By: Dennis Nessler
Hotel Interactive®, Inc.
While many hospitality companies point to the advantages of size and scale, Alliance Hospitality executives are quick to tout the benefits of a smaller portfolio and a hands-on approach to hotel management where the company can fully leverage its vast experience.
The Raleigh, NC-based management firm currently has 8 properties in its portfolio of full-service and select-service hotels and an executive team of five which brings more than 180 years of high-level multi-unit experience to the table.
Roger Miller–who joined the company last May as vp, operations, revenues and business development–acknowledged the atypical approach. “We’re going in the opposite direction of most management companies. We’re focusing on doing quality of work versus quantity of work. So while the majority of the industry is concerned about adding hotels to their portfolio every week, we’re concerned with keeping our portfolio capped at 15 and really doing quality work for all the owners, brands and everybody that we represent,” he noted.
Rolf Tweeten, president/CEO, also underscored the experience factor. “I think the biggest thing is we’re owner/operators so we understand the challenges that the owners go through. That’s probably how we sell most of our contracts, because we’ve been through a lot,” he noted.
Alliance was founded in 2003 to manage assets for institutional investment groups, individual owners and lenders. Tweeten noted the company has an ownership interest in two of its properties while the rest are third-party managed. Alliance did have a considerably larger collection of hotels prior to the sale of a large portfolio of properties to Interstate but Tweeten acknowledged the company is intent on keeping the number of hotels to 15 or fewer going forward.
Nevertheless, he pointed out he’s always on the lookout for a good deal. “In general I’ve always been opportunistic. If I see a good acquisition, repositioning or ground-up development that’s what I seek out,” he said.
Miller, meanwhile, touted the team’s hands-on experience with the properties the company currently operates as a key point of differentiation.
“It’s important for us that we are on the properties once every four to six weeks. We’re doing our audits. We physically get on the property and we meet with the general manager, director of sales and we meet with each department head. We feel that with every department head–regardless of whether it’s the front desk, housekeeping or maintenance–it’s important to be be part of their management team and support them. Very few management companies will go in and talk to anybody but the general manager and I’m shocked at that,” he said.
Miller further added, “The difference between us and everyone else is we work for the hotel, the hotel does not work for us.”
Tweeten reinforced the experience factor as one key point of differentiation. “It’s communication and I think using our knowledge to improve the operating performance of the hotel. For example, if we see property taxes going too high we’ll dig in, do what we can, suggest or retain a consultant to assist in fighting taxes because they keep going up or we’ll suggest buying energy wholesale. Other companies wouldn’t look into that kind of detail. Like many owner/operators I’ve had cash flow challenges and you’ve got to figure out where you can get cash flow,” he commented, later adding, “you’ve got to let them [owners] know what to expect.”
Miller also touted the importance of communication, as well as experience, pointing out that he and Tweeten have together worked with anywhere from 75 to 100 owners.
“You’ve kind of gone through a lot of the communication issues and you know the hot buttons. Before we get into a deal we always talk to that owner or ownership group and we try to find out what’s important to them. We do a question and answer period which is all about the owner. If you know what the owner is in business for and you know what he needs and what he is expecting from you then you do a much better job as a management company and supplying them the services that they need. So the experience here is everything,” he said.
Miller elaborated on the point when it comes to management agreements as the company eschews the one-size-fits-all approach.
“We do not focus on a cookie-cutter management contracts. We look at each management contract situation and we evaluate the product, evaluate the brand, and we evaluate each owners’ financial position. We try to build a management agreement that’s good for them and good for us,” he commented.
Within the Alliance portfolio, Tweeten called attention to a couple of unique properties which continue to stand out from a performance standpoint. As an example, the Hampton Inn Indianapolis Downtown was a conversion of a historic office building. “That hotel continues to be very successful,” he said.
Tweeten added that the company redeveloped the DoubleTree by Hilton Dallas Market Center and now manages the hotel. “There’s a lot of new supply in the Dallas market, but we continue to outperform our competitive set strategically,” he said..
While acknowledging that overall hotel performance has leveled off industry-wide, Tweeten said he expects revenue growth for the entire portfolio to be in the range of 3 percent for 2019.
Miller weighed in on overall market conditions. “I think going forward for the next two or three years you’re going to have to be really good at share shift. The last five to seven years the business has been brisk in most top 25 markets; people have not had to have been as aggressive as they were in previous decades. I think that moving forward you’re going to have to be with a company that really knows how to work with sales departments and revenue management on share shifting business, more like in the ‘90s. We’re focusing really heavily on that aspect of the business, not just sitting back and letting the economy continue to push us along,” he stated.