SAN DIEGO—Executives at Hotel Managers Group (HMG) are welcoming the apparent recovery in the economy and, by default, the lodging industry. The West Coast company, which third-party manages 19 properties, has a raft of approved license agreements in its pocket for projects under development and is eager to see them come to fruition.
“We have about 10 properties in our pipeline,” said President/CEO and Co-Founder Joel Biggs, who noted the recent—and, in some cases, continuing—contraction in lending, particularly for new construction, impacted many owners and developers. “Most of them are still on the boards to happen. The only difficulty is finding lenders willing to loosen those purse strings for hotels. But we are starting to see that happen so we’re hopeful that some of these will start to get off the ground. Some of them already have franchises in place,” he said.
Among the properties under development are: Hampton Inn & Suites Las Vegas Airport at Hughes Center; Residence Inn by Marriott at Truckee, CA; Hilton Garden Inn Gallup and SpringHill Suites Albuquerque, both in New Mexico.
HMG also has a 40% equity investment in a Hampton Inn & Suites in Las Vegas at McCarran Airport, with sliver equity in an under-development Fairfield Inn & Suites by Marriott in Perris, CA, and in a Hampton Inn & Suites in Green River, WY (which it previously managed).
“We were growing like other companies,” said Biggs, noting HMG opened five Hampton Inn & Suites during 2008, ’09 and ’10. “We had to really hit the ground running to keep those properties active and full, and we have. We saw, like many, the industry starting to turn around in the first quarter of ’11.”
HMG picked up a management contract for DoubleTree by Hilton in late 2010 and last year it was “able to really improve,” said Biggs. “We were able to pick up two or three smaller properties where owners were finding themselves in trouble and were not able to continue to survive unless they changed how they were operating. We were able to assist the owners to revitalize their properties with a different approach in management. Some of these hotels were focused-service properties, and in 2011, picking up some smaller properties that really needed some management was the thing that happened most in the growth of our company.”
HMG manages brand product from Hilton Worldwide, IHG, Best Western International and Wyndham Worldwide, and expects to add Marriott International and Choice Hotels International brands as its pipeline opens. HMG will be managing a 69-room Comfort Inn & Suites presently under construction in Lake Point, UT, that is slated to open in May. Additionally, HMG has been working for the receiver of the 124-room Howard Johnson O’Cairns Inn & Suites in Rocklin, CA.
It also manages several independents, including the under-renovation, 63-room Anaheim Express Inn, Maingate, CA; 140-room Camino Inn, Mountain View, CA; 168-room Nellis Suites at Main Gate, Las Vegas, NV; and the 202-room Mission Valley Resort, here in its backyard.
Tactically, HMG started using revenue maximization “very carefully in ’11 and we’re excited to see that it paid off for us,” said Biggs. “We grew most of our hotels in 2011; however, some of the new properties that had only been open a short period of time we continue to ramp up. For example, our Denver Hampton Inn & Suites in Highlands Ranch for the month of March [did]52% better on our RevPAR improvement over last year for the same month. So those are nice numbers we’re looking at now.”
Biggs and his team are no strangers to the impact of downturns. Before co-founding HMG with chairman Jack Giacomini, he headed Biggs Hotel Group. He merged his eponymous company with Giacomini’s Santa Fe Management in the late 1980s, later transitioning the company to HMG in 1996.
In the past HMG handled a portfolio of Residence Inns by Marriott that put it out of its west-of-the-Mississippi zone of concentration and earlier this year, HMG again found itself heading east. Hotel Managers Group has been transitioning a six-story, 236-room Courtyard by Marriott and CoCo Beach Water Park to a full-service Holiday Inn in Fitchburg, MA.
Biggs indicated Marriott would not re-ink an agreement for the brand after the previous management company departed. “We’re in as kind of a shoulder management company until it transitions into a Holiday Inn,” he said, adding the presence of the indoor water park may have caused Marriott to rethink the property, since the feature fits neither Courtyard’s footprint nor brand profile.
Biggs sees no problems having a property “out of the zone” for a short period; however, he does consider it a challenge “for any management company when you have to fly coast to coast regularly. You do, I believe, lose a lot when you’re on a plane all day long trying to get to a property.”
Biggs said the contract would automatically go away once HMG “has achieved the goal we set out to achieve with the current ownership.”
The CEO added HMG would consider other East Coast projects that offered “an interesting contract,” but that the company is not looking to expand to the East as a growth tactic.
Biggs does see company growth coming from a number of different areas, including sliver equity participation in properties and development. HMG’s SVP/Development and Principal Alan Bowles II has been tasked with searching out deals in Oregon and Washington where, said Biggs, “We believe there are some excellent opportunities for HMG.” Texas also is on the company’s radar.
Biggs said the company also has distressed properties under consideration and is talking to a number of clients that are putting together opportunity funds. “We’re helping them to recognize some properties that are out there that they may be able to purchase or go into partnerships with others that already have them. There are a lot of opportunities, we feel, out there for distressed properties to be turned around.”