The reputation of Stonebridge Companies as a prominent hotel operator has no doubt been “rock solid” over the past 30-plus years, but new President/CEO Rob Smith expects to build even further on that foundation with a strong emphasis on the third-party management side of the business.
Smith—a hospitality industry veteran with nearly 30 years of experience, including his most recent position as division president with Aimbridge Hospitality—took over the reins of the company in July, succeeding Navin Dimond, who founded Stonebridge Companies in 1991 and has assumed the role of Board Chair for the company. In his new role, Smith is charged with overseeing the operations of Stonebridge and leading the development and execution of the organization’s long-term strategies, reporting to its board of directors.
Even though Smith acknowledged he “wasn’t really looking at the time” when the company’s board of directors approached him earlier this year to discuss the opportunity to assume the top spot for the privately held management company, the opportunity proved too good to pass up. After meeting in Dallas for several hours with the company’s board of directors, Smith asserted that “both sides felt pretty strongly there was a fit there.”
Smith went on to discuss the appeal of the company, specifically referencing unique projects, such as the Renaissance Denver Downtown City Center Hotel, an adaptive reuse that had been the Colorado National Bank before being turned into a luxury hotel. “I’ve always admired Stonebridge as a developer. I’ve always thought that they’ve done a really good job with ground-ups and development [projects] that they then take over and continue to manage. So, it’s always been a business model that I admired, but becoming more aware of them as a third-party manager is what really excited me to become part of the company,” he said. To that point, the Denver-based company recently took its third-party operations up a notch with the acquisition of Real Hospitality (see sidebar). Now boasting a portfolio of roughly 160 hotels—including select-service, extended-stay, and full-service properties in primary and secondary markets throughout the United States—the company includes two separate entities: a property ownership entity and a third-party management company. The recently formed property company includes five wholly owned hotels and 10 assets in which it has coinvested with third-party owners. Furthermore, according to Smith, the operating company has some 61 owners for which it manages hotels. He pointed out, “Going forward, the main objective of the ownership entity is to be the vehicle to coinvest with owners interested in our management platform to grow the management company.”
Diverse Experience
Smith is no stranger to growth with a diverse background of experience, including several roles at the property level, in addition to spending the past 12 years with Aimbridge. During his tenure at Aimbridge, he was instrumental in the growth of the full-service, luxury, and resort portfolio. From a multi-property perspective, Smith noted he started at the bottom as an area director before being promoted to executive roles such as VP, SVP, EVP, and eventually president. Smith—who pointed out he got his first general manager job when he was 26 and worked for some 20 years—talked about his “direct property experience” and potential to apply some of his background.
“I started at the line level in hotels in college, worked my way through accounting and then back into operations, and did just about every job in the hotel. I think it’s pretty rare in our industry rare that a CEO has not only been through all the experiences at the hotel level, but also at the third-party [management] level. So, I think now that I’m at the CEO level, I can empathize with all the different positions within the company, and I can approach my job with an understanding at every level,” he said.
Smith’s experience also includes nearly two decades in the Caribbean, where he held positions at several large resorts and eventually served the island of Aruba as president and CEO of the Aruba Hotel & Tourism Association and Aruba Convention Bureau. “I wouldn’t trade my time offshore for anything. It was a tremendous learning curve for me to work in offshore and foreign countries. Aruba, specifically, has 40 different nationalities that live on the island. It’s a great way to build empathy and work with diverse skillsets and diverse opinions and views. It taught me how to really work by building a consensus,” he said.
While Smith credited the company’s existing culture with being “very good” when he arrived, he further detailed the type of culture he’d like to instill, which he described primarily as one of “accountability and excellence.”
Smith continued, “I’m very focused on our owners, as well as our associates, and I would like to make sure that’s the culture here. I just want to build on it and make it very owner-centric and very result-centric so that we build both our business and the careers of those that work for us. It sort of is a circle of success in my opinion.
Management Trends
That circle of success has yielded positive results, according to Smith, who noted that many Stonebridge and Real Hospitality properties have consistently been in the top 25 percent to 30 percent of guest satisfaction scores for all of the major brands. Nevertheless, he acknowledged some of the operating challenges that exist in today’s environment. “
You have to be a smarter operator today than we were five years ago, and at the same time the customer today is really looking for an experience, not just a place to stay. It’s a balancing act of making sure that we’re delivering the guest experience and at the same time making sure that we are cognizant of the investment thesis and returns that are necessary. … [Performance is] a real focus already so my job now is looking at a company that is really good and taking it to great, and that’s the focus that I have,” he said.
Smith offered some thoughts on how hotel ownership has evolved in recent years, particularly when it comes to third-party management and the expectations that come with it. “
More and more owners want to be married long-term to the brand, but they really want an operator that can be held accountable. So, I think that the third-party space is going to continue to grow and grow. We’re even seeing the brands start to franchise some of the higher end luxury product, which many thought that they would never do,” he said.
Long-Term Vision
Finally, Smith explained some of his objectives for Stonebridge going forward.
“My long-term vision is to continue to be recognized as the leading third-party operator and to continue that in a very diversified space. I want owners to think of us when they’re investing into a hotel as the company that’s going to be able to successfully execute their investment plan. No matter what their goals are, whether they’re a long-term REIT holder or whether they’re somebody who wants to buy a hotel and turn it around and sell it in five years, we want to be that manager for all of them. And we’re one of the few out there that has access, interest, and the confidence in co-investing because we know that we’re going to deliver the results for the owner and for ourselves,” he concluded.
The ‘Real’ Deal: Further Assessing Stonebridge’s Recent Acquisition
Active on the acquisition front within the past year, Stonebridge Companies took its portfolio to another level this past May when it acquired Real Hospitality Group, significantly stepping up the company’s presence in prominent lifestyle markets, particularly on the East Coast.
Prior to the Real Hospitality Group acquisition—which roughly doubled the company’s portfolio of 80 hotels—Stonebridge added a five-hotel portfolio of approximately 1,200 keys in December. Due to that deal, the company re-entered the greater Phoenix market with the acquisition of the Embassy Suites in Flagstaff, Arizona, and entered both the North Carolina and Georgia markets with the purchase of the Marriott Research Triangle Park in Durham, North Carolina, and the W Downtown in Atlanta.
However, with the addition of Real Hospitality, Stonebridge identified an opportunity to expand its third-party presence while diversifying its portfolio.
“When you look at the Real [Hospitality] acquisition, Stonebridge is very focused on smart growth and growth with the right people. We want to do business with people that are like-minded and owners that have the same goals and aspirations that we do, and Real Hospitality very much fit in with that. We want to grow in the third-party space, and they also have a great handle on independent, lifestyle properties. It really just diversified us,” said Rob Smith, president/CEO, Stonebridge Companies.
As part of the deal, Real Hospitality founder, president, and CEO Ben Seidel has joined the combined Stonebridge Companies as chief growth officer and sits on the company’s board of directors. The company is maintaining its Ocean City, Maryland office.
“First and foremost, Ben Seidel was just a really good fit within the culture of Stonebridge,” said Smith, who added, “He’s been a great partner so far.”
He added that the integration of the two companies continues, and “we’re taking the best of two companies and turning it into one stronger company.”
Smith further touted the overall personnel of both companies as he’s settled into his role.
“When I look at the deployment of folks and how we manage above property, the first thing that I always look at is vertical expertise, and we have that here both on the Stonebridge side and the Real side. We have a very diverse portfolio, and we have the personnel that fits right along with that vertical expertise. So, I was very happy and pleased to find the talent that’s within both buildings,” he said.
