Hospitality Ventures Management Group has acquired 15 hotels so far this year and company executives say portfolio deals are a good fit for the ownership and management company.
NEW YORK—It’s been a busy 2018 for Atlanta-based Hospitality Ventures Management Group.
So far this year the company has completed the acquisition of 15 hotels and one third-party management contract, totaling 2,205 guestrooms and all part of the Marriott International, Hilton and Hyatt Hotels Corporation families.
“We had an aggressive growth goal; we wanted to be more aggressive than in the past,” said Robert Cole, president and CEO of HVMG. “We saw some opportunities for improvement, et cetera, and we also have a strategy that targets high-quality assets in premium markets that we can maximize.”
The buying side
The bulk of HVMG’s year-to-date acquisition deals came through a joint-venture portfolio acquisition of 12 Marriott- and Hyatt-branded hotels in March. Together with Investra Capital Group Ltd, the company acquired the 1,465-room portfolio and also operates it.
The hotels are scattered across the United States, with three in Georgia, four in Texas, two in Michigan, two in Indiana and one in Ohio.
“The plan for these is to do cosmetic renovations and implement our systems to maximize performance to enhance the value of the properties,” Cole said. “We’ll own these for a while.”
Another transaction highlight was HVMG’s February purchase of a portfolio of three Embassy Suites hotels from Park Hotels & Resorts. HVMG was a co-investor in the portfolio and now manages two—the properties in San Rafael, California, and Atlanta. The third, in Overland Park, Kansas, is a candidate to sell, Cole said.
“The other two will go through significant renovation, and we’ll make those two like new,” he said.
Cole said properties like these Embassy Suites underscore HVMG’s deal and management philosophy to some extent.
“We love the brand. We look for Embassy (hotels) in need of a renovation or a (property-improvement plan). That’s one end of our spectrum,” he said. “Then you have the properties like the Courtyards, which can be more of a value-add-light, where it’s not a huge renovation that’s needed. It’s still a value-add play, but it’s more about operations.”
Mary Beth Cutshall, SVP and chief business development officer, said the company has about 18 hotels in different stages of renovations right now. Included on that list are renovations at two Bentonville, Arkansas, hotels the company acquired earlier in 2018—a 78-room TownePlace Suites by Marriott and a 130-room Candlewood Suites.
She said renovations and furniture, fixtures and equipment investments are efficient for HVMG, which handles those functions in-house.
The selling side
“We’re underwriting a lot of new deals, and we have the capacity to do more,” Cole said. “We’ve been (the) buyer and seller.”
Earlier this year, the company sold the 261-room Embassy Suites by Hilton Atlanta-Galleria and retained management of it, and in December it completed a similar transaction for the Embassy Suites Winston-Salem in North Carolina.
“We’re seeing a lot of activity (in dispositions), and there’s a lot of interest,” Cole said. “The hotels we’re selling are stable, with good in-place cash flow.”
Cutshall said HVMG’s ownership strategies keep the company relevant. “The difference for us is that we get change-of-ownership PIPs and give realistic expectations to the broker,” she said. “PIP friction is still there, but as sellers, we’re more realistic in knowing the true cost to execute them.”
Cole said HVMG’s portfolio, excluding hotels under major renovations, has achieved same-store total revenue-per-available-room growth of 7.7% year to date. The company currently operates 45 hotels in 18 states totaling 7,674 guestrooms.
“Our business model is that we create value and continue to reinvest in the next deal,” he said. “That 7.7% RevPAR growth is the value-adds we do. It comes down to our capital partners too. One of our goals is to do deals with capital partners who are longer-term holders to reduce turnover.”