International growth an increasing focus for Interstate
 
International growth an increasing focus for Interstate
31 JULY 2019 8:30 AM

Already the largest third-party manager in the U.S. hotel industry, Interstate Hotels & Resorts sees an increasing amount of growth internationally.

ARLINGTON, Virginia—Roughly 20% of Interstate Hotels & Resorts’ pipeline is now outside the U.S. as the company pursues growth opportunities in Central America and Europe and plans to return to Canada.

Speaking with Hotel News Now during a visit to Interstate headquarters, Chief Development Officer Greg O’Stean said the company is constantly looking for avenues to grow while also being thoughtful about which properties and projects to take on. At the time of the interview in late May, the company had plans to open as many as 50 properties within weeks across a range of segments and locations, he said.

Greg O'Stean,
Interstate Hotels
& Resorts

“Can we do that? Yes, because we have a lot of people,” he said. “Can we do that every month? No, because you start stretching people pretty thin. You don’t want to set limits on the total potential, but sometimes you do on the pace. You want every transition to be a perfect one. You don’t want to stumble because you’re trying to do too much too fast.”

Interstate manages 605 hotels comprising 102,655 guest rooms in 15 countries (each figure represents both open and pipeline commitments). While most of the company’s growth is still within the U.S., O’Stean said Interstate has significant opportunities in Central America, Germany and across Central Europe, with 40,000 rooms in various stages in the company’s pipeline. He also noted the company is looking at several options to gain a foothold in Canada, a country Interstate formerly operated in but had since exited.

O’Stean said Interstate is close to operating its first resort in the Caribbean, with plans to take over operations for an unnamed luxury beachfront property from another manager. He said the deal is exciting because it’s a new property in a new destination with lots of untapped potential.

He said the company has moved on the deal quickly, leveraging Interstate’s scale and deep bench to get the right people with the right experience to the property right away.

“We have a roster of talent who can be there on a moment’s notice,” he said. “If you are a smaller company, there’s only so much you can do.”

EVP and CFO-International Darren Brennen said when he began working for Interstate a decade ago, the company had seven hotels outside of the U.S.—six in Moscow and one in Ghent. At the time of the interview, the company had 78 operating international hotels and another 101 in the pipeline, he said.

“We’ve seen huge growth over the last 10 years … starting really with our expansion in the U.K., where we have 58 operating and about 12 in the pipeline,” he said.

Along with its U.S. headquarters, Interstate has international offices in Glasgow, Scotland; in Birmingham, England; and in Amsterdam.

The company’s presence has expanded in Eastern Europe and Russia as well, with hotels in Kazakhstan, Belarus and Armenia. Growth recently has been focused on western continental Europe, such as Belgium, the Netherlands and France.

Most of Interstate’s international growth historically and currently comes from new builds, whereas in the U.S. there’s a higher ratio of transitions, Brennen said. Most of the hotels the company manages internationally are branded, but there has been an increasing number of independent properties, including soft brands, he said.

Interstate’s scale helps because the company can react differently than smaller companies, O’Stean said. Scale helps to attract the best talent, operators and salespeople, and helps on the procurement side with vendors, he said. All of that translates to great relationships with owners, who are fans of the synergies Interstate’s scale creates.

O’Stean has about 20 people working for him directly and an expanded team of 35,000 associates across the company’s hotels.

“If I have a property in London that did a great job and continues to do so, we can take over management of other hotels based on that success. The more success stories you have, the more you can grow,” he said.

Editor’s note: Interstate Hotels & Resorts paid for meals, flights and accommodations at The Graham Washington D.C. Georgetown, Tapestry Collection by Hilton, to allow for a series of interviews at the company’s headquarters. Complete editorial control was at the discretion of the Hotel News Now editorial team; Interstate had no influence on the coverage provided.

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