GLOBAL UPDATE : PROFILE
Repositioning
pros
Ready for aggressive growth , DH & R is a bit distressed about the lack of good distressed assets coming to market .
By Jeff Weinstein , editor in chief
Destination Hotels & Resorts ( DH & R ), Englewood , Colorado , is aggressively looking to acquire and manage full-service U . S . assets and has the competitive advantage of a well-heeled parent company in Lowe Enterprises Investors . However , despite fluid access to capital , DH & R Senior Vice President of Acquisition Mike Everett worries about the dearth of good deals to buoy the company ’ s plans .
“ We wanted five or six deals in the first half of the year , but you can ’ t force the market , and when you do you overpay ,” says Everett , who at press time was able to announce the company ’ s second deal of the year , the acquisition of the Affinia in Chicago , which has been owned and managed by Denihan Hospitality . “ It is a typical 2006-2007 deal that was vastly improved and overcapitalized , and we are able to take advantage ,” he says .
DH & R will take over the hotel management and implement the property ’ s independent rebranding as MileNorth , a Chicago Hotel , a name inspired by its location near North Michigan Avenue .
Everett adds a third deal in a top 10 urban market is very close , and DH & R also expects to add third-party management opportunities . In fact , in February the third-largest management company in the United States announced it won the contract for the 296-room Lansdowne Resort in Leesburg , Virginia , from owner LaSalle Hotel Properties . “ It draws perfectly from the profile we like ,” Everett says .
DH & R prefers to acquire distressed assets with some 300 keys and significant meeting space , according to Everett , who points to last year ’ s acquisition of the Madison in Washington , D . C ., as its
“ We see social media as a big opportunity to close the gap as far as brand recognition goes . The opportunity to grow those channels grows tenfold each year and is a game changer for us .” – Mike Everett
prototypical urban asset with both good group and social business potential .
DH & R also wants to become more active on the resort side , again with 250 to 300 rooms , meeting space and ideally adjoining real estate available . “ With resorts , we are more willing and able to look at complex deals ,” Everett adds . What draws owners to DH & R ?
According to Everett , “ We have the ability to operate independent hotels on the transient or group side when we follow a company that has just a few hotels without the supporting platform we have . We can make meaningful changes to the product , but from our management capabilities can drive group and make a difference with an independent hotel that is not properly positioned .”
Long term , the stated goal for DH & R is to grow from its current stable of 42 hotels to 55 to 60 within three to four years , targeting expansion with larger assets in urban markets such as Los Angeles , New York City and San Francisco , as well as resort markets such as Mexico and the Caribbean .
On the operations side , Everett says while DH & R ’ s ski resorts had a rough year , with certain assets he is seeing a group business rebound . “ We are seeing less growth in pure conference center assets that attract hardcore training and consulting business ,” he says . “ But assets like Terranea Resort ( in southern California ) — with large , incentive-type meetings and high-ticket groups — have been strong . The higher end of the group spectrum has been extraordinarily robust ( 9 % to 10 % RevPAR growth ) whereas bread-and-butter conference assets are showing 3 % to 5 % growth .”
To offset tougher conditions , DH & R is maximizing total spend at the property level , creating more robust websites and allocating more resources for social media . “ We see social media as a big opportunity to close the gap as far as brand recognition goes ,” Everett says . “ The opportunity to grow those channels grows tenfold each year and is a game changer for us .”
18 HOTELS June 2012 www . hotelsmag . com