LOUISVILLE, KY— Just like the hospitality industry itself, Chester Musselman is continuously evolving the company that bears his name since founding it 15 years ago. As president and CEO of Musselman Hotels, based here, Musselman has taken his company from a small ownership and third-party management firm to one focusing on larger, bigger brand name properties. And although the number of properties Musselman both owns and manages will likely stay about the same this year as compared with 2003, the size and quality of them will not, he said. “What we’ve done is we used to focus on smaller, limited-service hotels. But during the past four years, we’ve evolved to do more Courtyards, Hilton Garden Inns and Residences,” Musselman told HOTEL BUSINESS®. Most recently, Musselman, the investor, opened the SpringHill Suites in downtown Lexington, KY in December. The 108-room property is owned by Musselman and his brother but is managed by the company, he said. “The limited-service profile works. We are just evolving toward bigger properties. In this business, it is a lot different to manage a bigger property than a smaller one,” Musselman said. To do this, the company has already started getting out of some of its smaller hotel deals. In February alone, Musselman unloaded four properties in Indiana and Kentucky for $18 million to Encore Enterprise. The quartet of hotels changing hands includes: a Fairfield Inn by Marriott as well as a Townplace Suites by Marriott in Jeffersonville, IN; a Fairfield Inn & Suites by Marriott in Hopkinsville, KY; and another Fairfield Inn by Marriott, this one in Mount Sterling, KY. Meanwhile, the company is ready to break ground within the next 30 days on another property, has two more on the drawing board and another two listed to sell, he said. All said and done, Musselman said he expects to have about 24 properties in the company’s management portfolio at the end of 2004, about even with 2003. Currently, about 12 of the hotels in its portfolio are not directly owned by the company, such as the recent SpringHill Suites, but instead by Musselman himself along with family members, he said. “The strategy for the next few years is to put in newer and bigger properties and take out the smaller ones,” Musselman said. “It’s a balancing act for a company to try and manage a Days Inn and an Embassy Suites. There are two totally different management needs. As we get into bigger properties it’s a challenge to try and manage the smaller ones. My preference is to evolve towards the newer bigger properties.” Musselman’s concentration is in the Tennessee and Kentucky areas— and is looking at one site in Virginia— and although the company will evaluate opportunities in other states, these two regions are its primary focus, he said. Most of the properties, Musselman plans to manage will either be owned by the company or Musselman’s himself along with relatives. “We’ve managed a few select properties for banks, in which we have taken them over and then they have taken them back. We have done six of those deals. But for the most part, we are owners, or partial owners, of the hotels we manage,” he said. However, this is not say Musselman will not take advantage of the opportunity to manage some one else’s property down the road. But to do that, he would have to reorganize his company internal but is not ready to do that right now. “We are focused on development. We create enough challenges for ourselves that we don’t need other people’s challenges. As an owner, I would not want my owner to manage his own hotels, however. If there is a fire at both properties, I am going to go to mine. It is human nature to take care of yours first and management second,” Musselman said.
