Magnolia Hotels Mulling Management Contracts

DENVER— With two properties open and another under construction, fledgling lodging company Magnolia Hotels also may take baby steps in another direction to spur its growth in the industry. According to Doug Cogswell, president/COO, management contracts are a feasible adjunct for the newly renamed company (formerly Steve Holtze Hotels). Right now, the company’s forte is to find tired, usually abandoned, office buildings it can gut and rehab on the inside while maintaining the often-historic exteriors, and reposition them as upscale hotels. While the company continues to scout such properties, Cogswell noted there may be opportunities for management contracts as well, particularly here in Magnolia’s headquarters city. He did stress, however, “we wouldn’t hang the Magnolia flag. We could be a management company and actually manage a property for some private entity or a group of individuals.” The company seems to be keeping its distribution options open as it builds its way toward brand awareness. Part of that growth was settling on a name for its collection of “boutique business” hotels. For five years the operation was known as as Stevens Holtze Corp., and several months this year as Steve Holtze Hotels. Recently, chairman Steven Holtze decided on a different tact. “The plan had been to create a bunch of boutique hotels all over the country, each one with an individual name. I decided it would be stronger for us to have a brand with one name tying us together,” he said. The name derives from the 30-story Magnolia Building in downtown Dallas, know for its roof-top red Pegasus. The former original headquarters of Mobil Oil (once Magnolia Oil) is now home to Holtze’s second hotel, the 330-room Magnolia Dallas which opened in 1999. Its first hotel, opened in 1995, was the 250-room Magnolia Hotel Denver, where the company has its headquarters. It’s third project is under way in Houston, TX. There, a 314-room hotel is being created from a 22-story, 85-year-old building, occupied for years by Shell Oil. The $51 million project also will have an adjacent $5 million parking garage, which is owned currently by Magnolia’s private equity partner. Cogswell expects to have about six hotels online in five years and Holtze is open to the idea of someone calling to say “let’s do a hotel somewhere.” For example, in California he’s looked at downtown Los Angeles and Manhattan Beach, and Pittsburgh in the East. Others sites, said Cogswell, are Chattanooga, TN, and West Palm Springs, FL. Still, the idea of doing third-party management remains appealing. “We’ve got a corporate office that could facilitate all of the services that are required to support a management contract. In my mind, it’s very possible,” said Cogswell, an industry veteran (The Broadmoor, Westin Hotels, Vail Resorts) brought on board in June to help shape the company. He added the idea was presented to Magnolia’s executive committee several weeks ago. “I discussed it, and didn’t feel anyone felt it wasn’t possible at all.” What would make the management piece “go,” would depend on “if it’s a perfect— and there’s no such thing— an ideal relationship. If it has sort of the same needs and [we]could fulfill those needs, then why not partner?” said Cogswell, adding “But our core business is really to run Magnolias.”