In a time where success in the hotel industry seems measured by a company’s international footprint, its profitability from franchise operations and its rapid acquisition of new assets, smaller-scale companies can get overlooked. But, often it’s these smaller companies that have the ability to be flexible and nimble where the giants can’t, retaining control over all aspects of the business, resulting in both positive financials and positive guest satisfaction.
Just ask Vijay Dandapani, president of Apple Core Hotels. He’s worked with the international franchising companies, and after more than 30 years in the hotel business, he is much more comfortable heading a small company, largely because of the control it affords over every aspect of the business.
For Dandapani and Apple Core Hotels, it’s all about that laser focus on strong, local operations. The company owns and operates five hotels in Manhattan, all within several miles of each other. Apple Core Hotels has its own call center, located in its Manhattan headquarters. It has its own booking engine. Two hotels in its portfolio are branded—La Quinta Inn and Suites Manhattan and Ramada New York/Eastside—but Dandapani is the first to tell you his goal is to move those properties from branded to independent, like he has with the company’s other three hotels: The Hotel @Times Square, New York Manhattan Hotel (nyma) and Broadway @Times Square. And yes, he loves Harlem and Brooklyn, but he has no short-term plans to expand the company’s portfolio outside of Manhattan.
Sounds pretty limiting? Not at all, according to Dandapani. On the contrary, he is all about innovation and quick change—two traits he said are absolutely necessary in the city that never sleeps.
Dandapani’s New York story started in the early 1990s. He and partner Steve Klein (who is now CEO of Apple Core Holdings, which was founded a decade ago and serves as the parent company of Apple Core Hotels) started the hotel business in 1993 with two hotels. Dandapani had started his career in his native India, where he worked for Oberoi Hotels before coming to Cornell University for his master’s degree in hotel management. Prior to Apple Core Hotels, he was VP of operations for a New York-based owner and operator of six hotels. He also served as VP of Polystar Corp., a North Carolina-based hotel owner involved with brands from Hilton Hotels, IHG and Wyndham Hotel Group. Before that, he was operations analyst for Grand Champions Resorts Corp., in Palm Springs, Calif.
His career in the New York City hotel industry mirrored the growth of hotel franchising at the time.
“We started here in the city with only brands,” he said. “This was the pre-Internet era and at the time, brands paid off quite well. We worked with small brands and it was friendly—it was a good run for about six years, we got the additional rate the brands promised, and then the brands woke up and realized they could really increase what they charged.”
So Dandapani made the risky choice to preserve the company’s profit and drop most of its brand affiliations.
But he was adamant that the move wouldn’t be just about money. He committed to keeping the hotels well-maintained and design-forward, on a consistent renovation schedule, and top on the radar of their guests.
It was good timing. As Apple Core Hotels was changing its strategy, Manhattan was cleaning up its image and neighborhoods, and tourism was taking off.
“Location is everything in this city,” he said. “I was here in 1989 when nobody wanted to be in Times Square, and then suddenly that started to change. We were in the Giuliani era [starting in the mid-1990s] and now Times Square was becoming a destination.”
KEEPING IT LOCAL
To thrive in Manhattan without brand recognition, Dandapani had to make his properties stand out. A big part of that strategy—as it is today at Apple Core Hotels—was to make the product outstanding.
“We’ve been at the forefront of a lot of things in the select-service sphere through the years, going back even to the early 1990s when it wasn’t economical to include fitness centers and free breakfast,” he said. “Now we do gut-job renovations every four or five years—you would think it was a new hotel, with new carpets, new wallpaper, furniture, TVs and everything.”
On this front in particular, Dandapani said he doesn’t miss affiliating with brands at all. “In anticipation of going brand-free, we did make our standards much higher than normal brand standards,” he said. “At one point, I had a brand manager tell me my bedspreads were too high-quality and he wanted me to change out to lower quality. No way.”
That local control extends to the company’s internal operations as well. Apple Core Hotels’ midtown Manhattan headquarters houses its own 24-hour call center, which Dandapani said “is a money center for us, even in this Internet age.”
“We realized in the city that many hotels forwarded their reservations calls to the front desk in the evenings and it wasn’t working; they were losing out on business and customer attention,” he said.
The added benefit, Dandapani said, is the business generated by the company’s own brand dot-com site, which hovers around 20 percent of contribution. “There’s no cost to it,” he said. “We have our own booking engine. Most small companies don’t, and so they pay a pretty penny and they lose control. We can modify our booking engine when we want, and it’s proven to be a good formula for success in terms of profitability.”
The company also leases out all of its F&B operations, which includes a locally popular rooftop bar at the La Quinta Manhattan. He’s adding two more rooftop bars, at nyma and The Hotel @Times Square, to appeal to the neighborhood regulars. “I’m not compromising our select-service model in the least bit,” he said.
While Dandapani admitted with a laugh that “our capital stack would be laughed at by most of the big guys,” he said the company “always has our head above water” and is always looking for opportunities. The company purchased its current portfolio between 1993 and 1999 and has maintained it since then.
“I really think, again and again, that it’s Manhattan that is able to weather the storm more than any other place,” he said.
Dandapani pays the same attention to marketing as he does to product, location and operations. “The Internet is the greatest thing that has happened in the last 10 years,” he said. “For a little guy like us, we can get our message out a lot more effectively. It’s a huge motivator for us to retain the independence of our properties and make sure they’re not cookie-cutter.”
Building visibility in the Internet age has been another unique selling proposition for Dandapani and Apple Core Hotels, and it goes back to emphasizing location.
Take, for example, the company’s Hotel @TimesSquare. That name is entirely intended to help the hotel score high in search engine optimization. “We’ve chosen names that are reflective of SEO, and since we started doing that in 2008, we’ve been at the top,” he said.
Public relations has been another factor in the company’s marketing message. Since Apple Core could track the origins of its returning guests (30 percent of its guests are international), and with Dandapani tuned in to tourism trends affecting the city as a whole, the company could support several big PR pushes outside of the U.S.
The company has worked with agencies in the UK and Canada, and has had a PR agency in Brazil since 2008. “Starting in 2005, we saw more Brazilian tourists and business people coming into the city, and since we started with an agency in Brazil in 2008, business from there has picked up.”
Some Apple Core Hotels have a business traveler base as high as 40 percent, most of whom pay out of pocket, not with a corporate card. Keeping repeat business is important, Dandapani said, and for that reason the company pays very close attention to its feedback and TripAdvisor scores. “We respond to every negative and positive comment out there,” he said. “We pay a lot of attention to this and are ramping up our social presence even more.”
But through it all, Dandapani remains focused on the company’s presence right here and right now in Manhattan. “The city today is a gateway, not just for foreign tourists but for American ones as well,” he said. “We’ll always have customers, from 18 to 85-years-old, who want to stay in a place that’s not cookie-cutter. That’s true across generations.”
AT A GLANCE
APPLE CORE HOTELS
Headquarters: New York City
Structure: Apple Core Hotels is part of Apple Core Holdings, a privately held investment company.
Portfolio: Five hotels comprising 775 guestrooms
Blogosphere: Vijay Dandapani on airbnb, travel loyalty and social media
The New York hotel market isn’t a simple one to understand, given the constantly changing political, economic and legal scenes. Now is a particularly dynamic time to develop and operate hotels in New York, according to Apple Core Hotels president Vijay Dandapani. “Hotel development in the city…has seen a boom since the Lehman crash like never before,” he said. “There’s been 25-percent growth in just six years. It’s tough to get my head around it.”
But Dandapani does get his head around this issue, and others affecting the city, in his blog, “New York Hospitality.”
Check it out at www.vijaydandapani.com.