GREENBELT, MD—For global lodging chains, snapping up a hotel portfolio that immediately delivers 100 hotels might be seen as no big deal for the entities involved. But down in the trenches, where many local and regional owner/operators and developers strive daily to get to that milestone mark, it’s a big deal indeed.
Right now, Baywood Hotels Inc. isthisclose to the opening of its 100th hotel, anticipated to be the Hilton Garden Inn San Antonio Downtown Riverwalk, which is expected to debut in the Texas destination this autumn. And for the privately held, family-owned business, it’s an event that’s been “in the works” for 42 years.
According to Al Patel, president of Baywood Hotels, his parents launched the business- with a single motel in 1975, opening the property in Laurel, MD, less than 10 miles from where Baywood’s corporate headquarters is today outside Washington, DC.
“Over the years we have grown various ways. We were big acquirers during the recessions in the early ’90s and then again after 9/11 [Sept. 11, 2001], and then again after 2008-2009. Today, we have about 16 hotels under construction and another three or four that we’re working on as conversions, so we expect to get to our hundredth hotel sometime in the third quarter of this year,” said Patel, noting while not planned as such, the new-construction Hilton Garden Inn is the likeliest candidate to hit the milestone.
“We’re going to celebrate around that hotel. It’s in a great market. It’s a very flagship hotel for us. It has 10 stories (128 keys) with a beautiful location right near the Riverwalk and near The Alamo in downtown San Antonio. So we’re very excited about that hotel,” said the second-generation hotelier.
The company also has two other hotels in development in San Antonio, including a Holiday Inn Express proximate Lackland Air Force Base and a Hampton Inn & Suites near SeaWorld.
Baywood currently concentrates on product from Marriott International, IHG and Hilton; however, it recently acquired an independent in Midtown Atlanta, The Regency Suites.
“We’re considering all kinds of strategies for that location right now and one of those strategies is soft branding that hotel,” said the executive, noting it was a good fit due to its size—96 keys—and location near public transportation and Georgia Tech University.
“A lot of major corporations are moving into that area and it is a new market for us,” he added.
While Baywood is actively growing, Patel indicated the company strategy going forward is “cautiously optimistic. We are looking at markets but our underwriting criteria has become more stringent, so we’re looking for higher-barrier-to-entry markets, higher occupancy, higher RevPAR markets to enter into that could, perhaps, withstand any type of turbulence coming in in the economy,” said Patel. “We look for multiple, major demand generators: an airport would be one; major companies would be one. We’re looking for multiple demand generators in markets before we’ll settle in.”
There’s no wish list of markets per se; rather, the company is opportunistic, said the executive.
“As opportunities come in we’re exploring them. My teams in all the various regions are always looking for more opportunities, and we’re evaluating them almost every day, every week; then we narrow down, based on our criteria,” he said.
Patel gives credit to his operations team members in helping advance the company, noting careerists like COO Rick Fenstemaker and Ryan Lee, SVP of operations, have been with him since he was named president in 2000.
“They have been very instrumental in our growth. Development is a great, fun piece to do, but I think operations is the backbone of our company,” the executive observed.
That said, Baywood is apparently having a lot of fun of late. In addition to the San Antonio properties, coming soon to the portfolio are AC by Marriott in Miami and Florida; Canopy by Hilton in New Orleans and Ithaca, NY; Hampton Inn in Marathon, FL; Home2 Suites by Hilton in Charlottesville, VA, and Atlanta; Residence Inn by Marriott in Owings Mills, MD, and Elmwood, LA; TownePlace Suites by Marriott in College Park, MD; Hilton Garden Inn, Dobbs Ferry, NY; Holiday Inn Express, Windcrest, TX; and Homewood Suites by Hilton in Austin, TX.
With such a strong pipeline, Patel was asked what the lending landscape looks like from his vantage point.
“We are seeing a bit more of a conservative approach from the lending community, but with our track record of 42 years in the business—never missed a mortgage payment, never requested a workout from a lender—those are the kinds of things that go a long way with lenders and we’ve been very fortunate that our lending partners have kind of remained by our side,” he said.
Patel acknowledged he’s comfortable with the pace of growth—he expects to add another 50 or so hotels during the next five years—noting there are challenges he keeps in perspective along with the rest of the industry.
“You have these geopolitical things going on in the world today that could affect us again like a 9/11 did for our economy. I think with the labor market tightening up as much as it has, it’s becoming harder and harder to find that smiling face that we so desperately need in our business. We’ve seen construction pricing increase quite rapidly over the past three, four, five years, and it seems unsustainable if that’s the trajectory of pricing of construction,” said Patel. “Those are the things I think about. Nothing really keeps me up at night. I’m really happy with where we are in our growth, with our company, the brands that we have, the locations we’re in. We’re just very comfortable with the position that we’re in right now.” HB