TORONTO—Coast Hotels has a deliberate growth plan: to grow its mid-market full-service brand from west to east, province by province, state by state.
“We believe that it’s important that there be some brand awareness at least on one side of that state or province so that when we open in a new market, there’s already some awareness to use as leverage,” said Coast Hotels President Robert Pratt. “The approach we take is really to go into the primary market in that province and then once we’ve established ourselves there, branch out into the secondary, tertiary markets. Our development guys call it the ‘hub and spoke.’”
The Vancouver-based company, which also has a United States-based office in Seattle, has 37 hotels in its portfolio—27 in Canada and 10 in the U.S.—with plans to grow internationally. But that growth will come once the company has North America covered, Pratt said.
“(Coast USA) is the same as we are. They’re very focused on growth but the right kind of growth,” Pratt said. “They want to grow our brand across the U.S., and we want to grow across Canada. We’ll work together to do that.”
Of the company’s 27 hotels in Canada, 20 are located in British Columbia, five are located in Alberta and one each for Yukon and Northwest Territories. Pratt said that operating hotels in the Territories is “a bit of an education process.”
“Some of these markets, it’s very difficult to get a valuable comp set, but we compromise just to have one because we want to keep track,” he said. “We’re being very conscious not to leap frog over the prairies because what we really want to get to is Southern Ontario.
“There’s lots of opportunity for our brand in Southern Ontario. But we really want to have a presence in the prairies before we do that,” he said.
Of the 27 hotels in Canada, Coast owns six and manages a handful for other owners. The company’s U.S. partners have equity in three of the 10 properties, Pratt said. Coast Hotels is owned by Okabe North America, a subsidiary of Okabe Company Limited, a Japanese manufacturer of construction and civil engineering products.
The company’s U.S. portfolio counts four in Washington, three in California and one each in Oregon, Alaska and Hawaii. Coast USA last year took over operations at the Waimea Plantation Cottages, a former Aston Hotels & Resorts* property in Waimea, Hawaii. During an interim period, the oceanfront resort was operated as an independent hotel prior to converting to a Coast hotel in March 2015, Pratt said.
Performance at Coast’s U.S.-based properties is “rocking,” Pratt said.
“In the U.S., we crashed and burned during the downturn. Canada dropped, but not nearly as much as the U.S. Recovery in the U.S. has been far sharper,” he said.
Biggest challenges, opportunities
Oil and gas remain the company’s top challenge in 2015 and 2016, Pratt said.
“These things are cyclical. We’ve been through them before and we know how to weather the storm,” he said. “You need to find other sources of business, and you need to be disciplined about not starting a rate war.”
Coast Hotels has seen performance slow in its oil-based resource markets such as Edmonton and Calgary, Pratt said. However, the company has other properties in the Alberta province that are performing well.
The biggest opportunity? The resurgence of U.S. travel to Canada, Pratt said.
“We really started to notice it last year in Victoria, which is on Vancouver Island. It had been suffering for 10 years because it was very reliant on U.S. travel,” he said, adding that since U.S. business returned last summer, the trend has continued.
“We’re hoping that that can offset what we’re seeing on the downside of the oil and gas markets,” Pratt said.
Coast counts three properties on Vancouver Island, all of which are performing well, he added.
Even though the company won’t be able to replace all the business in those struggling markets, Pratt said his executives can turn to other business segments such as leisure.
Defining Coast’s culture
Much like the major players in the industry, Coast Hotels is focused on providing a unique experience, hence its tagline “refreshingly local.”
“There are several ways we are striving to be unique, such as including local guides with some key tips on our hotel websites, including local tips in our pre-arrival emails and initiatives like displaying art from local artists in our public spaces in our Coast Victoria Harbourside Hotel & Marina,” Pratt explained.
There are several things that also make Coast’s portfolio “refreshing,” Pratt added.
“The non-cookie cutter nature of our hotels is refreshing. The fact that we don't charge for high-quality Wi-Fi is refreshing. The fact that our bathroom amenities are in large format bottles because we care about the environment is refreshing,” he said.
But ultimately, the key ingredient to the company’s success is its people.
“Our idea of being ‘refreshingly local’ allows each ambassador (what Coast calls its employees) to provide a consistent guest experience that lets people know they are at a Coast Hotel, but also allows them to engage and share local knowledge and experiences to personalize our guests’ stay and make it the best it can be,” Pratt said.
*Correction, 10 June 2015: An earlier version of the story stated that the Waimea Plantation Cottages was formerly an independent hotel.