Crestline plans careful growth after big 2015
02 FEBRUARY 2016 7:25 AM
After hitting the 100-hotel mark in 2015, management company Crestline Hotels & Resorts is ready to take on its competitors with years of experience and a focus on delivering results.
FAIRFAX, Virginia—Crestline Hotels & Resorts started 2015 managing 45 hotels with about 7,000 rooms in about a dozen states. It closed the year with 100 hotels, encompassing more than 15,000 rooms in 27 states, including Washington, D.C.
“2015 was obviously a very big year for us,” said James Carroll, president and CEO of Crestline.
The past year increased the company’s geographic footprint to include most of the major markets in the United States. Carroll said 2015 positioned Crestline to better serve its current owners, and the company has been able to increase its support system and further modernize.
While Carroll didn’t have final numbers yet for the full year, he estimated the company saw 108% to 109% in revenue per available room growth across the portfolio in 2015. Crestline’s hotels are first or second in their comp sets, he said, and their RevPAR growth exceeds their comp sets by half a percent or more.
Working through growing pains
“Growth is a double-edged sword,” Carroll said. “Growing by over 100% in a 10-month period presents a number of challenges.”
The quickly expanding management portfolio put a strain on Crestline’s systems, Carroll said, so the company flipped into hiring mode. While it was fun and exciting, he said, it was also a challenge to ensure Crestline hired the right people to handle the jobs and fit in with the company’s culture.
“We spent the year upgrading some of our systems, rolling into 2016 with continued upgrades,” he said. “It’s been our goal all along. We wanted to make sure all ownership groups felt they were getting the same level of attention they always have, with accuracy in financial statements and oversight. We wanted them to feel nothing has changed. I think we accomplished that.”
Growth for its own sake isn’t the company’s strategy, Carroll said, and there’s no specific size set as a goal. The strategy is to leverage the Crestline’s different strengths and make itself attractive to ownership groups through its philosophy and its strong and well-maintained assets.
“We tend to have an owner-focused view, which helps us serve our owners better,” he said. “It keeps strong relationships in markets and allows us to foster some of the relationships, and it started (with) the relationships two years ago that helped the growth we saw come to fruition in 2015.”
Carroll said he does not foresee the company expanding in 2016 as it did in 2015, though he does anticipate some growth, including six properties Crestline will begin managing during the first half of 2016. The company will also begin to manage a new Hyatt Place in Washington, D.C., during the first quarter.
Crestline is also continuing to work through its partnership with the Pro Football Hall of Fame in Canton, Ohio, Carroll said. The company will be part of a four-star property with a large meeting facility as part of the museum’s Hall of Fame village, he said.
“We’ll have a nice growth profile that combines management transitions with new builds and development projects,” he said. “It will keep us busy, but not necessarily the same growth we saw in 2015.”
Carroll said that will allow Crestline to upgrade to new systems, modernize and turn its recently achieved economies of scale into savings for its ownership groups. With its increased talent, he said, Crestline has leverage in its markets and can drive more RevPAR growth.
“We want to optimize our inner workings so we’re delivering an even better product to owners,” Carroll said.
The company has a great national footprint, he said, and is attractive to most ownership across the country at least in part because it delivers a multi-property environment to leverage assets in or near markets to efficiently operate hotels.
“I think some upgrades we’re able to make will serve us well to deliver tech solutions, get more information to ownership groups and create the greater ability to push one of the best core competencies—sales teams, revenue management and ecommerce people we’ve added during the growth phase to take competitive advantage and push it out even further,” he said.
Cultivating a culture
Crestline’s history and experience lends itself well to partner with real estate investment trusts, private equity firms, pension firms and other owner types, Carroll said. The company has been in management for more than 15 years, but it has been an asset manager and an owner in the past. Crestline has spun out international and domestic REITs as well.
“We understand the needs of our customers,” he said. “We have an owner mindset with a focus on owners. It’s not something just learned but lived. They see that and recognize that. It adds a lot of value.”
The company is committed to its employees, Carroll said, and they feel and see that commitment day in and day out. The tenure of Crestline GMs is noticeably longer than the industry average by a few years, he added.
“They see the value of working with Crestline,” he said. “We are focused on driving high results and value at the properties. They know we’re focused on supporting them at the corporate office. The folks in the corporate office and regional teams don’t make the money. The job of the team is to support them at the property level to help them perform well. That’s ingrained, and it drives results.”
It’s an honest and respectful group of people and company, Carroll said, and he believes owners know that. There may be people who can pitch a better story now and then—and on the short-term basis pluck up results—but Crestline tends to be upfront and clear. Carroll added that Crestline delivers day in and day out and company officials try to be honest.
“They recognize that honesty and genuineness,” Carroll said. “They know where they stand with us, know we’ll stand by them and take care of their product. It’s the fundamental trust and honesty and respect we show our owners.”