HOTELS ' InvESTmEnT OuTLOOk
HOTELS ' InvESTmEnT OuTLOOk
The Anichi Marriott Autograph Dominica comes to Highgate from the
Trust portfolio .
add value to their platform and have one plus one equal three .”
A prime example of that is the Trust deal , which widens Highgate ’ s footprint in the Caribbean and Latin America . As CEO of Trust , Richard Millard was drawn to Highgate ’ s entrepreneurial spirit , culture and scale . That scale will help streamline the organizational chart and provide more purchasing muscle .
“ 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 ,” he says .
Highgate principal Rich Russo thinks the 22 properties have significant upside potential to benefit from Highgate ’ s operational efficiencies , revenue management and sales expertise .
Millard , in turn , will beef up Highgate ’ s development and owner relations in key U . S . markets , the Caribbean and Latin America . “ We couldn ’ t be more excited to be working with Richard and Michael Register ( Trust ’ s development head ) to help us grow out our platform ,” Russo says .
InTegrATIon proCesses Partnerships aren ’ t the only goal , as the Colony deal shows . Integrating these hotels into the Highgate system will take some time , but “ we feel good about the positioning of the assets and are excited to work with brands , lenders , associates and many other important stakeholders across these portfolios ,” Berger says .
Highgate ’ s experience managing full-service hotels in urban markets has created some bench strength that could benefit any potential repositioning of the Colony properties , Russo observes . “ In addition to being a global organization , we have organized our business to be able to manage and / or own any type of hotel , ranging from select service 2- and 3-star hotels to high-touch 5-star destination hotels and resorts , both branded and independent .”
For example , the company ’ s F & B team created a destination rooftop bar at an AC Hotel in San Juan , Puerto Rico , a project that could provide a model for differentiating some of its newly acquired select service assets .
Debt is another consideration . Analysts have suggested that the Colony properties — which Highgate essentially picked up for the value of the hotels ’ US $ 2.7 billion debt — have a healthy outlook if and when travel volume bounces back , and restructuring would make sense . Berger says it ’ s too soon to discuss .
Russo says an organization like Highgate has an edge in a turbulent environment . With no formal mandate or bureaucratic process , “ We pride ourselves on being a highly flexible , nimble organization that can continually adapt and move to where we see opportunities and grow our platform in a very deliberate manner so that the various components all enhance the entire organization ,” he says . The outlook for more deals is good ,
“ We pride ourselves on being a highly flexible , nimble organization that can continually adapt and move to where we see opportunities and grow our platform in a very deliberate manner so that the various components all enhance the entire organization .”
– Richard Russo
Berger says . “ It goes without saying that there ’ s a lot of distress out there . A lot of folks are actively thinking through how to recapitalize their assets to reflect the new reality .” He adds that Highgate will continue to consider any possible moves with a collaborative , not predatory , mindset . “ We ’ ve been around for 30 years , we ’ re in this for the long haul , and folks tend to work with us for years ,” Berger says .
www . hotelsmag . com • HOTELS ’ Investment Outlook • November / December 2020
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