ALIS Roundup: New Projects and Announcements

Nearly 2,800 top industry leaders attended the Americas Lodging Investment Summit (ALIS) in Los Angeles last week, and we were on the scene to uncover the latest hotel news and trends. In between an array of seminars and panels, we caught up with a number of hotel industry experts who had new projects and announcements to share.

Eric Danziger, Début Hotel Group
Eric Danziger, president and CEO of Hampshire Hotels Management, unveiled Début Hotel Group, which encompasses five lifestyle brands ranging from 3-star limited service to 5-star luxury. “Lifestyle should be applicable in every market tier,” Danziger said. In addition to expanding its Time, Night, and Dream brands, the company has introduced two new options: Augustus Hotels, a five-star luxury product; and Unscripted Hotels, which will appeal to the upper-midscale to upscale market. The first Unscripted Hotel is slated to open in Northern California within the next three months, Danziger said, with other locations in the works in St. Martin and Durham, N.C. Dream Hotels will soon add Chicago, Dallas, Hollywood, Washington, D.C., and Long Island City to its portfolio, and a franchise rollout is in the works for the Night brand, he added.

Chad Crandell, Richard Warnick, and Ken Wilson, CHMWarnick
Chad Crandell, Richard Warnick, and Ken Wilson announced the formation of CHMWarnick, a hotel asset management company that is the result of a merger between CHM and Warnick + Company. The new company will provide hotel business advisory services, including asset management, operational assessment, and strategic development advisory, from offices in Boston, Denver, Los Angeles, Minneapolis, New York, and Phoenix. The combined companies have a client portfolio of 54 hotels with 23,000 rooms, representing roughly $8 billion in hotel assets and an aggressive growth plan. “We have a three- to five-year goal of doubling that,” Wilson said. “We want to be 50 to 60 people, somewhere in the range of 100 hotels, and potentially 50,000 room nights with $15 to $20 billion of market cap.” Ideal owners have complicated assets that are in the full-service, big-box, resort, or luxury realms. “Our sweet spot is in larger, more complicated assets where we can really move the needle,” Warnick said. The need for asset managers has never been greater, he added, as the industry continues to rapidly evolve. “This business seems to get more complicated by the day, with new technologies, distribution channels, and issues comings up.” From a capital spending standpoint, Crandell said they’ve seen a significant uptick in budgets to support new technologies, whether it’s brand software, Wi-Fi, or mobile check-in. “All these things are funded by owners, and there needs to be some rigor and discipline that goes into paying for these costs, bidding them out, vetting them, and getting the right service behind it,” he said.

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Brad Rahinsky, Hotel Equities
Brad Rahinsky, president and COO of Atlanta-based Hotel Equities, reported that the company grew the size of its portfolio by more than 40 percent in 2014, from 40 to 62 hotels, and saw a 500 percent year-over-year increase in operating income. “We’re in 14 different states now, so we’re not a southeast regional company anymore,” Rahinsky said. Hotel Equities’ most ambitious project to date is a $53 million Residence Inn in Miami Beach, which is scheduled to open this summer. Other big projects in the works include two in Costa Rica, a Residence Inn that’s under construction in the Guanacaste region, and a 2,400-acre mixed-use project that will have up to four hotels, including a Courtyard, for which they are in the final permitting stages. The company was also selected last month as the management firm for three Marriott hotels in Texas. “It continues our expansion westward,” Rahinsky said. “Once we get into market, we tend to grow in that market.”

Steve Van, Prism Hotels & Resorts
Prism Hotels & Resorts announced that it has assumed management of the 428-room Hilton Tucson El Conquistador Resort in Tucson, Ariz. Steve Van, president and CEO of the Dallas-based full-service hotel investment, management, and development company, said Prism saw big potential in the deal. Due to Prism’s confidence in the future of the resort and its ability to produce strong operating results, the company also took an ownership stake in the hotel, which is located on more than 500 acres at the base of the Santa Catalina Mountains and surrounded by Sonoran Desert terrain. The Prism team is working with ownership partner Humberto Lopez to capture a more unique local flavor as part of an approximately $20 million repositioning and renovation project. “Lopez is willing to put the capital into the property it needs and give us time to do the turnaround,” Van said.

Gerry Chase, New Castle Hotels & Resorts
New Castle Hotels & Resorts, a hotel owner, operator, and developer, announced the acquisition of the 103-room Comfort Inn & Suites Downtown in New Orleans, La., for $9 million. The hotel will undergo a $10 million renovation and rebranding that will debut in 2016. Gerry Chase, president and COO, said New Castle intends to upbrand the historic property with a new flag that is yet to be announced. Rockbridge, a private equity firm, provided financing for the transaction. In addition to a prime location in the central business district, only one block off Bourbon Street, the hotel has tremendous upside potential in a market that continues to outpace the national average in terms of RevPAR and occupancy. “New Orleans has really come back with strong components and fundamentals,” Chase said. “The dynamics of demand growth in that market are great.” In terms of his overall industry outlook, Chase is bullish on the year ahead. “I think we’re going to beat 2014. We want the parade to continue.”

John Hardy, John Hardy Group
After launching work on three projects in Hawaii late last year, John Hardy Group, a growing hospitality development services firm, has opened an office Honolulu. The company, which also has offices in Atlanta, New York, Los Angeles, and Paris, is managing a creative reuse of the Waikiki Trade Center for Chartres Lodging Group; handling development oversight for one of two joint-venture partners at The Grand Islander timeshare; and managing the renovation of the Four Seasons at Manele Bay on the outer island of Lanai. The Hawaiian hotel market has distinct opportunities and challenges, said CEO John Hardy. Occupancy rates are some of the highest in the United States, as leisure travel is consistent year-round and robust government work makes it an active market for business travel. Available land for new construction is scarce, however, and the approval process is lengthy, making available properties extremely valuable. “People are acquiring, repositioning, and redeveloping,” he said. “That’s really the name of the game in Hawaii.”

Mat Crosswy and Michael Harper, Stonehill Strategic Capital
After successfully closing $25 million in loans in December 2014 and an additional $65 million under signed application scheduled to close this month, Stonehill Strategic Capital is primed to provide $500 million in hotel financing in 2015. “Now that the system is in place, we can focus on transactions rather than on building out the platform,” said Vice President Michael Harper. Adding a permanent loan product is an important milestone in the company’s growth that directly complements the existing debt solutions it provides, said President Mat Crosswy. Stonehill completed 19 transactions in 2014, totaling more than $150 million and including bridge loans, permanent loans, mezzanine loans, and preferred equity investments. The company’s sweet spot financially is $5 million to $20 million in deals, typically in secondary and tertiary markets with limited- and select-service hotels.