OPERATIONS
Smooth Operators
TECH-CENTRIC HOTEL OPERATORS LOOK TO UPEND THE TRADITIONAL MANAGEMENT MODEL .
By DAVID EISEN
I
n fall 2021 , the Ace Hotel in Pittsburgh ’ s East Liberty neighborhood reopened after being forced to close during the COVID-19 pandemic . Only thing was , it no longer was the Ace Hotel . Now called The Maverick by Kasa , the hotel ’ s owner decided to jettison Ace as the operator and install Kasa , which manages accommodations and bills itself as “ tech-enabled hospitality for the future .”
Not only did Kasa pick up the former Ace Hotel in Pittsburgh ; in January , it was tapped to run the erstwhile Ace Hotel Downtown Los Angeles , now operating as the STILE Downtown Los Angeles by Kasa .
Kasa is among a set of burgeoning technology-led management companies that seek to streamline operations and expand profit margins . In the case of the Pittsburgh hotel , ownership decided to make the switch to bolster profitability by doing more with less . Other owners are taking a similar approach and engaging companies like Kasa , part of a subset of tech-led and growing management companies whose business models differ from more traditional operators in the space .
The directive for how the template works is an easy explanation : lower the cost structure of operating properties . Getting there , however , takes nuance , discipline and alchemy , according to Kasa Founder & CEO Roman Pedan , who started Kasa in 2016 fresh off three years at private equity
THERE ARE GOING TO BE MORE SITUATIONS WHERE THE EXISTING COST STRUCTURE DOESN ’ T WORK AND THE EXISTING MANAGER OR BRAND DOESN ’ T WORK . OWNERS ARE LOOKING FOR ALTERNATIVES
– ROMAN PEDAN , FOUNDER & CEO , KASA giant KKR . “ There are going to be more situations where the existing cost structure doesn ’ t work and the existing manager or brand doesn ’ t work . Owners are looking for alternatives ,” he said .
In its pitch to owners , Kasa , which last October closed a $ 70 million Series C fundraise , promises GOP margins in the 55 % to 70 % range for hotels with sub-200 keys . ( In the U . S .,
38 hotelsmag . com May / June 2024