DALLAS—Ask Dave Johnson the most difficult part of converting 103 hotels in 60 days, and he’ll tell you it was the unexpected logistics.
Take signage, for example, said the president and CEO of Aimbridge Hospitality, which in January was awarded the management contracts for 103 Jameson Inn hotels after they were acquired by Colony Capital.
“To change signage in 103 different municipalities, to get the permitting through was a challenge,” he said. “We had upwards of 200 billboards that were advertising these various Jameson Inn brands, so we had to go and repaint several hundred billboards.”
Equally difficult was deciding which property would receive which new flag, a process that Aimbridge worked closely with franchisors Choice Hotels International and Wyndham Hotel Group to determine.
“There was a lot of research, a lot of analysis and a lot of spirited debate,” Johnson said. “First and foremost, we had to go to the brands and ask which brands were available in which markets. … There were already certain brands that were taken in those markets. So we were restricted out.
“We put together a focus group that analyzed brand availability within the Choice and Wyndham systems that were applicable to these types of assets and these types of markets. We internally ranked which brand we felt was strongest for that particular asset and that particular market.”
The support Aimbridge received from both brand partners was instrumental to the success and speed of the conversion process, Johnson said.
“We wouldn’t have been able to do it without their support,” he said.
With nearly a year of hindsight under his belt, Johnson spoke candidly with Hotel News Now about the deal, next steps and other opportunities for Aimbridge, which operates 185 hotels.
Hotel News Now: What about that Jameson portfolio did you find particularly attractive?
Dave Johnson: “(It was ) an opportunity to jump into the economy segment as a platform. We hadn’t historically operated in that platform. We decided as a company if we were going to do it, we were going to jump in in a big way. That gave us that opportunity with critical mass.
“(It also) gave us an opportunity to work with Colony. We were flattered to have an opportunity to work with them.”
HNN: How have the properties performed since the conversions?
Johnson: “Overall, the first quarter was really a transition quarter. We were in the process of rebranding of signage and systems. We put quite a bit of (capital expenditures) into these hotels. (Aimbridge co-invested $7 million with Colony.) The second quarter was probably the first quarter where we could really focus back on operations.
“We’ve had significant growth each quarter in year-over-year performance. … We’re seeing considerable growth, growth that’s above and beyond the normal (revenue-per-available-room) growth. … We’re seeing significant market share growth for each quarter.
“For the fourth quarter, it looks great on a graph.”
HNN: Can you share any insight as to Aimbridge’s or Colony’s long-term play with this portfolio?
Johnson: “There’s no clearly defined path right now for exiting these assets. Along with Colony, we’ve discussed several options. For Aimbridge, we love it because we feel we have a platform in which we think we can grow pretty substantial over the next five years.”
HNN: What’s next for Aimbridge?
Johnson: “Our resort business, (which Aimbridge launched three years ago) has really started to take off.”
(The company has six resort hotels in its portfolio: The Hacienda Hotel in El Segundo, California; Sugar Bay Resort & Spa in St. Thomas, U.S. Virgin Islands; San Juan Water Beach Club Hotel in San Juan, Puerto Rico; The Jewel - Dunn's River Resort in Ochos Rios, Jamaica; Windsor Court Hotel in New Orleans; and the Country Springs Hotel, Water Park and Conference Center in Pewaukee, Wisconsin.)
“We also see very real opportunities in Bermuda and Aruba.”
HNN: Anything else in the works?
Johnson: “We’ve got five in the last year that we have been buying with some strategic partners gen 1 and gen 2 Embassy Suites projects. We’re completely gutting those projects. … We love the brand. This has been an opportunity to get into some key locations. We’ve proven to ourselves that you can’t go into an asset like this and do a typical rooms renovation.”
HNN: Are you looking to expand your footprint further outside of the United States?
Johnson: “We’re seriously contemplating … opening up a Mexico/Latin America region of our business.”
HNN: When, where and how does Aimbridge invest in different assets?
Johnson: “75% of our business we have done with private equity.”
(Depending on the size of the deal, Aimbridge works with different partners with different size funds.)
“On the real estate hat we currently operate, Aimbridge has a direct investment in probably about 70% of the assets that we manage. We like to co-invest. We’re always the minority partner, (investing between 2% and 20% depending on the size of the deal). …
“It creates great alignment with our partners. They like the fact that we’re their partner in the real estate. We’re just a fee-for-hire manager. … It gives us an edge in understanding our partners.”
HNN: After a busy year, what is the busiest challenge you’re facing next?
Johnson: “The biggest challenge we’re facing right now is ‘what next?’ As an organization, we’ve got what I think is the best leadership team in the industry.
“This industry is always changing, whether it’s the capital that propels the industry, where the brands are headed, whether we feel like we’re in an up cycle, a down cycle, we’re always the type that’s trying to figure out where we’re going to be in the next two or three years.”