees to respect our guests, and we make sure we spend the same amount of effort to ensure that our management team respects the owners,” Duncan says. “We listen to our employees and owners, and respond to their needs accordingly. It’s been proven that the value of those relationships will help propel our growth.”
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