LOS ANGELES—Palisades Hospitality Group is getting into the development and acquisition business with its newly launched Local Framework real estate arm.
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Independent-minded Palisades will use the new vehicle to grow its Mosaic Hotel Group, an operations and management company with seven hotels flying the Mosaic flag, said Skylar Skikos, co-founder and president of Palisades, during a break at last month’s Americas Lodging Investment Summit.
“There’s a much better cohesion and alignment on the projects when we’re in ownership as well as management in terms of aligning everyone’s interests and focusing on the project from start to finish,” he said. “Local Framework is really focused on the real estate side of things. It just so happens that Mosaic and Local Framework are aligned in their focus and their mission, so it naturally works together.”
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Skylar Skikos, |
Skikos, who worked in private equity prior to joining Palisades, said Local Framework is focusing on highly defined projects with three characteristics: a sense of place, connection and meaningful engagement.
“We want to go back to the time of human-scale developments and markets in terms of the size and the feel of the projects,” he said.
The company is looking to own assets, according to the president.
“I’m a real estate guy—why would I want to be asset-light?” he said. “There’s a lot of value you can create in the real estate. You can create that value by having the alignment to be able to do it right, to apply the programming that’s appropriate and the design and environment that’s there and also having the luxury of time. You’re focused on playing the long game and adding value over the long term as opposed to a build-and-flip strategy.”
Palisades specializes in hotels under the Mosaic name and restaurants under the Moana name. It owns and manages three of its seven Mosaic properties, and manages the other four. Three of the current properties are located in Mexico; the other four are located in California.
“We’re focused on independent properties and really making sure with each and every one that we create an identity and a story that is specific to its location and its setting,” Skikos said. “We’re focused on the value proposition of that.”
All properties under Local Framework ownership will be part of the Mosaic Collection, and each will have its own name, according to Skikos.
Local Framework acquired its first property last August when it bought Olema House in Olema, California—an hour north of San Francisco that borders a national park. The area’s culinary and artistic reputation feeds the property’s local approach, he said.
The company isn’t looking for large properties, Skikos said.
“Generally it’s going to be under 100 (rooms)—the sweet spot is in the 50 to 80 range,” he said. “The real focus in terms of the development is the scale of the overall project. It is in harmony with the individual projects and markets.”
Local Framework will capitalize its deals on an individual basis.
“We have a collection of investors who invest in multiple deals,” Skikos said. “As we grow further, that likely translates to a programmatic capital base with a like-minded investment group that’s focused on the long term.
“That’s why we’re on the ownership side … we want to align those interests,” he added.
Local Framework’s pipeline includes:
- a 3.5-acre entitlement site in the Napa area that will include a 50-unit hotel;
- a 1,000-acre site three hours north of Mexico City near San Miguel de Allende, a high desert colonial-era town with an abundance of baroque Spanish architecture—the project will include 60 to 80 hotel rooms and a residential component; and
- another project in the works in the Southwestern U.S. with a similar concept and philosophy (it’s too early in the process to identify the location, Skikos said).
Skikos said Local Framework is very focused on clustering the development and preserving a lot of open space. He noted local artists will work on site at those properties to offer workshops for guests.
“We’re very big on national parks, cultural heritage, something that’s drawing us to a destination where we can complement that destination, integrate with it as much as we can,” Skikos said. “The beauty of it is we don’t have a mandate—we don’t have to build X number of hotels or get to a certain level by a certain date.”
The company’s commitment to the “independent mindset” is essential to its growth as each hotel will retain its own name in addition to the Mosaic moniker, the president said.
“The biggest advantage that I see to it is the flexibility to really customize your hotel to the market and be able to change that as you learn,” Skikos said. “We do what makes sense for the property.”
One of the company’s core philosophies is to empower its GMs on site, he said.
“They’re on the ground … they’re an entrepreneur themselves—they have ideas and they can enact those without us saying ‘hey, that didn’t adhere to our brand standards,’” Skikos said. “It gives you the ability and opportunity to experiment—but to experiment quickly. You can test it, see what works and change from there as opposed to trying to foot wedge a square peg into a round circle.”
The company’s projects will fall into the upper end of the hotel spectrum, he added.
“I don’t think we’re luxury … to me, we’re focused on a psychographic,” Skikos said. “It’s a psychographic that may stay at luxury hotels and may state at more upscale hotels when they’re traveling on business. When they’re staying with us, they want to capture their curiosity. It’s much more about what sense of place and environment we have.”