Deals volume is picking up for Sightline Hospitality, which will help the company “grow like we want to grow” coming out of the pandemic, President Kirk Pederson said.
SAN FRANCISCO—After a 2020 that could end up being “a wash,” Sightline Hospitality expects 2021 to be a good year based on growing momentum for deals, President Kirk Pederson said.
Hotel News Now spoke with Sightline’s Pederson in 2019, after the company was formed by a merger between Kokua Hospitality and Filament Hospitality. At that time, Pederson predicted in its first year that the company would grow its portfolio to 30 hotels and have another 15 to 20 hotels in the pipeline.
Sightline now has 20 hotels in its portfolio, though some of those hotels have closed temporarily during the pandemic, and a handful of those might not reopen, he said. Some hotels also could change to a totally different product type, such as senior living or apartments.
The company could come out of the pandemic with another five to 10 properties that are new to the portfolio, he said.
“For the year for us, it will kind of be like a wash,” he said. “Instead of the 10 to 12 property game, we’re going to lose some and we’re going to gain some.”
The company has been working with the brands and development teams in the industry to “find out where they are going to land when the cards settle … because there’s going to be a lot of shakeout,” he said.
“You’ve got assets that are in special servicing, you’ve got other assets that are closed and you’re not sure whether they’re going to even reopen again … so we’ve got a real mixed bag,” he said.
Pederson said 2021 should be a good year for management companies as deals momentum builds up.
In the past two months, Pederson said, deals interest has come from both independent and soft-branded hotels, particularly Autograph, Tribute and Tempo products.
Sightline has been focused on deals on the West Coast, which are closer to home and easier to do, he said.
The company worked on a few deals in New York this year, which was difficult, Pederson said.
“Not only getting there, registering to get there, obviously going through the whole process when you get there, responding to how you are feeling every day; it didn’t make business travel easy,” he said. “We kind of defaulted to working a lot more on West Coast stuff.”
Deals on the West Coast started very slow, but the “volume has picked up tremendously,” he said.
“We are probably seeing three to five new deals that hit our desk every week,” he said.
Pederson said not all those deals are being added to the pipeline because a lot of other management companies are also looking at those deals.
The company has also fielded more interest in deals over the past two months than even before the pandemic, Pederson said.
“Pre-COVID, we didn’t have that kind of volume at all,” he said. “It was a couple deals, three deals a month that were coming on that were real opportunities. Over the last two months, the volume has picked up so much.”
Sightline is now working with groups that are putting bids out on properties a couple times a week, he said.
Coming out of the pandemic, Pederson said there’s going to be deals volume that enables the company to “grow like we want to grow.”
One challenge has been having to say no to deals, he said.
“Pre-COVID, we would have been like, ‘great, let’s go do that.’ Now, it’s difficult to do. Owners can’t afford to pay you; there just aren’t enough revenues in the hotel to support a third-party manager. Those kinds of deals we’ve had to say no to now,” he said.
Pederson said Sightline might consider taking those deals back on again when revenues come back and owners can properly pay management companies.
The people component
People are the main component of a management company, which is why Sightline made a pact at the beginning of the pandemic to keep its corporate team intact, Pederson said.
“When you’re hiring a management company, you’re hiring people,” he said. “Everybody’s got systems … but what you’re hiring is people and you are hiring people that are going to be attentive and focus on your asset if you’re an owner.”
A work-from-home policy has helped to keep on corporate team members, he said.
Employees are also traveling still to do deals, Pederson said. They do not have to if they feel uncomfortable, but no one has turned down a trip.