STRATEGY |
The Hamilton Alpharetta , Curio Collection by Hilton is managed by Hotel Equities . |
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Williams , The Hotel Group , Greenwood Hospitality , National Hospitality Services , Maximum Hospitality and Trust Hospitality .
“ We often use the phrase 1 + 1 = 3 with these relationships and that ’ s because we ’ ve been able to prove , now having created seven of these relationships , that we can drive innovation and achieve greater outcomes together ,” said Brad Rahinsky , president and CEO of Hotel Equities . He added that strategic partnerships foster collaboration and flexibility , allowing both parties to combine strengths , expertise and resources to achieve shared goals while enabling us the ability to adapt quickly to market changes .
Partnership also provides accretive and quicker growth . “ By mitigating risks and enhancing operational efficiency , partnerships provide significant financial benefits and opportunities for market expansion without the need for
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substantial upfront investment ,” Rahinsky said .
Two words — consolidation and scale — are now fully entrenched in today ’ s hospitality vernacular . The more the industry attenuates ,
WE WILL SEE MORE OF IT BECAUSE EVERYONE IS UNDER PRESSURE TO GROW AND IT ’ S AN EASY WAY TO DO THAT
– DAN LESSER , CO-FOUNDER ,
PRESIDENT AND CEO OF LW
HOSPITALITY ADVISORS
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the better the companies doing the absorbing can thrive through economies of scale that provide better purchasing power , insurance savings , sharing of business intelligence tools , customer support and development and disposition services , to name several . As Rahinsky succinctly put it : “ Scale matters because reach matters .”
Hotel ownership is not for the faint of heart . It is a risky business , filled , often , with things out of an owner ’ s control , which makes it more periling . Generating enough revenue to cover costs and debt service and showing profit at the end of each month is the goal , but getting there is not always clear sailing ; in fact , it rarely is , which is why many owners seek out any advantage to make it easier . It can often come down to partnering with a management company to steer the ship . But which one and how to choose ?
Management companies can range in size from the small in
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stature to the demonstrably large . There is nuance in both camps . Smaller management companies might be able to offer quicker , more personalized service and services , but larger management companies can potentially drive better value . “ The fear of being lost in the shuffle is real and we ’ ve heard directly from owners who felt overlooked by larger companies ,” Rahinsky said , though , at 250-plus hotels , Hotel Equities is rather large . Still , he argued , “ Our model naturally combats this in a couple ways — one is that our goal has always been to ’ get better ,’ not to ’ get bigger .’ We think the bigger part happens organically when the better part is nurtured .”
Is partnership the new M & A ? Maybe not . It ’ s more of an offshoot or hybrid form of M & A , as LWHA ’ s Lesser said . But it ’ s not going away ; in fact , it will increase . “ We will see more of it because everyone is under pressure to grow and it ’ s an easy way to do that ,” Lesser said .
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28 hotelsmag . com July / August 2024 |