White Lodging Services Builds On ‘Smart-Growth’ Strategy

MERRILLVILLE, IN— Forget the adage that bemoans “the road not taken.” At White Lodging Services Corp. here, the daily mantra involves “the hotel not built or managed.” As pointed out by Deno Yiankes, executive vp/development & asset management for White Lodging Services (WLS), “We work hard to restrict ourselves to only those opportunities where we can truly add value as an organization.” As such, he claimed the company “continues to pass on approximately 50 deals for every one [it]actually pursues.” This orientation toward selectivity has seemingly not impeded the organization’s growth, especially of late. At this time, the firm operates 69 hotels totaling 8,458 units, opening 10 of those properties over the course of the past 12 months. Moreover, Yiankes contended that— factoring in the “definites” in the WLS pipeline— the firm’s portfolio total at year’s end 2001 is expected to stand at 73 hotels comprising 9,055 units. Looking further down the road, at year’s end 2002 those numbers should amount to 83 hotels encompassing 10,468 units. Additionally, this expansion shapes up as more than just an effective check on reckless spending and runaway development. The 16-year-old firm’s modus operandi neatly fits the vision Chairman/CEO Bruce White has for WLS— that of becoming “the most desired and valued management company of leading-brand limited- and full-service hotels in [the country].” To this end, the company has apparently not been reticent about backing its value-opportunity opinions with its own money… even in a commercial climate that many feel has decidedly turned against property-ownership and toward fee- and contract-based revenue streams. A privately held organization, WLS-related principles maintain ownership in approximately 85% of the organization’s managed portfolio, with the other 15% reportedly consisting of third-party fee-management). “While the bulk of our current growth continues to be on the new-construction side,” Yiankes explained, “we did acquire a full-service hotel in the third quarter of 2000, and are constantly evaluating additional acquisition candidates on an on-going basis.” As for where those additional new-builds and/or acquisitions might enter the WLS system, Yiankes noted that the firm “currently operates in nine states [IN, MI, IL, KY, TN, TX, CO, UT, and FL], and our current and future growth continues to be focused within these areas where we already have a physical presence established. This allows us to leverage not only our knowledge of the sub-markets in which we operate, but the relationship with key demand-generators as well.” In terms of types of properties earmarked to be added to the WLS ranks, Marriott-flagged sites look like they would constitute a solid bet. According to Yiankes, “Our current portfolio consists of approximately 10% full-service and 90% upper-tier select-service and extended-stay [hotels], with the 90% number dominated by Marriott-affiliated facilities [22 Courtyards, 13 Fairfield Inns, 20 Residence Inns, and two Springhill Suites].” But despite the “sameness” one might come to expect with a single flag so dominant across a national hotel portfolio, a sense of uniqueness similarly permeates the WLS family of lodging properties. “I am not sure what separates us from the pack,” Yiankes said, but he suggested that “probably the single largest factor for our success to date has been our internal culture.” As he described it, that culture “constantly recognizes and promotes the fact that true value-creation does not take place in the corporate office. Rather, [it happens]at the property level, with our associates and managers.” Finally, in line with how this deeply ingrained corporate culture and expansion strategy meshes with today’s (and tomorrow’s) business/industry realities, Yiankes offered that “our growth will continue to be opportunity- and economics-driven on a deal-by-deal basis. From an underwriting perspective, we have always treated each