HIgHgATE ’ S high-speed
An entrepreneurial approach is steering this company ’ s expansion .
Contributed by Megan Rowe pATH
In the dumpster fire otherwise known as 2020 , while many hotel owners are nervously eyeing the exits , Highgate has been out shopping . The real estate investment and hotel management company kicked off the year by picking up Heavlin Management Co ., which managed 11 hotels in Arizona and Alaska . Then it struck one of the year ’ s biggest deals , a US $ 2.8 billion agreement for 197 select-service hotels ( 22,676 keys ) from Colony Capital . Two weeks later , New York City-based Highgate announced that it had assumed management of Trust Hospitality ’ s assets , some 22 hotels and resorts open or in the pipeline in the U . S ., Caribbean and Latin America .
The Colony acquisition , a rare big transaction amid troubling times , has caused the loudest buzz . “ This is a statement-making deal ,” says Gilda Perez-Alvarado , JLL ’ s CEO . It signals a commitment to the sector , she adds , “ but also further positions Highgate as a major hospitality investor , above and beyond their hotel management focus .” She notes , “ It sets a precedent for what is to come in full force over the coming months .”
Before these deals , Highgate was the largest hotel owner and operator in New York City . The Colony purchase will more than double the number of hotels it owns or operates , to 357 from 160 , and position it among the largest hotel owners in the U . S . More deals are likely , especially given the number of owners looking for a lifeline or escape route .
No oNe-size-fits-all Given the current environment , Highgate is eyeing mergers and acquisitions from a variety of angles . “ Our roots are as an entrepreneurial organization ,” says Highgate principal Zach Berger , and many of the candidates for acquisition share a similar mindset . A one-size-fits-all strategy doesn ’ t cut it . Rather , he says , “ When we approach an M & A opportunity we tend to focus on the incumbent principals ’ objectives and vision for the future . Our objective is to continue to celebrate all the resources and capabilities that these potential partners bring to the table , think through how Highgate can contribute and
“ Hotels need to figure out how to run with less money for the time being , and often that means scale . I also think purchasing power will be huge moving forward .”
– Richard Millard
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November / December 2020 • HOTELS ’ Investment Outlook • www . hotelsmag . com