Hotel Equities has grown its portfolio significantly over the last year and is poised to continue that pace while maintaining a company culture that has supported the company’s success.
ATLANTA—Hotel Equities has undergone a major expansion, both in its footprint and the size of its team.
Over the last 24 months, the company grew its portfolio from a net 44 to 85 open and operating hotels—with another 55 under construction or in development—and increased the number of its associates from 1,300 to 2,800, added eight VPs and made 25 corporate hires in the last few months. The company welcomed 40 hotels into its portfolio in 2019 alone. The growth prompted the company to purchase a new building and move to its new headquarters.
“Historically, we’ve been a predominantly Southeast state company,” said EVP Bryan DeCort. “Over the past several years, we’ve really pushed out into the Midwest and West Coast and certainly up into Canada. The geography of our ownership profile and our asset profile has shifted.”
To ensure the company continues to provide value, strong performance and other metrics of success to owners, it expanded its leadership team to help it adapt to the larger portfolio, he said. That required being even more intentional and thoughtful in how it strategically brought people into the organization as the company has historically promoted from within.
Most of the company’s growth happened organically as a byproduct of its performance with existing partners, President and CEO Brad Rahinsky said.
“Most of that growth between then and where we are today is our existing stable of owners and partners that we’ve performed well for them to look at other opportunities and acquisitions with them,” he said. “Everything that we do is led by performance. The way we grow bigger is by getting better.”
When looking to grow, the company takes a disciplined approach when exploring new options, Rahinsky said. Labor and construction costs have dramatically affected the way the company underwrites projects, and he estimates the company says no 20 times for every time it says yes.
It’s key to stress test potential properties through all phases of the cycle, he said. Company officials look at project costs from the previous year or two compared to today to make sure they’re getting the right basis, location and brand.
Looking at the last 14 months and then at the company’s growth pipeline in 2020, Hotel Equities has an aggressive strategy going forward, DeCort said, focusing on what the company does well through organic and third-party growth as well as significant mergers-and-acquisitions growth.
“To get ahead of what we know is coming, we really, really pumped up across every discipline,” he said. “We really bolstered up our operational teams, both in our corporate office and out in the field at every level.”
Historically, the company grew organically by partnering with multi-asset owners or by developing with brand partners and then fostering deep relationships with them, DeCort said. Opportunities then present themselves in new areas and the company pursued the ones that made the most sense, he said.
“From a culture standpoint, from a financial standpoint, from a growth standpoint, that’s how we’ve historically grown,” he said. “We’ve done a really good job for an owner in Market X, and they build up a hotel in Market Y, and they go with a winning solution with partners who understand how they operate, what their expectations are, what their returns are and what their whole strategy may be.”
That’s how a lot of growth used to happen in the industry, he said. Now the company is looking to go where there are critical opportunities to check a bunch of their boxes. They want markets that have an appetite to bring in a strong-branded partner, with high-barriers to entry, great drivers of potential business and for further growth, he said
At this point, following Hotel Equities’ successes there, many markets in the Southeast feel saturated, so many of those new opportunities are in the Midwest, West Coast and Canada, DeCort said. In Canada specifically, the company realized the country was underserved by third-party management companies across the board, he said.
“We went in about two years ago, and we did really well in a couple branded assets, and that opened up the door to just incredible growth in the last 12 to 14 months where we went from two assets to over 25 assets,” he said.
Maintaining culture through expansion
Hotel Equities has invested heavily in its infrastructure over the past three years, focusing on its technology and business intelligence tools so the company is best in class from a communication and KPI measurement standpoint, Rahinsky said. The company also heavily invested in its personnel, promoting from within whenever possible and finding the best outside talent when necessary. That’s coupled with investing in training as well, he said.
“Training is the way you tell your associates you care about them,” he said.
Training is how the company is able to retain so many talented employees and control turnover, he said. With unemployment so low, it’s a challenge to find talent in many markets,.
“If you’re not training and listening to our associates and making sure that their aspirations are being listened to and heard and acted upon, and somebody else will, then you’re in trouble,” he said.
The company has been able to maintain is strong company culture by growing its leadership through elevating existing employees, Rahinsky said. Having so much of its leadership come from within is a point of pride for the company, but there are times when it has to bring in outside talent.
That means finding people who are creative and amenable to the company’s culture through a disciplined process to make sure everyone is aligned not just in their skills but also in their ability to execute. Equally important are who they are, what makes them tick, how they evaluate what’s considered a win and their management style, he said.
Hotel Equities executives take a lot of pride in having some of the lowest turnover in the industry, DeCort said. It has an internal proprietary training program with unique the curriculum and training platforms, he said. There are a large number of resources put toward “cradle to the grave” training programs for everyone from hourly associates looking to dabble and see if this is a business they’re passionate about to those interested in attending its GM University and comprehensive management training program.
The company is projecting continued growth, so it’s confident in its ability to groom leaders, he said.
“We’ve done that really successfully as over half of our GMs today come through our own programs,” he said.
The company’s culture is “the foundation of who we are,” DeCort said. It’s embedded in the organization through the company’s chairman and CEO, he said.
It starts with having a cultural conversation around leadership and about its value and mission statements, he said. It’s about making sure the company finds like-minded leaders who are not only an incredible fit and ensure the culture lives but that it also drives best-in-class results.
“That’s not always easy to do,” he said. “It’s easy to typically find one or the other, but to find that blend of really mature servant leadership of folks who will come in and plug in and really add to our culture, not take away from it, and push best-in-class results within the focus—I think we’ve been highly successful.”