After years of keying in on select-service properties, Hawkeye Hotels is expanding into luxury, full-service hotels as company executives believe they can excel in the F&B space.
CORALVILLE, Iowa—Hawkeye Hotels is in the midst of a development push, but officials with the company said they’re not just looking to sink their time and money into any property, they’re looking to invest in full-service hotels.
Chief Development Officer Raj Patel said the company, which has a long history with select-service hotels, is now putting a significant amount of energy and capital into what he described as “passion projects,” albeit ones executives are confident have the right recipe for financial success.
“We have some really exciting projects that are experiential hotels that will put (guests) in the best location and building in town,” he said.
Patel said Hawkeye is rolling out a hose of projects in “large urban core markets” across the U.S., including Denver, Minneapolis, Chicago, St. Louis and New Orleans, along with some renowned properties in the company’s home state of Iowa, including the historic Hotel Fort in Des Moines.
When looking at development opportunities outside of Iowa, Hawkeye officials look for “large metro markets” with room for growth, Patel said.
“We want to be in the strongest markets from an occupancy and (average-daily-rate standpoint) that still have opportunities for developers and have a strong business environment that continue to attract new business and new travelers,” he said.
Hawkeye President Ravi Patel said the company likes markets with “strong fundamentals.”
“We look at the supply and demand in a market,” he said, noting they like areas with “strong transportation and a diversity of demand generators like universities or major corporations.”
Hawkeye currently has 50 owned and managed hotels, with 20 more in joint ventures and 30 more properties in the works. The company’s portfolio includes both branded and independent properties.
Hawkeye also opened a Courtyard by Marriott property in Grove City, Ohio, in August.
Strength in F&B
Raj Patel said the company draws confidence from a few core competencies—including interior design—as it moves into more full-service and luxury properties, the most important of which might be its focus on food and beverage.
“We wanted to have full control of the F&B experience for our guests,” he said. “So we started our own F&B department as a company to own and operate restaurants in our hotels.”
That division is structured differently than you might see in other hotel companies, and works almost as a separate entity to ensure it is providing quality service and remaining profitable by operating on a “separate ledger.”
“For many hotel companies, F&B is a drain on the bottom line,” Raj Patel said. “So we decided to break that space out, and treat it like we have the best operator in town running our restaurants.”
Because of the company’s history with select-service operations, its move into full service will benefit from the ability to operate efficiently, Ravi Patel said. He added the fact there are long-term owner-operators helps in that regard as well.
“We can run better margins than some institutional groups,” he said. “We’re putting a lot of thought into both the full-service and limited-service properties we build because we want to build and hold them for an extended period of time. So there are a lot of efficiencies put in during development that can lower some operating costs.”
One of Hawkeye’s most recent announcements was the purchase of Radisson Quad City Plaza in Davenport, Iowa. That deal marked the company’s 15th property in its home state. Hawkeye officials announced plans to renovate the property at the time of the acquisition.
Hawkeye also recently purchased the Park Plaza Hotel in Bloomington, Minnesota, with plans to convert it into a Courtyard by Marriott within a year. It will be the company’s second Minnesota property, and officials plan to open a Home2 Suites by Hilton in Eagan, Minnesota, this spring.
When asked about where the industry sits in the current cycle, Ravi Patel said “it’s really tough to tell,” but he added his company is poised for success even in the face of a potential recession.
“I feel good about the current market fundamentals, and we continue to stay very aggressive in everything from acquisitions to development,” he said. “We make sure we develop at the right basis and (operate) at the right margins, so should something happen, it doesn’t put us in a really vulnerable position.”
Raj Patel agreed that “it’s very tough to forecast and know what the future holds for us,” but Hawkeye managed to thrive in the 2008-09 recession, saying the company learned how to operate more efficiently during the tough times.
“We came out of it as strong of an operator as we ever were,” he said.