The global COVID-19 pandemic forced change on a lot of companies. For third-party manager Chesapeake Hospitality and hotel development company 3rd Wave Development, it also presented an opportunity to partner to develop and manage hotels. Chesapeake CEO Chris Green calls the relationship “a shared commitment.”

“At Chesapeake, throughout the pandemic we were looking for ways to move forward,” Green said. “I believe management, because of financial pressure, has gotten commoditized. ... I knew we needed to search for a like-minded individual willing to buck the trend.”

He found that in 3rd Wave Managing Partner Tony Stacy. The two knew each other from two projects started pre-pandemic — a pair of new-build boutique lifestyle hotels in Tempe, Arizona and outside Charlotte, North Carolina.

“We weren’t sprinting with these projects; we were walking them forward so they could come out of the ground and be healthy,” Stacy said. “We used those as opportunities to get to know each other and ended up forming this partnership.”

Stacy, a longtime investor, asset manager and advisor, started his company in 2018 to invest in boutique, lifestyle hotels.

Green and Stacy are partnering on five hotel projects. A 182-room Tribute Portfolio in a mixed-use development in Tempe, Arizona; a 175-room Tapestry Collection by Hilton in Lake Norman, North Carolina, outside of Charlotte; and a 200-room Tribute Portfolio hotel in West Palm Beach, Florida, are slated for 2022 groundbreaking. The other two projects are in the works.

Stacy said the partnership is based on a shared vision for hotels that fit the “four-star lifestyle hotels in the markets we want.” Ideally, the companies are looking to partner on 30 properties, both new-build and acquisition.

“What’s different about this partnership is that Tony’s not an investor in Chesapeake,” Green said. “We’re just aligned through vision and goal. We didn’t hand over our keys, and Tony didn’t hand over his. It’s like we’re extensions of each other’s companies.”

Stacy said he presented it to 3rd Wave’s capital partners as “a true partnership.”

“Do we own each other’s entities? No. You can have a partnership without ownership. Here’s the example I use: Say we’re negotiating a term sheet with Marriott. Now we do it together. It’s a small detail, but we have those types of conversations and collaborations on all the nuances of a project,” he said.

Green added: “Through this shared vision, there is a trust and a real ability to have honest conversations. We’ve looked at a hotel, and I’ve said ‘No, Chesapeake isn’t built for that,’ and Tony says ‘OK, let’s move on.’”

The partnership has allowed the companies to collaborate on projects while still focusing on their areas of expertise.

For Stacy, that was navigating financial markets during the downturn.

“We have formal, strong, long-term capital relationships, so we were most concerned about the debt market, not the equity market, and the escalation of materials costs,” he said. “Keeping these projects financially feasible during the pandemic was a pain point.”

Chesapeake continues to pursue projects outside of the partnership with 3rd Wave as well, Green said. The company operates 31 hotels with 6,195 rooms, and his target portfolio size is 60 to 80 hotels via organic growth.

Working together helped both companies maintain a positive outlook during the dark pandemic months, they said.

“It gave us an opportunity to be certain we were designing and building what guests actually want as the market recovers,” Stacy said. “We were trying to make the best decisions we could make with what we know now.”

Green said the collaboration on future projects has been “a life raft” during the pandemic.

“Our team could have some excitement about the future,” amid the chaos of shutting down hotels and dealing with the pandemic, he said.

The partnership is key to how the two companies look at deals.

For example, Green said, Chesapeake brings the ability to get in on the ground floor of a deal to optimize operations through building layout.

“A lot of times operators are handed nightmares,” he said. “For example, the kitchen isn’t accessible by the rooftop bar. We can help get these things done in advance, and that’s what Tony really saw in us.”

The two also think a lot about how the pandemic permanently changed travel behavior and how hotels operate.

“We’ve been talking about what’s changing with housekeeping, for example,” Green said. “As brands move to optional housekeeping, we talk about what the capacity need is on guestroom floors for towel storage and how you reformat housekeeping if you are going to be doing more of a delivery service than stocking for full-blown housekeeping. Is there less need for chemical storage and more for towel and amenity stocking if we’ll be moving to more of a DoorDash model of delivering towels and amenities?”

Green said they also consider changes in the back of house areas, particularly the sales offices for full-service hotels.

“Do we move to more collaborative office space? Will sales come back more segmented? What does the sales office look like now?” he asked.

Green and Stacy are aligned on the need for great indoor/outdoor gathering space and food and beverage.

“Giving guests a great space with energy is what we’re all about,” Stacy said. “We’ve always loved indoor/outdoor spaces and are focused on being able to give that to guests, whether it’s on the street or on the roof.”

Green said “F&B is back with a vengeance."

"There’s revenge travel, and also apparently revenge eating and drinking,” he said.

“At times, we questioned whether we need fewer tables and less space in [food and beverage] outlets, and we decided that we need to do it even better. If we’re going to leverage what we have to have in [average daily rate], the [food and beverage] experience has to be completely elevated, seamless and efficient.”