DOTHAN, AL—In the news lately for developing and opening the first Home2 Suites by Hilton, LBA Hospitality concurrently has been busy with several other projects as it continues to expand its portfolio of 65 third-party-managed hotels.
However, describing 2010 as “a down year,” president Barry Kraselsky said the biggest challenge for the company was trying to manage ADR. “Overall our rate was down about 5 percent from the previous year, probably closer to 6 percent. But we actually ended the year slightly up in occupancy.”
Building rate is the priority for LBA this year. “We are making headway. It’s more from trying to manage the type of business in the hotels. We have some group business, but we’re more transient properties. We’re trying to manage our restrictions better, particularly when it comes to opening discounts. We’re really holding the line more…we’re revenue managing closer to the arrival date than we have in the past. We also have some higher benchmark rates that we’re trying to achieve…we’re being firmer on rate even if it costs us a little bit of occupancy.”
Kraselsky said LBA has put an emphasis on its sales and revenue management teams to help advance the company this year, making sure they are “going after the right business at the right price.”
LBA has been proactive in these areas over the past several years to offset the downturn, adding a vp/sales, more sales staff at the property level and more support staff at the corporate level.
“We made a conscious decision to become a better sales organization,” said Kraselsky.
The executive feels the organization has a good handle on understanding owners’ needs. Up until 2007, the company owned and managed properties then sold its portfolio to Apple Real Estate Investment Trust Cos. and by default began to do third-party management.
“Like a lot of companies we saw the opportunities to sell assets and really take advantage of the cycle we were in,” said Kraselsky, noting LBA manages the assets it sold and other properties for Apple REIT, as well as several other owners.
“We develop our hotels like we’re going to own them, we operate our hotels like we own them, we don’t make decisions based on anything other than what’s best for the property,” said Kraselsky.
Last year, LBA added some eight contracts to its portfolio, half of which it developed and sold to Apple REIT.
The company will continue to “selectively add contracts,” said Kraselsky, noting most of the new management contracts will stem from LBA’s development opportunities.
The executive stressed there needs to be a values match between LBA and an owner. “In a lot of cases, we interview the companies more than they interview us. We have to have the same commitment from the new groups that we do from the groups that we manage for now. We’re really not looking for one-off management opportunities. We really would rather manage several hotels with one owner,” said Kraselsky.
Premium brands
LBA Hospitality has a concentration of Hilton Worldwide and Marriott International select-service brands, including Hampton, Hilton Garden Inn, Homewood Suites, Home2 Suites, Courtyard by Marriott, Fairfield Inn, Fairfield Inn & Suites, SpringHill Suites TownePlace Suites, and Residence Inn.
It also had an IHG Holiday Inn, a property owned here since 1972 by Larry Blumberg, founder, president and CEO of Larry Blumberg & Associates, aka LBA. The exterior-corridor hotel was reflagged to a Choice Hotels’ Clarion on Jan. 1 instead of undergoing the renovations necessary to fulfil the Holiday Inn brand relaunch.
Kraselsky said Blumberg remains “the visionary for the company” and is involved in all major decisions.
While LBA has been touted for its role in bringing Hilton’s extended-stay Home2 Suites out of the ground, Kraselsky was not looking to do other so-called emerging brands; however, he might consider “a small, full-service hotel if the right opportunity presented itself, either from Marriott or Hilton.”
Right now, LBA is working with River Ranch Development to bring a SpringHill Suites out of the ground in River Ranch, LA, with the 103-suite property slated to open in June. “We’re really excited about that area,” said Kraselsky.
LBA also is developing a TownePlace Suites near Nashville, TN, and a Fairfield Inn & Suites in Tallahassee, FL, both of which it expects to sell to Apple REIT by year’s end.
LBA’s properties are located in Florida, Alabama, Georgia, Kentucky Louisiana, Mississippi, North Carolina, South Carolina and Tennessee, and there are plans to move outside the Southeast.
“For us to really have the kind of growth that I think we can have over the next five years, we’re obviously going to have to expand our footprint,” said Kraselsky, who, at press time, was in Houston, TX, getting a piece of land under contract for its first property in the state: a 124-room Courtyard by Marriott in Nassau Bay near the NASA space agency.
Kraselsky added LBA Hospitality is looking to shift the type of markets it’s been developing in as well, opting now for more high-profile, high-barrier-to-entry locations in primary and suburban areas of first- and second-tier cities as opposed to the tertiary markets it historically has chosen.
LBA also is looking at some South Florida and Virginia opportunities, he said.
Kraselsky indicated there’s not a fixed number LBA is looking to get to in terms of portfolio growth. “It’s more the kind of growth that we’re going to have. We’ve got great opportunity, we’ve got great people in the company, we’ve got a platform that has proven itself, so I think the opportunity can be unbelievable for us. We can be a company of 100 hotels easier than we became a company of 50 or 65 properties. But it’s got to be the right property and it’s got to be small and controlled growth. I don’t want to see our company grow any larger than it should.”