a patio with black iron tables and chairs

Hunter round-up: Charlestowne Hotels

In this week’s Hunter Hotel Conference recap, Kyle Hughey and Michael Cady discuss how the company’s unique, full suite of management services have supported strategic portfolio growth in the lifestyle independent

Hotel Bethlehem in Bethlehem, Pa.
Charlestowne Hotels has more than 50 hotels and nearly that number of restaurants and bars in its portfolio, including the Hotel Bethlehem in Bethlehem, Pa. (Charlestowne Hotels)

Despite the lingering effects of the pandemic, hotel companies are continuing to expand their portfolios and operations. At the recent Hunter Hotel Investment Conference, a number of hotels shared where they are now and where they hope to be in the future. Here’s what executives from Charlestowne Hotels, HP Hotels and stayAPT Suites shared about their companies.

Charlestowne Hotels

Lifestyle independent hotels and F&B outlets are Charlestowne Hotels’ focus, and the company recorded 20 percent growth in size during 2021. It now has more than 50 hotels and nearly that number of restaurants and bars in its portfolio. But growth just for the sake of growth is not on Charlestowne’s agenda—the company is very measured about adding numbers.

“Essentially, we’re managing 50-plus different individual brands, then [add in] the 45 [F&B] outlets. It’s like 90 different brands,” said Michael Cady, chief marketing officer. “There’s no template—and that’s not feasible at a certain number—so we don’t want to be a huge, enormous company. That kind of goes against our values and our principles.”

The growth led to the company adding 18 corporate employees last year, which Cady said was necessary to continue to offer the owners and hotels the appropriate level of service.

“We do all the technical services—accounting, revenue management, marketing and creative design,” he said. “We have a whole internal design agency that does all the creative and marketing for the hotels because we found that so many people just third-party that out. If you’re an independent hotel company like us, you need those people to understand those independent brands. It’s been a real differentiator for us.”

Kyle Hughey, Charlestowne’s CEO, agreed that the company’s strategy works for its independent properties.

“We feel like there’s a trend where a management company becomes a brand and they pull all their portfolio under one ‘brand,” he said. “We like our properties to stand alone. It’s a lot more work; they’re all highly curated. But our owners appreciate that.”

The independent space has gotten easier to work in during the past decade, according to Hughey, which helps the entire process.

“Ten years ago, finance and capital raise for an independent was hard,” he said. “You kind of had to go in with that raise already done. There wasn’t a traditional lending market for it. Now that’s changed. Sometimes part of our service to our clients is being part of their bank pitch or even their investor pitch because they see that we’ve done some good things with our independents and they trust our company.”

HP Hotels

The first part of 2022 has been a bit of a roller coaster for the industry, but it’s really beginning to stabilize, according to Ed Robison, HP Hotels’ SVP of owner relations and development

“We’re starting to see a lot more consistency in our business. Business travel is slowly picking up,” he said. “Corporations are bringing employees back in; people are dying to get face to face. Second quarter [and] third quarter are going to be very strong. First quarter is going to be a blip on the radar for 2022. But I think, all in all, we’re going to have a good year.”

While occupancy isn’t where it was before the pandemic, rates are better than they were—so there’s a balance, Robison said.

CEO Kerry Ranson said he expects a huge spring break period in terms of travel with this summer experiencing even higher travel numbers than last year’s better-than-predicted performance.

HP is celebrating its 20th anniversary this year, which Ranson said is a big deal for the company and could herald a change in structure.

“I’d like to see us try and pick up between five to 10 additional assets this year, in the right places and with the right partnership groups,” Ranson said, noting equity groups in particular. “If an opportunity would present itself for us to be able to align ourselves with an owner/operator that’s looking to focus more on development and give up the operational components and we can combine efforts and partner up that way, I think we have some opportunity with that as well. But it’s going to have to be the right kind of partner that we align with in culture and we align in where we’re heading.

“I’m going to give up ownership to join efforts, then I’d like to see us also being fed opportunities from that side. And that’s the right kind of alignment.”

stayAPT Suites

The stayAPT Suites offering launched at an inauspicious time—January 2020—but it has made the most of the time since then, with 20 hotels slated to be open by the end of this year. Gary DeLapp, the company’s president and CEO, expects 49 properties to be open by the end of 2023.

“It’s been going better than people expected,” DeLapp said. “We’ve been fortunate to really build a lot of hotels in the middle of the pandemic. Obviously, it’s been challenging, but we’ve been successful with it and had successful results after the doors open.”

The biggest challenges have been seen at the construction end of the business, he said.

“Everything from logistics, supply chains, labor costs, [subcontractors] cost—one day you get one cost and a week later [that] may change,” he said. “It’s all that uncertainty. Let’s say you can’t get certain light fixture or you can’t get a dishwasher. The replacement is never equal to what you were going to get and it’s not like 5 percent more, it’s 25, 30, 40 percent more.”

The all new-construction brand is designed to fit in large, medium and tertiary markets, ranging in size from 59 to 89 units. The average length of stay is 29 nights. The plan is to remain all-new construction, despite the roadblocks that presents.

“When you launch a new brand, having a consistent product and the consumer expectation of the experience—you don’t get that when you have conversions,” DeLapp said. “I’m not saying conversions don’t work. For [many] places it does. It’s been proven, but from a new-brand perspective, having the purity of a new brand and construction and operating everything the same, the guest feels comfortable and they know what their expectations are when they get there. From that standpoint, it’s very critical to keep only all-new construction.”

DeLapp has a wealth of experience, previously serving as president and CEO at both WoodSpring Hotels and Extended Stay America, among other industry roles. But he attributes stayAPT’s success to more than himself.

“The team I have is a very experienced extended-stay team and in all different functional areas … it can’t be a one-man band,” he said. “It’s got to be the team and everybody having experience in extended-stay has really been helpful to understand how to build these and then No. 2, how to operate and market this business.”

VIEW FULL ARTICLE HERE