ATLANTA—The independent hotel sector is shining brighter these days, according to Michael Tall, president and COO at Charlestowne Hotels.
Tall, who spoke with Hotel News Now during the 27th annual Hunter Hotel Conference, said the environment for independent hotels has changed quite a bit during the past several years.
“There’s actually been a ton of activity in the last two years,” he said. “I think there’s a lot more education in independents and the boutique side.”
The tracking of data for independent hotels, such as is done by HNN parent company STR, has added a degree of comfort for those working in and with independents, he said.
“There’s more data to make investment decisions on independents than there ever has been prior, and performance has been very good,” Tall said. “Lenders are much more amenable to independents than they ever have been.”
According to STR, U.S. independent hotels during February saw year-over-year occupancy grow by 4.5% to 58.5%; average daily rate grew 5.1% to $114.22; and revenue per available room was up 9.8% to $66.88. Management company Charlestowne has 32 independent properties among its 37-hotel portfolio.
The performance of the sector has helped legitimize to a certain extent the independent world, Tall said.
“The performance over the last four or five years has really helped to reinforce the decision (for owners) to go independent or to build or develop a hotel as an independent,” he said. “It has made the conversation much more comfortable than it has been before.”
Development interest
Tall said officials at Mount Pleasant, South Carolina-based Charlestowne have been busy during the past 18 months taking care of the contracts the company has in place and investigating future deals.
The goal for Charlestowne is to grow by approximately six hotels per year, Tall said.
“We’ve grown a tremendous amount,” he said. “In the last eight years, we’ve doubled the size of the company twice. We’ve learned a lot in that process.”
Tall said investors are more frequently looking at the independent space now. There’s been so much fervor around traditional, branded hotels that some money is looking at independents where there might not be quite as much competition.
Recently, Charlestowne executives are being called to underwrite some deals to present to investment groups or private equity because a lot of clients don’t have the capacity to do so, Tall said.
“We’ve seen a lot of private-equity activity in the last 12 months,” he said. “Institutional money seems to still be there.”
The road ahead
Going forward, Tall identified a pair of potential challenges for Charlestowne. First, as it relates to deals, he said the company will need to maintain discipline in which opportunities it pursues.
“You could walk into a place where all these deals are coming at you, and you take them, and you can’t deliver on them,” he said. “That can be a slippery slope.”
The second challenge, Tall said, is related to human resources.
“With all the growth, we’ve been growing and independents have been growing at exponential speeds,” he said. “We want to make sure we have the right talent and keep the right talent so we can deliver on all the promises we’ve made to our current owners. And we want to make sure for any new deals we source, we’re able to deliver on those.”