Generator, which has managed its own shared accommodation boutique and hostel properties across Europe and the U.S. since it launched in 1995, recently signed its first-ever third-party management agreement, taking over operations of the nearly 100-year-old Paramount Hotel in New York City’s Times Square.
Alastair Thomann, CEO, Generator and sister brand Freehand, said that the company has been building toward this moment since 2017, when it was acquired by Queensgate Investments.
Alastair Thomann Generator
“After coming into ’17, spending two years creating a really strong platform and really professionalizing this business and interfacing all of our systems, we’re now at a stage where we’re ready to manage third-party properties,” he said. “We’re ready for franchising, for licensing, all of those kinds of things—and we’re just building up a team for that. But, even before we have the team in place, there’s a lot of interest out there.”
One of those interested companies was RFR, the owner of The Paramount, which selected Generator to manage the French Renaissance-style property, which was in danger of closing permanently because of the pandemic. “The Paramount is an iconic property,” said Thomann. “It is a really cool brand fit with our brand and a shared accommodation component… This makes Times Square accessible for a whole bunch of interesting new segments—families, groups and so on… We really believe that we can add a lot to that property.”
Naturally, because The Paramount has been a “traditional” hotel before Generator took over, some changes were necessary, both for the property and its new operator.
The hotel will now include four- and six-bed dorm-style rooms. While Generator is able to sell by the bed at its other properties, an old New York prostitution law does not allow for that at The Paramount.
“We’re going to be careful—we’re going to start with maybe 20% shared rooms,” he said. “I predict this will go up to 50%.”
The shared accommodations will lead to higher RevPAR, according to Thomann. “[If] a family of five wants to stay in a Time Square location in any traditional three- or four-star hotel, they’re going to need at least two rooms,” he said. “Well, for us, they can stay in one room. And, yes, they’re going to pay more for that one room than for one room in another three- or four-star hotel, but they save the money [that would be spent on a]second or third room, so it makes it a lot more accessible. We make more money on a per-room basis, and the family saves money. That’s just one example of one segment. So, we can really drive RevPAR, and that is the main driver.”
Welcoming more people to the property will push the room rate, but also it means that there are more guests to sell service to, including food and beverage and merchandising.
Thomann said that The Paramount and its “iconic” lobby fit well with the Generator brand. “We’re such a social brand,” he said. “We’re all about the social element and to get this kind of clubby atmosphere all happening in this iconic lobby, it really hits our sweet spot.”
The company is also bringing in some new beverage partners who are “big names” in the New York scene, according to Thomann. “They are going to add some very interesting elements to the property, and it is all about activating these public spaces and bringing the excitement back,” he said.
With these changes, he believes that the property will bring in a slightly different demographic than it had before—but still attract the corporate business. “It will definitely be a bit younger,” he said. “Times Square is still a very corporate market… But, I think this mix, plus a really strong backwind at the moment in New York—our pre-bookings for the next six to nine months are really strong—makes us really positive about New York.”
Thomann sees more properties turning to the shared accommodation space in the future. “I think the whole shared accommodation space has been pretty much overlooked,” he said. “Going forward, especially if rates continue to stay this high, it is a great alternative. You’re going to see more and more traditional operators using this tool to drive their RevPAR. It has really been one of the upsides that have been overlooked to really optimize the bottom line of a piece of real estate.”
While The Paramount is Generator’s first third-party management agreement, the CEO said more deals are on the horizon. “Going forward, our growth—as opposed to owning all of our assets, which we more or less do now—will be a higher percentage of managed contracts and franchises. It is a way for us in the next couple of years to grow much more quickly than we have traditionally done.”
