Interstate Hotels Shows Early Foot As A Smooth Operator

WASHINGTON, DC— Now that the dust has settled from the groundwork involved in bringing together MeriStar Hotels and Resorts here and Pittsburgh, PA-based Interstate Hotels Corp., the immediate challenge facing newly formed Interstate Hotels and Resorts, its officers and executives is to “stay focused and run the business” the way it deserves to be run. As noted by newly anointed Chairman/CEO Paul Whetsell, the merger of the two mega-sized companies makes for “a terrific combination. Essentially bringing us the size and scale we have long been seeking, this move is an accretive one to our (MeriStar) shareholders, and similarly unlocks value for Interstate.” Furthermore, with $8 million to $10 million worth of synergies on tap, Whetsell suggested the economic as well as operational future for Interstate Hotels and Resorts looks bright indeed. “Not only has this proven to be an extremely smooth transition,” he said, “but it’s equally important to keep in mind this [hotel management]is a core business for us.” Not only has the newly formed firm upped the overall property and room count under its aegis (specifically, more than 400 lodging properties encompassing some 85,000 rooms worldwide), it has also inexorably upped the ante for others bent on competing in this particular end of the lodging marketplace. As the largest operator in the industry, Interstate Hotels and Resorts has, according to Whetsell, the cumulative clout to “compete for— and/or provide— virtually any service necessary” for the successful operation of a hotel. “Hotel owners will find we’re a very real alternative to brand management,” the new Interstate chieftain intoned. “But that certainly doesn’t mean we’re in any way adversaries [to the major flags in the industry]. We have always worked well and partnered with the major brands, and I don’t see any reason why this relationship can’t and/or shouldn’t continue. After all, we are the largest single franchisee of most major hotel brands today.” Under its new corporate set-up, Interstate Hotels and Resorts consists of four basic divisions: Luxury and Independent Hotels, with about 60 properties in its fold; Upscale Branded Hotels, comprising roughly 120 properties; Crossroads, with some 170 (basically) limited-service facilities; and Bridgestreet Corporate Housing Worldwide, a subsidiary as well as one of the firm’s primary operating divisions. Separate and distinct from the aforementioned divisions is Flagstone Hospitality Management, a 55-property subsidiary of MeriStar Hotels and Resorts that is to be operated independently. Other parts of the company’s overall operations also include MeriStar-launched Net Effect Alliance and Continental Design Services. As Whetsell explained, despite the enormity of its current overall portfolio, growth will still be the order of the day in the months and years to come as the company looks forward to double-digit expansion for the foreseeable future. “But rather than looking at something along the lines of perhaps doubling our numbers, our game plan is to grow selectively, particularly in the Central Business Districts [CBDs] of primary and— to a lesser extent— secondary cities. Additionally, growing the company’s presence overseas— particularly in Europe— is also very much on the firm’s drawing board. “What we’re aiming for,” Whetsell explained, “is a solid and predictable income stream from quality hotels. Basically, this translates into making sure we have the right properties in the right markets, even if it takes some capital investment on our part,” he said. On the other hand, sheer size and scope is no guarantee of success in the hotel-operations arena, though Whetsell maintained “most property owners recognize the benefit of working with a strong hotel operator.” However, he added: “There is no such thing as an ‘automatic cure’ to successfully operate any hotel. But I’m extremely comfortable our organization is well-positioned to do a better job [when it com