The upheaval of the past nearly three years has proven the importance of relationships—especially those with the right management companies. This fact, combined with a desire to focus on the development side of the business, has spurred PeachState Hospitality to partner with TPG Hotels & Resorts for hotel management.
TPG has assumed management of 10 properties previously operated by PeachState. The portfolio consists of an Aloft, two Residence Inns, a Courtyard, a Candlewood Suites, two Fairfield Inn & Suites, a Fairfield Suites, a Holiday Inn Express and a TownePlace Suites, all located in Georgia.
In addition, the companies have entered into a strategic agreement for the management of any additional hotels developed by PeachState.
“Our world is a specialist world,” said Ricky Raman, PeachState’s chief operating officer. “In the 35 years we've been in the industry we've learned that becomes a bit of a challenge when you're trying to wear multiple hats in an opportunistic environment. Over the last five years, the management conversation has been one in our boardroom of what do we do with it? Do we continue to grow? Do we continue to add resources to our platform and see where that takes us? Or do we find a best-in-class manager such as TPG to really be a partner for us and really be the rocket to our engine?”
The company decided that having TPG as a partner would enable it to “clear the runway for our growth trajectory,” Raman said, allowing PeachState to really focus on its core expertise of development.
TPG Hotels & Resorts has about 140 open properties in its portfolio, according to Tim Muir, the company’s chief development officer.
What's Next
One of the properties in the portfolio, the Fairfield Inn & Suites in Warner Robins, Ga., is completing a renovation. Two more, the Courtyard Warner Robins and the Fairfield Inn & Suites in Cordele, will begin renovations shortly. All of the properties will retain their current brands.
“We're partnering with best-in-class franchisors. The promise that we make to our franchisors and our brand partners is that we will run these hotels to the best of our ability and the best we possibly can under your flagship,” Raman said. “We're very happy to continue to stay the course and TPG coming in only enhances our ability to further hit the benchmarks at a higher level. We believe that we've done a good job on the management side from a brand standards standpoint and keeping guests happy and having TPG come in further enables these assets to grow and be more successful.”
Geography played a part in the arrangement between the two companies.
“When you build, when you look at new markets, when you chase new attractive deals, you have to think about how you're going to operate these hotels at a high level or the expected level that we're underwriting to,” Raman said. “There's always been an opportunity to be in California, to be in Denver, to be in Texas. But then, on the back of that comes, well, how am I going to manage these hotels efficiently?”
Raman said the agreement enables PeachState to look at more opportunities and really open the floodgates in terms of growth. The company has 14 hotels in the pipeline, all in the select-service space. Discussions for additional properties are ongoing, with TPG being involved in those conversations.
“There's a high level of conversation that we're having in terms of the right key count, the right market,” he said. “Those conversations are very much so a dual dialogue between our [teams]. I'm saying, ‘Hey, look, what's the right market? Where does TPG find an opportunity? Where can PeachState deliver a value?’ It’s very much a two-prong conversation.”
PeachState’s bread and butter historically has been the Southeast, but TPG’s involvement will help expand the partnership’s reach.
“Moving forward with this partnership enables us to look at markets historically that we haven't, so it's really opportunistic,” Raman said. “Tim is on the road looking at deals on a daily basis and we are as well, so we're very opportunistic on where we go from here.”
Taking Notes
TPG’s breadth and scope in the select-service space really made an impact, according to Raman, as well as the philosophical alignment between the two companies: “How we think about the business really aligned as well, how we look at the COVID years, how we look at the growth trajectory and a recovery standpoint. Us partnering with TPG really is a ‘one-plus-one-equals-three’ type of model.”
Muir took on the chief development officer role at TPG in June of 2021, and within two weeks had reached out to Danny Patel, PeachState’s president and CEO. “I look up to him. I've watched Danny, over 30 years, build and develop [hotels]. I think he's one of the best builders and developers in the United States, and he built over 50 hotels. I've stated those properties and they were exceptional. So when I reached out to Danny, I didn't reach out say, ‘Hey, I know you're interested in transitioning the management platform,’ I just reached out to him and I told them what we were doing and the core values I was looking for. Honestly, everything I was looking for was PeachState Hospitality.”
PeachState has such a strong track record and so much room for growth that the conversation turned to operations, accountability and other hotels TPG has managed, Muir said, and quickly drew Raman in. The PeachState executives visited TPG’s headquarters to see the operation first-hand. “You can't put a price on seeing hospitality happening live. When we toured the their corporate office at the time, immediately one of the things that stuck out is that whether they're a third-party manager or an owner operator … every dollar is ours, every associate is ours, every career is ours and we are fiduciaries of those dollars and those careers—when you get to see that happening live it really lends a lot of perspective of, ‘Hey, this is a friend who looks at the business the same way we do.’”
Muir agreed that culture and values are the foundation of the relationship.
“The DNA was very, very similar—both family businesses, a lot of passion,” he said. “We have a lot of admiration in terms of what they do and how they do it in terms of building and developing and all the heavy lifting that goes with it. The best is yet to come—just watch their platform and watch what they do because they do it as well as anyone. We're really happy to work with them."