SAN FRANCISCO—Joie de Vivre Hospitality intends to cast its shadow beyond the Golden State.
The boutique hotel company plans to nearly double in size thanks to a US$150-million infusion from Geolo Capital, according to recently named interim CEO Gary Beasley.
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Gary Beasley |
JDV currently has 35 hotels and about 4,250 rooms in its portfolio—all in California—but is searching from sea to shining sea to add to the list. Beasley mentioned markets such as New York, Seattle and Portland as potential expansion opportunities as well as having more hotels in its home state. JDV indeed looked close to home this week in making its first acquisition from the fund, acquiring for an undisclosed amount the 250-room Custom Hotel in Los Angeles.
New York could become something of an East Coast “center of gravity” for JDV, he said, adding that the company’s headquarters will remain in the Golden Gate City.
Specifically, the company seeks to acquire 3.5- and 4-star properties in distressed situations. Half of these new properties would be owned by JDV and the company would function as third-party manager for the other half.
“I like where we’re playing in the three-and-a-half-star space,” Beasley said.
The company is planning to deploy “patient capital” and pick up assets that other companies, such as real estate investment trusts, have passed by.
“We are looking at assets that have a little hair on them,” Beasley said.
JDV wants to have between 50-60 hotels under its umbrella within the next three to five years. “It could be substantially quicker than that,” he said.
Geolo’s investment
This growth is made possible by Geolo, which acquired a controlling interest in JDV earlier this year. Beasley declined to discuss terms.
Geolo Capital is the private equity investment arm of the John A. Pritzker family.
The money invested will be a mixture of sliver equity to 100% investment.
“And we’re talking to people about everything in between,” Beasley said.
It’s possible the company will look for other strategic investors to co-invest in hotels. And a portion of the US$150 million from Geolo might be earmarked for investment back into JDV, Beasley said.
The investment benefits both Geolo and JDV, Beasley said. From Geolo’s perspective: “It allows us to invest capital,” Beasley said. “It gives us access to deal flow.”
And from JDV’s perspective: “It’s a tremendous growth engine.”
JDV is currently going through its strategic planning process to decide how to treat the hotels in its portfolio. Beasley said the idea is to create a “really tight, highly focused concepts” for the portfolio, though what exactly that will entail is still being fleshed out.
Still, if such an arrangement is going to work then both sides have to be on the same page, said Jim Butler, chairman of the global hospitality group at Jeffer, Mangels, Butler & Marmaro.
“The success of the venture depends on … the views and interests of the parties,” he said, adding that a partnership like JDV-Geolo can work great if all goes according to plan.
Geolo is likely to be a long-term investor in JDV, Butler said. “Once they buy a sizable piece of the equity, it probably is (long-term),” he said.
Short time at the top
Beasley, himself a principal at Geolo, isn’t planning on getting too comfortable in the executive suite at JDV. The company will name a permanent CEO during 2011. The company does not yet have a potential list of successors.
“I’m here until I’m not,” the 45-year-old Beasley said.
Beasley replaced Chip Conley at the helm of JDV. Conley, who was unavailable for comment, is now serving as executive chairman and chief creative officer and remains active with the company.