When Atlanta got slammed with a round of snow in late January that left cars immobilized on city highways and people stranded all over town, local hotels opened their doors and did what they did best—provide hospitality. Among those were the Atlanta hotels managed by Hotel Equities. Post-storm, company founder, CEO and president Fred Cerrone took to his blog to thank employees—many of them by name—for their personal attention to distressed guests. “They set the example for a ‘whatever it takes’ attitude,” he wrote. “I could not be more proud of our teams and the manner in which they displayed a real sense of caring during this crisis. That is the epitome of our value statement, ‘the greatest leaders are the greatest servants.’”
That blog post sums up Cerrone’s leadership style and exemplifies the culture on which he has built his company. Cerrone makes sure he and everyone on the Hotel Equities team don’t let their mission (made up of 12 value statements) languish on a shelf; he lives and breathes it every day and encourages everyone to do the same. It’s the driving force behind the company’s aggressive growth for its third-party management platform and hotel development activity as it heads into its 25th year in business.
While a busy year of growth, acquisition and new executive-level hires can be a dizzying prospect for many companies, Cerrone is the first to tell you that Hotel Equities’ culture is what keeps the company firmly rooted as it spreads its branches—and that culture is a direct product of Cerrone’s own history in hospitality.
A head start
While he started on the job early, it wasn’t with the intention to make hospitality a career. With a low draft number at the onset of the war in Vietnam, Cerrone joined the U.S. Marine Corps as a reservist. Right before his unit shipped out, it was recalled back to his home town of Boston to help ready supplies. That call to Vietnam never came, so Cerrone’s uncle helped him snag a job interview at the Sheraton Boston. While waiting for his unit to get called up, Cerrone worked at the hotel as a mail clerk. His unit never got the call, so he completed the Sheraton training program and became a GM at 21 (the youngest in the brand’s history) at the Sheraton in Quincy, Mass.
It was a real turning point in his career.
Pictured: January marked the groundbreaking of the $52-million new-build Residence Inn by Marriott in Miami Beach/Surfside, a joint venture between Hotel Equities and Hotel Development Partners, a JV of IRE Capital.
“This hotel was so bad,” he said. “The roof leaked. It was sinking into the river. You couldn’t even get into the hotel without making an illegal U-turn.” To make matters worse for the hotel (and what could be worse than 30-percent occupancy?), only four letters in the Sheraton sign lit up at night (we’ll leave that to your imagination).
But Cerrone didn’t let that get him down. He pored over the books and learned that the hotel used to be the official host hotel for the nearby Gillette Co., but that business had disappeared years before.
“I put on my best suit and headed over to Gillette and told the assistant I wouldn’t leave until the boss talked to me,” he said. “I was 21 and I looked about 14 when I walked into his office. He blasted me for 20 minutes about everything wrong with the hotel then asked me what I had to say for myself.”
What he did was something only an optimistic 21-year-old might do: He committed to host the company’s annual St. Patrick’s Day party at the hotel. Cerrone went all out for the party and won the business back. By the time he left the hotel nine months later, occupancy was back in the 80s and Cerrone, at 22, was on his way to manage the 744-room flagship Sheraton Biscayne Bay Hotel in Miami with his wife and two small children in tow.
Pictured: Brad Rahinsky, joined Hotel Equities in 2012 and was promoted to COO in 2013. Today Rahinsky oversees the company’s strategies and day-to-day operations.
His stint in Miami brings back many great memories, and he’s especially proud of Hotel Equities’ recent deal to develop a new-construction, $52-million Residence Inn by Marriott in Miami Beach/Surfside. Hotel Development Partners broke ground in February and the property is scheduled to open next year.
Miami is also where Cerrone finished his associate’s degree in hotel and restaurant management from Miami Dade College, where he went nights and weekends. That commitment to education would last well into his career.
By the time Cerrone founded Hotel Equities in 1989, he had considerable property-level experience under his belt. By 1992 the company managed seven properties across five states. He explored new avenues for growth during the mid-1990s; in 1994 Hotel Equities was named among the first franchise partners for Marriott International, and Cerrone formed a partnership with Peyton Day, son of the founder of the Days Inn hotel brand. Cerrone and Day named their company Day Hospitality Group and they developed and managed a handful of Marriott-branded hotels, many under the fairly-new-at-the-time Fairfield Inn brand.
Even in the earliest days of the company, Cerrone and Day knew that a positive work environment would mean less employee turnover and overall better performance. When Cerrone bought the management arm of the company in 2006 and changed the name back to Hotel Equities, the company’s culture was clear.
