PLANO, TX—Michael Mueller, founder, president and CEO of boutique brand NYLO, has sold his interest in the company and stepped down from the post he has held for a decade.
The executive is now heading Archtower Capital, LLC, a boutique real estate investment and advisory firm he founded prior to NYLO that he has reactivated. The firm, based here, specializes in the hospitality industry and was the seed investor in NYLO hotels.
Mueller acknowledged turning away from NYLO was not the easiest thing to do.
“Anytime you have something for 10 years, it’s difficult to walk away from it,” he said. However, he added, “The intent was always to build it and recapitalize it. Obviously, the recession happened and it took a lot longer… I would have liked to recapitalize it and continue with the company, but that didn’t happen.”
Mueller confirmed the below-the-radar deal closed in December but would not disclose the buyer or acquisition cost of his interest in the company.
Mueller characterized NYLO as “a very good idea, a great business plan and a great hotel concept that, if it weren’t for the recession, would have been hugely successful. Our timing was not good. The recession really hurt us. We only had one hotel open when the world fell apart.”
That said, the brand kept striving to grow. It currently has hotels open in New York City; Irving/Las Colinas, TX; Dallas; Plano/Legacy, TX; and Providence, RI. Another NYLO is slated to open this June in a four-story, former factory in Nyack, NY.
“I think that’s just testimony for it. It’s a good product and people like it,” said Mueller, noting the portfolio has a RevPAR penetration of 110%. “It’s a nice little brand of six hotels today, and I’m hoping somebody will see the business plan through and grow it to dozens, if not hundreds, of units in the future.”
As for his own future, Mueller is looking for hotel investment opportunities and is again noodling around hotel and restaurant concepts.
“I am actively working on some new concepts myself that I’m initiating and developing, as well as looking to partner with others who are working on new concepts. So, we will be a seed investor for new concepts in hospitality,” said Mueller. He added the projects in focus right now are full-service hotels with an F&B component, either from third-party operators or something Archtower creates. Mueller said the company also would look to create and grow F&B concepts that could be standalones outside the hotel environment.
At press time, the entrepreneurial executive was at various stages of wrangling three to four real estate deals, as well as negotiating entitlements and financial incentives with cities and other interested parties in some cases, he said, but added, “I’m not at the state where I can disclose anything.”
Mueller said he might use some of the concept brands he’s developing for the properties.
“The people I’m dealing with now are owners of hotels and developers, people who own real estate and are looking to develop a hotel at least as a component of a project, if not the project. I’m also working with some management companies about properties they’re operating to see if they’re suitable for conversion. That’s the universe of people I’m looking to attract and work with right now,” said Mueller.
While the recession may have derailed speedy growth for his NYLO venture, Mueller sees strong opportunity within the current robust lodging landscape, particularly regarding new concepts.
“It seems, just in the last couple of months, several new concepts have been announced, and that’s something I’ve expected for a long time. Ten years ago when we started NYLO, that’s what we expected to happen and that’s why we started NYLO,” said Mueller, recalling a period when dozens of brands—some conceived only on cocktail napkins—were launched in the industry. He indicated the continued emergence of new brand concepts looking to meet the ever-changing needs of consumers—as well as developers—remains a positive; however, he felt “there’s still huge gaps in the product that’s being offered versus what people are looking for. There’s still a lot of old, tired properties and brands out there that aren’t being invested in and refreshed the way they should be to attract and keep their clients. So, I think there’s a lot of need and a lot of gaps in the marketplace.”
In advancing his new concepts, Mueller said they could come from conversions or new-builds, although he didn’t think it made sense at this point to do a strictly new-build prototype business plan. “Construction financing is still very difficult outside of certain markets… I think it would be wise for any concept to be adaptable to either new-build or conversions. That’s what I’m interested in. The goal for me would be to do something that can work and develop and grow, regardless of whether there’s financing and equity available for new-builds,” he said.
While he felt there’s “a bigger opportunity with conversion,” he acknowledged there are markets that could really benefit from new development, so he intends to remain flexible with his concepts.
“To make a hotel concept brand that you can build new or convert means, by its nature, that it’s not going to have a readily identifiable physical appearance. It’ll have buildings of different sizes and shapes and materials so, from an owner’s perspective, that’s a good thing because it gives you flexibility to adapt in the future, to change brands in the future as opposed to having something that’s so distinctive looking that it really can’t convert to any other brand and would limit the value of that real estate potentially in the future.”