Hunter round-up: Mission Hill and Prominence Hospitality

ATLANTA — Last week’s Hunter Hotel Investment Conference drew more than 1,700 registrants, another sign that the hotel industry is moving forward past the pandemic.

During the three-day event, Hotel Management spoke with a number of companies, including Mission Hill Hospitality and Prominence Hospitality, to get a feel for how they are coming out of the pandemic and where they are focusing their attention.

Mission Hill Hospitality

Denver-based Mission Hill Hospitality, which is part of KSL Capital, launched about a year ago and as of the end of March counts 18 properties in its portfolio. The company invests in the select-service and extended-stay segments, focusing on value-add and development projects that present significant opportunity given market and economic conditions, according to CEO Greg Kennealey.

The company was founded with the idea that there would be a number of distressed assets in search of new buyers, but the market did not play out that way, Kennealey said.

“There are a few hotels that we've got a pretty good price [on], but the distress was not what everybody was expecting. So, from a buyer perspective, that was unfortunate,” he said. “However, we are still finding lots of hotel investment opportunities that we really like.”

These opportunities can take a variety of formats, according to Kennealey: “In many cases, we’re either taking stabilization risk, where we're buying an asset as a … developer’s got it to [get a] certificate of occupancy so we'll take the operating ramp risk, or we're buying assets where we see opportunity to renovate, reposition [and] improve in some other ways so we can get to an opportunistic return.”

The company is targeting institutional-quality assets—newer vintage premium brands with higher revenue per available room—in a fairly specific geographical perspective.

The first is drive-to leisure. “That's been a staple in KSL’s strategy for forever,” Kennealey said. “We were pretty early to that, which I think has served us really well.”

The second geographical target is what the company calls GEM markets—government, education and medical, such as Mission Hill’s AC Hotel Duke University Durham (N.C.).

The third is growth metropolitan statistical areas—“areas where the supply-demand dynamics look favorable for the next five years, but we think there'll be an opportunity for above-average growth,” Kennealey said. “Then layer on top of that our preference for value-add work into those geographies where we think we have an advantage, and we're hoping the combination gets us the returns we're looking for.”

Prominence Hospitality Group

Real estate investment, development and hotel management company Prominence Hospitality Group has 21 hotels in its portfolio, nearly half of what principal Rana Rehan Zaid said was the goal when the company was founded five years ago.

The Chicago-based company has grown organically as well as through joint ventures and strategic partnerships with a goal of making the properties better.

“We've invested a lot of resources and capital into building the systems because you start realizing how important that becomes,” Zaid said. “You think you can do certain things with five and then you have 15 hotels.” That requires not only a different kind of human capital base, he added, but also different systems—“and we all know that our industry is significantly lacking when it comes to technology and systems.”

This growth required Prominence to really think about its mindset as a company and a business owner, according to Zaid.

“Are you a technology company that's providing a service or are you a service provider that has some technology?” he said. “We're challenging ourselves to say that we want to be a systems-oriented technology company that is happens to be in the hotel industry.”

The company’s portfolio consists of brands franchised under the Marriott International, Hilton, IHG Hotels & Resorts, Hyatt Hotels Corp. and Choice Hotels International flags, from economy limited-service to upscale full-service. Room counts range from 60 to 266 with a focus on the Midwest and East Coast.

Entering the independent property space is on Prominence’s agenda as it continues to grow, Zaid said.

“That's kind of the next step as we step away from our core strategy of being in secondary and tertiary markets. As we step into some of these primary or top 50 or 100 MSAs I think that's where the independent product makes sense,” he said. “We've started looking into those types of investments but we're not there yet. That's something we would definitely like to get into.”

Company culture is something else Prominence is investing in, especially as a result of the pandemic and the conditions it has created in the hotel industry.

“How do you connect all the dots together and all the people together and build a community and a mission around our hotels?” Zaid said. “How do we connect and then help them understand what are we looking to do and what are you part of and how can you grow and what perks you have?

“It gets lonely. We're running this hotel day in, day out and dealing with customers, dealing with associates and it gets tiring. It burns you out. So if you don't have that bigger piece you believe in and you're part of, you're going to have a high turnover and customers who are dissatisfied.”

Coming tomorrow: stayAPT, HP Hotels and Charlestowne Hotels.