Major Business Expansion In The Cards For Paramount Hotel Group

PHOENIX, AZ— Business growth may be as easy as one, two, three for Fairfield, NJ-based Paramount Hotel Group. As Paramount CEO David Simon explained to HOTEL BUSINESS® at the Eighth Annual Lodging Conference here, the three-year old company has “one” major objective in mind, and that’s to continue to expand the depth and scope of the firm’s business without incurring any financial or operational missteps. As for the goal of that expansion, Simon said it would be reasonable to expect the company to grow to some “two” times its current business levels and, to do so, he outlined “three” primary avenues to achieve that growth. Simply put, Paramount’s multi-pronged strategy to achieve its growth goals include: obtaining third-party contracts; co-investing with other partners to acquire and develop properties; and providing construction-management services for new hotels as well as renovations. On the first point— that of third-party management contracts— Simon reported the firm would be “knocking on the doors of financial institutions, lenders, private investors, and even franchise companies” as Paramount goes forward to herald its availability and commitment to “work with owners” in line with what they want to do with their properties. Continuing with the matter of co-investing, Simon maintained the company certainly relishes the idea of having an ownership stake in the property at hand… in certain situations. “Understand our sliver-equity investment is not just a ploy to win the management contract. We truly believe sharing the risks [and rewards]goes a long way toward aligning the interests of owner and manager alike,” he said. On this note, Simon explained the company is not necessarily looking for the quintessential turnaround opportunity. However likely, he claimed ownership-investment targets would be (primarily) suburban limited- and/or full-service locations of between 100 – 300 rooms. As such, the common thread meriting Paramount investment would be some real “upside potential,” he added. As for construction/renovation management, Simon maintained his firm has the experience and expertise to do more than just act as a go-between to hire the general contractor. “In this day and age, it’s never been more important to know how to speak [the contractor’s]language, and that’s [an area in which]we’ve proven ourselves— as more than $40 million in renovation/construction management over the course of the past 18 – 24 months would attest.” Accordingly, with “good to excellent business prospects, strong positioning in terms of its finances and management line-up, and the successful integration of its previous acquisitions,” Simon suggested the way is clear indeed for the company to pursue its growth objectives. “A reasonable goal at this time might be a portfolio of some 50 hotels; a number we’re already well-positioned to handle.” Finally, while Simon emphasized the aforementioned arenas would constitute his organization’s carefully and strategically plotted expansion path, it was similarly interesting that he would not definitely rule out other major acquisitions by the company down the road. On the other hand, don’t look for Paramount to end up in anyone else’s camp anytime soon, he said, noting he— and his partners— like being privately held… and plan to stay that way for the long term.