ORLANDO, Florida—At only six months old, Alena Hospitality is hitting the ground running. The ownership and development company’s portfolio consists of 1,150 rooms in five hotels, with more acquisitions on the way, according the CEO Nik Patel.
“For the most part, it’s been smooth sailing,” he said. “The one challenge we’ve seen is we’re promoting a lot of equity.”
Hotels have been in Patel’s blood since he was a teenager in Lake Buena Vista, Florida, whetting his appetite for the business by working the front desk at a Staybridge Suites. But it wasn’t the operations that intrigued him. “I knew I was going to be on the ownership side,” he said.
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Nik Patel Alena Hospitality |
Patel spent his formative years being a part of the corporate finance world, working as an analyst for Wyndham Worldwide Corporation and Marriott International where he was financing half a billion dollars in hotels. But after years of working for other people, he decided to branch out on his own.
“The only difference is I do it for myself now instead of somewhere else,” he said.
Patel takes that oath seriously. Up until now, he’s put several million dollars of his own money into Alena, although he is looking for equity partners.
“I used my money first,” he said, until he was at a comfortable point with the hotel projects and he could start to talk to other people about investing money in his company.
So far, “we’ve exceeded our budgets,” he said. “From the debt side, we’re finding it very easily. We’re able to find a debt financing piece of these purchases, and we’ll be looking for an equity partner soon.”
Value-add developers
Patel said Alena is in acquisition mode, but the company doesn’t want just any asset.
If all the hotels in a competitive set have occupancies of 75%, Patel said he is looking to buy the lone hotel on the block that’s occupancy is half of that.
“There’s potential there,” he said. It’s about looking at the small items from furniture to architecture, changing it and seeing if it can do what the rest of the competition is doing, he said.
“We’re value-add developers of distressed hotel assets,” he said. “We’re making purchases of distressed hotels in the Southeast and Northeast regions of the U.S.”
The company’s specific aim is to buy underperforming hotels and real estate in primary and secondary markets, then renovating them for solid returns. The company conducts an analysis on a potential property and then a plan is crafted on what to do with the asset. That’s a “value-add asset deal,” Patel said. The company wants a hotel that has an opportunity for reposition, even if that includes changing the brand flag or enhancing the room and common areas.
Recently, Alena purchased the Orlando Vista Hotel in Florida, which will be rebranded to a Crowne Plaza; a Holiday Inn at the University of Central Florida; a former Holiday Inn in Saddlebrook, New Jersey; and a Sheraton in Chicago. The company plans to redevelop the hotels, with hopes of having 5,000 rooms in its portfolio by the end of the year. Patel declined to give the price of the purchases of each property.
The company contracts all management to third-party operator Paramount Properties Group in Rhode Island.
Patel said finding the right deal depends on each company’s plan and vision. For Alena, that means looking for hotels that others may see as hopeless cases.
“No one wanted the (University of Central Florida) Holiday Inn for a long time, but we had a vision. We saw where the market was going, and we acted on that,” he said. “When you have that vision, anything is possible.”