There are plenty of clichés out there aimed at reinforcing the notion that teamwork and partnerships can yield positive results, that one plus one can be greater than two, and that collaboration can be more productive than competition.
Like so many clichés, these and others embody a core truth. And in today’s evolving marketplace—in the early stages of a fragile recovery still filled with obstacles for even the most proactive hospitality dealmakers—that truth translates to signatures on dotted lines.
Strategic hotel partnerships are becoming an increasingly popular way to get deals done.
Today, finding the right partner (not just any partner) with complementary professional strengths that can add value and strengthen your professional profile can be a difference-maker when it comes to getting a deal done.
Here are a few important factors to consider when pursuing a hotel partnership.
Choose wisely
On a fundamental level, smart partnerships make intuitive sense. Industry professionals engage and interact with each other at conferences and industry events, and we often are looking at the same properties and opportunities. But not just any professional relationship is a good fit, and not just any deal will work.
The big question: Is this someone you will be happy doing business with down the road?
It only takes one nutcase to spoil a deal, much less a relationship, so think carefully about the implications of every partnership in your own portfolio. Take the vetting process seriously. Negotiations and discussions can be informal, but they should be thorough and thoughtful. For a joint hotel venture to succeed on an operational and financial level, both parties must share similar professional cultures, motives and expectations.
One of the often overlooked elements of forging successful strategic partnerships is the need to look beyond the short-term economic synergies and operational advantages to ensure long-term goals are in sync.
Another important question to ask is whether your prospective partner is in the hotel business or the real-estate business. There’s a big difference between the two.
Clarity and consistency
While compatible professional cultures and big-picture goals are important, the operational details are no less integral to a successful strategic partnership.
One of the most important steps to take to maximize the chances your collaboration will be a positive and productive one is to take the time early in the process to clearly and definitively clarify everyone’s specific roles in the project. Delineating the precise structure of who is responsible for what not only creates a working environment that optimizes efficiency and maximizes clarity and communication, but it also minimizes conflicts and misunderstanding.
Remember “co-managing” does not work; there has to be a leader. Picking a leader helps to sidestep any ego issues and ensures all parties are on the same page from a logistical and operational standpoint from Day One.
Competition or collaboration?
While it can sometimes be easy to lose sight of the value of collaborative partnerships in a competitive industry and in the spirited dynamics of a free market, the advantages of pooled resources and shared prosperity are significant. In today’s climate, risk reduction and the added value of “free” resources needed to make a deal happen are especially appealing.
An important part of the process of forming strong and successful partnerships is the ability to get past an ingrained mindset of constant competition and begin to think more strategically about your professional goals. All business is local, and worries about ceding a competitive advantage to the competition are frequently overblown. Unless you work in the exact same markets and compete directly on a unit-by-unit basis, there is little reason to worry—the benefits of quality collaboration almost always outweigh any competitive considerations. To use a music industry analogy: There are plenty of bands trying to sell music within any one genre, but they are not necessarily direct competitors.
Complementary skillsets
While the additional financial leverage that often comes with strong professional partnerships can make deals happen, one of the biggest advantages to making them work is the freedom a well-chosen partnership grants you to focus on what you do best.
Great partnerships let your firm play to its strengths. The size and strength of a hotel management platform can be an appealing asset, for example, and might be a good fit with a firm with deep pockets and a strong development focus.
The partnership trend is especially evident on the development side of the hotel industry, as the combination of complementary expertise, reduced exposure and easier access to capital is not only helping to push more deals through but providing more firms with the resources they need to pursue additional opportunities.
Is the recent upswing in collaborative enterprises and strategic partnerships just a response to an evolving industry and new economic and operational realties? Or is this part of a larger, more fundamental trend—and are there broader implications here for partnerships in the long term? It seems as if the conventional wisdom of the past with regard to professional partnerships has tended to be “if you can avoid it, you should.”
But today, for many hotel professionals, that calculation is changing, and it is exciting to watch that process unfold.
First Hospitality Group, Inc. has been involved in the development, ownership and management of hotels since 1985. Currently, the First Hospitality Group, Inc. portfolio consists primarily of Hilton and Marriott affiliated assets. In addition, First Hospitality Group, Inc. has ownership interests and manages hotels affiliated with InterContinental, Hyatt and Carlson. For further information, visit www.fhginc.com or call Robert Habeeb at 847-299-9040.
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