But it didn’t happen overnight. “We learned that as we got larger, we had growing pains,” he said. “But we had to scale our basic principles for the company and apply them where we could. We took the time to develop programs like our chaplain program, our Foundations class and our commitment card. Those are things we use every day.”
The company employs a chaplain at its Atlanta headquarters to provide interdenominational support to employees, acting as a sounding board and confidential listener. It’s a point of pride for Cerrone, an active man of faith himself, and something he sees as a real differentiator that fits into the company’s philosophy.
Pictured: Hotel Equities added the management of the four-star boutique Wyvern Hotel in Punta Gorda, Fla., in early 2014.
For Cerrone, serving as a living, breathing example of the standards he sets for his company is his No. 1 priority. That’s what propelled him to return to school in 2006. “I only had a two-year degree for years and years,” he said. “And I wanted to be a good example for my grandkids and associates, so I went back to get my MBA.”
The two years he spent earning his executive MBA at Georgia State University were both transformative and affirming for Cerrone. He came out of his degree program and built an extensive training facility in the company’s headquarters, modeled after his classrooms at Georgia State. “I gave this room the same audiovisuals, the same chairs, everything,” he said. “We knew that if we were going to do training well, we had to put our money where our mouth was. And you wouldn’t believe how that has paid us back—the value we have realized by having a solid training program in place.”
Today, Hotel Equities associates participate in an extensive and established training program that includes classes, reading, meetings and more, the highlight of which is a class taught by Cerrone himself, called Foundations (see sidebar).
While Hotel Equities’ culture is the underpinning of the business, it’s still a business at the end of the day. The company heads into its 25th anniversary year with 12 months of seemingly nonstop growth behind it. In mid October, Hotel Equities formed a joint venture with Raleigh, N.C.-based Alliance Hospitality to grow its footprint and the development side of the business. With the acquisition the company grew its full-service portfolio in particular, and continues its growth trajectory on both sides of the business. Later in 2013 the company added its first boutique hotel management contract to its portfolio, with The Wyvern Hotel, a boutique property along Florida’s Gulf Coast. The company added several La Quinta management contracts at the end of 2013, and has two Home2 Suites by Hilton projects under development, with management agreements attached as well.
Along the way, the company made several key executive promotions and additions, all designed to keep momentum moving forward.
“I love the deal side of the business, love it,” Cerrone said. “We have a tremendous deal flow and that’s because we have taken the time to establish and maintain relationships with lenders, brokers and brands. I hope that when people think of us, they think of quality and tenure, and excellence in hospitality.”
And while Cerrone’s goal is to visit 100 new hotels every year on the quest for new business, his passion for his employees is just as strong.
“There’s no doubt that the bigger a company gets, there’s a chance our culture can be diluted, so we work very hard at not letting that happen,” he said. “We review our values daily at the corporate office and at every hotel. My biggest fear is that I’ll wake up one day and our culture will have diminished.”
Ask any current or former Hotel Equities employee and they would say that’s unlikely.
AT A GLANCE
Structure: Third-party management, ownership, development
Portfolio: 45 properties in 12 states
Part of Hotel Equities’ training program is a class president and CEO Fred Cerrone teaches himself, called Foundations. New employees take it and managers take a refresher every year. It’s a part-history, part-goal-setting, part-leadership course, and Cerrone loves every second of it.
“I am whooped when I come out of teaching this two-hour course, but I just love sharing the history of the hotel business and the history of the company,” he said. “You should see everyone’s eyes light up in this class.”
A big part of the class is teaching employees how to take charge of their own success. “I tell our employees that if they work hard and are successful, they can go anywhere in the world,” he said. “We’re not the only great company out there. I tell our people that in essence they are self-employed. They work for Hotel Equities, but they really work for themselves. People will hire them and they’ll earn opportunities based on their own gifts and talents.”
As a leader himself, Cerrone said one of the most frustrating parts of training others is wanting more for people than they want for themselves. That’s why he tries to instill a love for the industry and for personal success at every turn. “The best thing I know how to do is try to connect the dots for people personally,” he said. “We encourage everyone to have personal commitments and goals.”
That means that Hotel Equities often can promote people from within, which ends up saving money and time, while encouraging upward movement.
Cerrone is proud that even throughout the recession, when companies were diverting resources and cutting corners, Hotel Equities never altered its cultural training. “It was very difficult, but we were diligent,” he said. “We kept preaching the culture and kept talking about it and we were fine.”