It’s a defining moment for The Hotel Group as the Washington-based company is using new-builds and the extended-stay segment to add to its portfolio while it prepares for its 35th anniversary in 2019.
PHOENIX—2018 has been a big year for The Hotel Group. Literally.
The Edmonds, Washington-based management, development and investment company in 2018 opened the largest property in its history and completed it most-extensive hotel renovation ever as it gears up for its 35th anniversary in 2019. In addition, it’s reshaping its portfolio to make the extended-stay segment a significant presence in it.
“It’s been a great year,” said Doug Dreher, president & CEO, during a break at September’s Lodging Conference. “We’re obviously at epic levels of performance for the industry, and the company has had some real success of late.”
The Hotel Group
With 13 properties open and five more in the pipeline, The Hotel Group is attracted to branded properties. The brands include Crowne Plaza, Delta, Doubletree, Hampton Inn & Suites, Hilton Suites, Hilton Garden Inn, Homewood Suites, Marriott, Holiday Inn Express and Residence Inn. When the pipelined projects open, it will add Tapestry Collection, Radisson Red and Home2 Suites to the mix.
THG’s portfolio stretches from Cleveland to Honolulu. It has three extended-stay hotels in its construction pipeline, and when they all open, one third of the company’s portfolio will fall in the extended-stay sector, according to Dreher.
“We hadn’t had any extended stay until that Homewood Suites in Issaquah (Washington),” he said. “Now it’s a significant part of the portfolio.”
The extended-stay segment’s high occupancy rates and the balanced-yet-diversified approach to demand generators are attractive to owners and managers, according to THG’s leader.
“With the suites and kitchen set up, you can tap into demand generators that you can’t with a transient traveler,” Dreher said, adding that because transient travelers like the product, too, it fills a lot of niches.
Extended-stay occupancy rates of five nights or more can vary from 25% to 70%, he said.
Another benefit of extended-stay is its need for fewer full-time employees as the nation goes through a tight labor pool period, Dreher added.
“The lack of comprehensive immigration reform is hurting the industry—we’re at a real pinch point,” he said. “And in some markets like Seattle, you’re competing against the tech companies. That affects hiring an accounting manager or a controller. It’s really a challenge.”
THG’s portfolio is generally filled with newly-built hotels. Including a 254-room Hilton Garden Inn that opened in May in Bellevue, Washington. THG has 11 new-builds in the portfolio, Dreher said. That property is the largest hotel THG has had in its system.
“We come in early in the process,” he said. “(For example,) The Bellevue hotel we were hired in 2014, so it can take a long, long time.”
The fierce competition in the acquisition market is part of the reason for number of new hotels in THG’s portfolio.
“The new-builds have been great because the market for value-add buys is pretty challenging,” Dreher said.
But even the older hotels in the portfolio are getting some love from The Hotel Group. It completed the largest renovation in company history at its Marriott in Kansas City.
“At the time (it joined the portfolio in 2015) it was our first full-service Marriott, so seeing it be transformed and reimagined is special,” Dreher said. He declined to say exactly how much the renovation cost other than it was “multi-million.”
“It’s a terrific property with the public space transformation,” Dreher said, citing the M Club and Marriott’s new guestroom design initiative as key components to the renovation. THG received Marriott’s Renovation Excellence Award for its efforts.
As it prepares for its 35th anniversary next year, The Hotel Group launched a refreshed mission statement focused on serving its people and properties, inspiring a culture of hospitality greatness and delivering investment value for its partners, Dreher said.
“It’s been exciting to see the team embrace a refreshed mission statement that revolves around serving our people, partners and properties,” Dreher said. “Heading into our 35th year we thought it was an appropriate time to do it. It’s been a real neat culture shift for us.
The main word bandied about in the company is “collaborate,” Dreher said.
“We’re using the term ‘go direct’ … it doesn’t matter who reports to who, just go direct,” Dreher said. “We’re collaborating a lot better than we ever have.”