Investment, management and development groups will maximize alliance
National Report–As many companies struggle to find footing in a new economic reality, Tarsadia Hotels is embodying change and diversity.
As of Jan. 1 the Orange County, Calif.-based Tarsadia Hotels is now an alliance of three separate companies, changing ownership and broadening scope. What was one privately held hotel management, development and investment company now is three, known by new names and with new goals and ownership.
Bhikhubhai (B.U.) Patel founded the original Tarsadia in 1976, and ran the company with sons Mike and Tushar, investing the family’s money, along with money from a select group of other investors, in hotel real estate development and management projects. As the family’s interests changed and the company grew, the decision was made to transition into three separate companies, each owned by longtime Tarsadia veterans.
John Murphy now is president of the management company, Evolution Hospitality; Mont Williamson is president of the new development company, T2 Development; and Greg Casserly is now president of the investment company, Tarsadia Investments.
By virtue of the split, each company may pursue deals independently. But Casserly, Murphy and Williamson said they will keep working together through the new alliance.
“The new management company will focus on generating third-party management contracts for full-service, lifestyle and premium-branded select-service hotels, primarily in the western United States,” Murphy said.
At press time, Evolution Hospitality is under contract to manage the Tarsadia portfolio and two third-party management contracts with Chesapeake Lodging Trust.
“We think like owners because that’s the way we’ve always thought about the business,” Murphy said.
Murphy and Casserly said their main goal is to raise awareness of the new company through the Tarsadia alliance.
“We want to be a first choice anytime someone makes a decision for the management of an asset that fits into our model,” Murphy said. “Our sweet spot is a property in the 150-500-room range, branded or independent, where we have skin in the game.”
The new development company is co-owned and run by Mont Williamson, along with Tarsadia’s Mike Patel. T2 Development will focus on hospitality development, primarily of premium-branded select-service hotels along the West Coast.
“There may be a few people who do what we do, but the fact that we are willing to have skin in the game and that through the alliance we are turnkey is a huge plus,” Williamson said. “Because we are aligned with the management and investment companies, we can bring the entire package to a client.”
“This concept of the developer bringing the money, both equity and debt, along with the management expertise, is unusual,” Williamson said.
He said most likely T2 will offer third-party development services without ownership based on one of three structures—a cost-plus-fee-based structure; a fixed-price merchant-build, at-risk contract; or a turnkey build to suit for an agreed sale price.
“Our real opportunity in the next few years is to hook up in a joint-venture structure with people who control land and don’t yet realize the potential of a hotel use for that land and don’t have the expertise to pursue the idea of a hotel as the highest and best use,” Williamson said.
At the same time, T2 is actively pursuing ownership.
The investment side of the company, now called Tarsadia Investments, will do as it’s always done—manage the original founder’s family wealth and select clients’ wealth.