Owners on what it takes to enter indie hotel space
 
Owners on what it takes to enter indie hotel space
25 SEPTEMBER 2019 11:59 AM

Independent hotel owners said passion for a project and proper execution lead to success.

REPORT FROM THE U.S.—Owners who have moved into the independent hotel space said the process required a lot of hard work and passion, including getting the story of the hotel right.

Mitch Patel, president and CEO of Vision Hospitality, said his company took on its first independent hotel project, The Edwin, based on circumstance.

“There was this fantastic location in our hometown of Chattanooga, Tennessee, we felt it was the best location in a 100-mile radius,” he said, adding that the location, near an iconic pedestrian bridge in an arts community, wasn’t right for a branded property.

Local businesses near the site were ready to throw their support behind the right project, and Vision decided an independent hotel that told the story of the area was the right choice, he said.

The process of creating an independent hotel was fun, Patel said, but figuring out property management systems and distribution channels for the hotel was not, which is why he decided to soft brand with Autograph Collection by Marriott.

“I am not going to tell you we’re going to make more money or less money by going down the soft brand (route),” he said. “I can’t tell you that with utmost confidence, because there’s a cost associated with that. But I can tell you that I can sleep better at night knowing there is a major company behind my hotel.”

Independent since 1962
Marcus Hotels & Resorts started in the movie theater business in 1935 and moved into the hotel space—and the independent space—in 1962 with the acquisition of the Pfister Hotel* in Milwaukee.

Andrea Foster, SVP of development at Marcus, said independent hotels are a lot of work because instead of sticking to brand standards, hoteliers are creating their own.

Kent Duncan, VP of strategy and asset management at Marcus, said the company has had success with independent hotels by focusing on passion and purpose, pre-work and process.

Having passion and purpose for a project helps in finding the right players, such as partners, developers and owners, he said. Purpose “helps keep everybody on track to drive the passion forward,” and pre-work is crucial to find the right systems, including the PMS, as well as the right people to run the hotel, he said.

Throughout the process, an owner determines how to run the hotel, he said.

Foster added practicality as another essential element.

“(Ensure) there are roots to everything you do when you’re creating a property with a new identity, (and create) an experience customers and guests want to have,” she said.

Marcus recently opened Saint Kate - The Arts Hotel, located in the heart of the Milwaukee arts community and across the street from a performing arts center.

Saint Kate – The Arts Hotel opened in the heart of Milwaukee’s entertainment district, across from a performing arts center. (Photo: Marcus Hotels & Resorts)

Finding the right partners
Ray Martz, EVP and CFO of Pebblebrook Hotel Trust, said having the right partners is key to owning an independent hotel.

“It’s important to have a hotel operating partner who knows what they’re doing,” he said. “Not all managers can manage independent hotels, so it’s really critical you have a management company that knows that space, has experience in that space and can obtain and hire talent.”

Good GMs and directors of sales want to know what an independent hotel can offer them, he said, and letting those employees know what that looks like can be a struggle for some smaller operators.

“That’s where it’s important to align yourselves with a good manager who knows what they’re doing, so you can hire good talent. … If you can’t attract and maintain a good executive team, you’re going to struggle,” he said.

Distribution, experience
Independent hotels don’t have a built-in distribution channel, so understanding how these channels change in this space is important, David McCaslin, EVP of acquisitions and development at Hersha Hospitality Management, said via email.

He said hoteliers also need to realize the importance of creating a story and experience for guests.

“The independent customer is looking for unique experiences and the branded customer is looking for you to fulfill the brand promise of an expected experience,” he said. “The new soft brands are blurring the difference a bit.”

*Correction, 26 September 2019: This article has been updated to correct the name of the hotel. 

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