Hotel Equities has been navigating a significant transition in recent months, as its founder, Fred Cerrone, retired in November. With this transition, alongside its merger with Springboard Hospitality, Ben Rafter took the helm as Hotel Equities’ chief executive officer, while Brad Rahinsky, former president and CEO, was appointed co-chairman. Meanwhile, the company has continued to expand its portfolio; it now operates almost 40 hotels in the Canadian market, following the additions of the Moxy Vancouver and Element Vancouver. Additionally, Hotel Equities has grown its Caribbean & Latin America portfolio, which includes five open hotels and multiple projects—including Amaris Grace Bay, an LXR Hotel in Turks and Caicos—underway. Chief Development Officer Greg O’Stean, who has been a key part of the company’s recent momentum, spoke with LODGING while attending the Hunter Conference and highlighted Hotel Equities’ growth while sharing his thoughts on the path ahead.
LODGING: What new developments with Hotel Equities would you like to share?
We’re coming up on a year since we merged with Springboard. That happened last May, so they’re fully integrated, and we’re really starting to appreciate the synergies and the knowledge transfer. Springboard was 50 independent hotels, not soft-branded, no affiliations, and then you had Hotel Equities, which was historically branded and historically select-service [hotels]. It was two very different groups coming together but preserving all of the knowledge, the talent, and the skillset. Springboard has much larger commercial services, marketing, and storytelling behind their assets, whereas most of ours were Marriott, Hilton, and IHG brands. So, there’s a lot less storytelling around that. So, we’ve come together really well, and we’re really focused.
LODGING: On the management side, what are your differentiators?
We have three divisions—focused service, full service, and lifestyle—and we maintain those divisions, the talent base, and the allocation of the above-property support in those lanes because we don’t want to be “one size fits all.” If you had a select-service hotel and you had a full-service hotel and someone else had a resort or a lifestyle, ultimately, you should have a dedicated team that has expertise in that segment. That’s why we have different divisions. From a corporate management standpoint, that’s more expensive to run a company like that with all the talent divided into divisions. But it’s better for the owner. It’s better for the hotel owner to know that they’re not just signing up for the one-size-fits-all [model]. We’re growing, but our goal is not to be the biggest or the fastest-growing. It’s not growth just for growth’s sake. It’s intentional growth. It’s, “How can we better serve owners? How can we take our expertise and help the investors get a better return out of their assets?” So, we turn down as many things as we accept. We turn down a lot of assignments where we feel like we can’t really add value.
LODGING: What are you looking forward to this year and beyond?
We are looking to grow our relationships with capital partners who are looking for turnaround opportunities, and for capital partners who are more institutional and have portfolios. So, it’s really two segments that we’re not that deep in today. We have some institutional owners that have multiple portfolios, and they love what we do for them. We don’t want to be all things to all people. But it would be great to have some more institutional owners that are looking for someone to go find them the opportunity. And that’s really what we do a lot; we’re not waiting for the phone to ring. We’re creating opportunities for investors, not so much for us. We don’t look at something and say, “It would be great to manage that hotel because we’ll get fees of X.” We look at something and say, “Wow, for the right owner, there’s some upside here.” There’s a story to be told. We can renovate it, rebrand it, or reposition it at just the right time. Think about Nashville 10 years ago. Not Nashville today, which is overbuilt. But Nashville 10 years ago. If you had been an early investor in some of the downtown areas, your value doubled for a while, and now it’s kind of tapered off a little bit.
So that’s what we’re looking for—more acquisition and reposition. There are so many … Nashville’s a difficult market; Austin, because the convention center is closed, is a difficult market, while they renovate. So many markets right now are difficult, and so it’s taking owners who have said, “I want out of this asset,” and then finding another owner who says, “I have a vision for Austin, and I’m okay waiting three years for the convention center to open.” It’s putting those two together. It’s finding someone who says, “I’ve got a longer-term vision.” There’s a lot of chaos going on in the world right now, so there are a lot of people who look at hotels and say, “I’d rather do data centers or warehouses or multifamily.” So, it’s pairing those up. It’s finding the seller who said, “This isn’t the right asset for me,” and then the buyer who says, “I have a vision,” and helping them achieve that vision. They’re hard to find. For the most part, we’re looking for the right opportunities for the right investors.
