Alliance looks to conversions, Caribbean acquisitions

RALEIGH, North Carolina—Alliance Hospitality is working to expand its footprint in 2016 by negotiating with outside investors to collaborate on brand conversion projects in U.S. secondary markets and uncover acquisition, reposition and value-add opportunities in the Caribbean and Central America.

EJ Schanfarber, president and CEO of Alliance Hospitality, said the company is “putting a lot of effort” into converting hotels to the new-to-the-U.S. Delta Hotels and Resorts by Marriott brand. The company is currently in the process of converting the Wyndham Glenview Suites Chicago North in Glenview, Illinois, into a Delta hotel, and anticipates the hotel will open as a Delta in fall 2016.

“Our (growth) strategy is kind of two-fold this year,” Schanfarber said. “We’re putting a lot of effort into conversion opportunities with Marriott, primarily in United States secondary markets where values are strong for conversion opportunities.”

Rolf Tweeten, chairman at Alliance Hospitality, said the company also is focusing on converting properties to the DoubleTree by Hilton brand.

In 2015, Alliance expanded its geographic footprint from coast to coast with the addition of the Holiday Inn San Jose—Silicon Valley in San Jose, California, to the company’s management portfolio. Tweeten said the company also is developing two properties from the ground up: one in suburban Chicago and one in Richmond, Virginia.

Expansion in the Caribbean, Central America
Converting hotels to Delta and DoubleTree brands is Alliance’s main priority, but Schanfarber said the company also is interested in opportunities in the Caribbean and Central America.

“The region has finally bounced back—or has begun to bounce back—from 2010 to 2011, and there are great opportunities for acquisition and repositioning of large multiscale assets that we are working with a number of partners on.”

Schanfarber said he’s spent approximately 10 years developing and operating resorts in the Caribbean.

“My experience is really developing properties—both destination and timeshare properties—and so we’ve aligned ourselves with really a number of different types of partners that have an interest in either acquiring assets in the Caribbean or are really more interesting in value-add, repositioning opportunities throughout the Caribbean,” he said.

Schanfarber said he included Central America in the mix of Alliance’s places of interest for acquisitions and repositions because opportunities in that market are starting to heat up.

“Costa Rica and those areas have really come back in a strong way, with a number of distressed assets that were in the hands of the lenders for a number of years that were near foreclosure or were halfway finished,” he said. “The lenders stepped back in and took them over, and those opportunities are now heating the market.”

Working with outside investors
Schanfarber said Alliance has expanded its pool of investor partners who have similar growth goals both via acquisitions in the Caribbean and Central America and conversion projects in the U.S.

“One of the capital groups that we’re working with is actually a new group (to the hotel space,)” he said. “They have been primarily in the office space nationally, and they’re trying to find a way to balance their portfolio to ride out the economic cycles. … They’re hoping that they can establish a presence (in the hotel space) really coast to coast to help balance their portfolio of office buildings.

“Oftentimes we see where a market softens a little bit in office space (is where) hotel demand goes the other way, and so they’re looking at Alliance as a resource and a partner. … We’re working with them primarily on value-add opportunities to reposition as a Delta or a DoubleTree, mostly in secondary markets where the values are particularly strong right now.”