Oxygen Hospitality's goal: Breathe life into Southwest hotel scene

The Ivy Palm Resort in Palm Springs, Calif., was Oxygen Hospitality's first acquisition. Photo credit: Oxygen Hospitality

Yaron Ashkenazi has flipped the script on his career, moving halfway around the world in the process. The international hotelier joined Oxygen Hospitality as CEO in May 2018, leaving his previous gig as CEO of GCH Hotel Group—the second largest hotel management group in Germany—where he ran a portfolio of 120 hotels across Germany, Belgium and Austria. By comparison, Oxygen Hospitality had yet to start breathing.

All that changed quickly. Oxygen was founded as a real estate investment and management company designed around acquiring, renovating and managing branded and independent hotel assets in the Southwest. The Phoenix-based company officially launched operations in November 2017, purchasing its first hotel, the Ivy Palm Resort in Palm Springs, Calif., nearly a year ago.

“The shift was easy,” Ashkenazi said. “The weather is great in Arizona. My son went to a doctor in Berlin, and he said it is too cold for him there. So we moved to the hottest place on Earth.”

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Ashkenazi’s goal is to hold Oxygen Hospitality to its name by using the company to breathe new life into the hotel industry. He will do this, he said, by approaching amenities and services differently, including design, technology, coffee and breakfast (placing particular emphasis on bread).

“America needs a very good breakfast, and Americans deserve better bread and coffee,” he said. “Similarly, hotel managers deserve better tools to run their properties. The revenue-management piece is still not old, but [operators] are pricing by benchmarking per segment, not against demand and supply.”

The Wyndham Garden Phoenix Midtown is the second property acquired by Oxygen Hospitality. Photo credit: Oxygen Hospitality

Small Beginnings

After acquiring the Ivy Palm, Oxygen announced plans for a two-phase renovation that would update the hotel's guestrooms, lobby, outdoor pool area and restaurant, and will also christen the property with a new name. The renovation is expected to begin this June and end sometime in the fall.

In February, the company acquired its first hotel in Phoenix, the Wyndham Garden Phoenix Midtown, and similarly announced plans to overhaul the building’s aesthetic and amenities. Oxygen purchased the property’s leasehold, and is investing several million dollars to modernize it as a business hotel.

“We acquire hotels that not everyone can acquire because in order for them to be successful we have to solve some issues along the way,” Ashkenazi said. “These types of deals don’t come to your table every day. Knowing how to connect the land, the owner and the bank is a skill, and we were looking at this property for several months. It was not easy, but it is a deal.”

According to Ashkenazi, these two hotels ticked three boxes Oxygen Hospitality is looking for in potential acquisitions: good bones, a competitive location and a history of underperforming. Ashkenazi also said Oxygen was strategic in purchasing branded or independent properties depending on the markets in which they are located. For example, he liked the Wyndham Garden Phoenix Midtown’s brand association, but said the Ivy Palm Springs is better off as an independent.

“Palm Springs is not a great place for a branded hotel,” Ashkenazi said. “When it comes to Palm Springs, people are there for the destination. If you are located well, know how to manage the property and have the right name, you can succeed without paying royalty fees. In prime locations it’s not necessary.”

Conversely, Ashkenazi said he needed a brand in Phoenix.

“When you go to a brand, you get their sign on your roof, their global distribution system, bookings through brand.com and their rewards program,” he said. “Wyndham has almost 20 million loyalty members. This helps us bring clients from Minnesota and Hong Kong to Phoenix, and we needed that here.”

The Ivy Palm Resort is preparing for a renovation that is set to begin in June. Photo credit: Oxygen Hospitality
 

Breathing Easy

Ashkenazi also has aspirations for improving the hotel operating climate. He takes issue with the number of disparate systems at play in a hotel’s back end, and how they sometimes complicate what should be simple.

“Revenue management, financial reporting, guest contact, every company is doing these things but nobody is talking to each other,” Ashkenazi said. “We are going to marry these systems in the near future.”

Though Ashkenazi likes to think big, he isn’t looking far past the Southwest right now for development opportunities. For the next five years, Oxygen Hospitality’s focus will be on Arizona, Nevada and California, but he would be open to potential deals in Texas and New Mexico, with the goal of reaching 7,000 rooms over that period. This desire to remain small is not the only thing that differentiates him from the competition—he also has an unmistakable positivity that is at odds with much of the industry.

“Surprisingly, there is a strong feeling here [in America] that a crisis is going to occur,” Ashkenazi said. “Most hotel companies here are waiting to see what will happen. Our goal is to breathe life into the industry, to do things the industry hasn’t seen in 20 years.”

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