THE WOODLANDS, Texas—With three brands to grow, new Benchmark Hospitality International President Alex Cabañas is sticking with the formula that has worked for 33 years: an attention to detail, providing sliver equity when needed to close management contract deals and a commitment to treat the 6,000-plus employees like family.
Cabañas, a Harvard Business School graduate and a nine-year employee of Benchmark, was named president and CEO of the company last fall when his father, Burt Cabañas, was elevated to chairman. The younger Cabañas now occupies the office he remembers playing in as a kid when his dad was getting the company off the ground. He said during a recent phone interview that it’s business as usual for The Woodlands-based Benchmark.
“Burt was promoted to chairman; he doesn’t need to be running the day-to-day operations of the company,” Cabañas said. “He’s been able to reduce the responsibilities specific to him to chairman-like responsibilities. For most of his life he has worn every hat. Today, it’s just a different hat.”
Burt Cabañas will focus on building relationships and the growth of the company, which stands at 36 managed properties and was founded in 1980. Twenty-two of those have been added during the past five years. Alex Cabañas will focus on advancing the growth strategy Benchmark has developed during the past few years.
Benchmark’s umbrella includes three brands: Personal Luxury Resorts & Hotels, Benchmark Resorts & Hotels and Benchmark Conference Centers.
Cabañas said Benchmark’s four pillars of growth include:
- organic expansion of the organization;
- product diversity;
- global expansion; and
- acquisitions of other companies or joint ventures.
“We don’t buy or build ourselves so we have to pursue or are pursued by others,” Cabañas said. “Personal Luxury was the last big step in product diversity when we acquired (MTM Luxury Lodging in 2011).”
That deal helped Benchmark cement its position in the luxury segment, according to Cabañas.
“Nobody knew us for smaller luxury hotels even though we had eight in our portfolio,” Cabañas said. “We added four more (through the acquisition) and it gave us a lot more exposure.”
Benchmark budgeted for $600 million in management revenues for 2014, but Cabañas said he thinks the company could surpass that goal based on the 8% growth it has achieved during each of the past couple of years.
“If we grow at that same pace, we could be a billion-dollar company in the next 10 years,” Cabañas said. “We have that growth goal out there, but I’m a firm believer that growth goals are absolutely fantastic to have. … At the same time, I am not better at predicting the future than anybody else.”
Cabañas said he is also optimistic that the resort business is bouncing back.
“People want experiences; they want to get out and they want to be engaged, and part of that is the destination,” Cabañas said. “(Americans) don’t do well in four-year recessions. We get pretty bored and eventually want to break out of the boredom. I see that happening now.”
Benchmark will put sliver equity into an agreement to secure a management deal, but it prefers to be a straight third-party manager, Cabañas said.
“We don’t want to be potentially conflicted by being a real estate company, but we do have the option to place sliver equity in the future, too,” he said.
Group performance getting better
The company’s conference center business continues to grow, and Cabañas is bullish on group business for the next couple of years—as evidenced by its recent release of its top 10 meeting trends for 2014.
“We’re 15% to 20% up in pace across the whole portfolio,” Cabañas said, pointing to Scottsdale, Arizona, and Chicago as leading the way.
“Scottsdale is doing phenomenal. That market by far has been the most painful market since the beginning of the recession,” Cabañas said.
He said it’s easy to see why there’s a surge in business.
“Overall, people are spending money again,” Cabañas said. “It’s not back to where it was in the heyday, but more of that hangover is gone. The competitive forces are also churning; one company starts doing the incentive trips and other things they used to do, and others follow because they want to retain talent.”
A growing side of the business
The entire Benchmark team was involved in forming the strategy for the company’s future, a task that has gone on for nearly six years, the executive said.
“We spent time—our entire home office, our GMs—to make deliberate decisions every year on where we’re going to invest in,” Cabañas said.
During that time, Benchmark added 22 people to its home office infrastructure and spent $3 billion on technology, the majority of which was used to build a global revenue support center to help handle overflow reservations requests.
“We have eight to 10 agents there that have conversion rates twice the industry average,” Cabañas said.
Benchmark first approached the idea by having onsite third-party technology at all properties to allow overflow reservations to roll over to each other as needed.
“Then we realized we were rolling over to third parties and we were probably losing $1 million to $2 million in revenue and had significant expense paid to third party,” he said. “We said, ‘Why don’t we become the third party and we can control it?’ It has since become more successful than we ever could have imagined.”
Cabañas said Benchmark doubled the size and volume of the calls that go through the center within the first 18 months.
“We’re still firm believers in reservations on site—you are there, you live it—but the economic decision started to make more sense for smaller properties that didn’t need a full-time approach,” Cabañas said.
A family atmosphere
Benchmark bills itself as the largest Hispanic-owned hotel management company, a designation Cabañas said can be a calling card.
Cabañas said the family’s Cuban roots—both of his parents were born there—make the company a natural to expand its presence in the Caribbean.
“A piece of that heritage is family oriented, and for us, that is a big part of the culture that has been infused in our company,” Cabañas said. “We do treat our company like a family.”
And what about the Latin-owned aspect?
“It’s important to us when it’s important to our clients,” Cabañas said. “We certainly applaud any effort by minority-owned or women-owned businesses to expand their presence in the hotel industry.”
Cabañas said the company, which has more than 6,000 employees and approximately 6,300 rooms in its portfolio, wants to earn business based on its performance.
“We don’t want to be awarded business because we’re minority owned,” Cabañas said. “We want our clients to make that decision based on the efficiencies and revenue we create.”