THE WOODLANDS, TX—M&As usually mean one company is limping while the other is sprinting. However, the recent merger of Benchmark Hotels & Resorts and Gemstone Hotels & Resorts finds top executives from both companies agreeing each was running along just fine but that tandeming now means going farther faster and with twice the strength to endure in the industry’s competitive arena.
According to Alex Cabañas, CEO of parent company Benchmark Hospitality International, the combined company (it’s working on creating a new name) brings together an aggregate 58 hotels, resorts and conference centers that open new markets and property types, and sets the stage for new opportunities not only for physical-plant growth and expansion, but for its community of employees as well.
Cabañas will reprise the CEO role for the new entity while Benchmark veteran Greg Champion will share his role as president/COO with Gemstone’s principal partner, Jeff McIntyre. Gemstone partner Thomas Prins will hold the newly created post of managing director-real estate investment while Benchmark’s SVP/Finance Kirk Jones has been promoted to chief financial officer.
Benchmark Founder Burt Cabañas will continue his current role as chairman within the blended entity. He and Karim Alibhai, who leads Gencom—Gemstone’s parent—will be the principal shareholders of the new company.
The move to meld was originally floated by both companies’ executives some six years ago, then revisited 18 months ago when McIntyre and Alex Cabañas connected during the Americas Lodging Investment Summit (ALIS) in Los Angeles.
“While neither company was particularly focused on needing to do anything, the number of elements that were important to both of us matched up. The first one was culture and doing business with people we felt were going to be very well-aligned in how we think about the business, how we treat people and how we enjoy the business,” said Cabañas.
Benchmark and Gemstone bring varied product to the new entity; the former is well-known for its portfolio of resort and conference-center product while the latter is fluent in the luxury-boutique space, a blend Cabañas described as complementary.
“Our disciplines really added value to each other in infrastructure and support. There were many business reasons [to do the deal]and, most important, a tremendous amount of personality and culture reasons that made this all make sense,” said the CEO.
“It was obvious to us we had compatible portfolios,” said McIntyre, agreeing the same applied to outlook. “Neither of us was ‘desperate,’ but we thought the combined entity could not only better serve our owners in the current portfolios, but also provide a great platform for very measured growth going forward. You put all those things together and it was a pretty compelling argument.”
Ted Davis, chief sales and marketing officer, indicated a brand identity/research firm is tasked with developing a new company name. However, he added, a possibility being looked at is “a new umbrella company name, which the other brands might sit below.”
He expected initial results by month’s end, followed by a presentation during an upcoming leadership conference. If a consensus is reached on the new brand identity, Davis said in September “we would move forward to communicate it more broadly to the public.”
Company headquarters will remain here, with offices in Miami and Park City, UT.
Benchmark has a wider variety of product type than Gemstone that it is bringing to the mix. Among its properties are The Chattanoogan, TN; The Heldrich, NJ; Hotel Roanoke & Conference Center, VA; Eaglewood Resort & Spa, IL; and Tokyo Conference Center Ariake, Japan. Many of its conference center facilities, which include private and individual centers, are IAAC-certified. (IACC is a membership organization that represents small- to medium-sized venues focused on meetings, training courses and conferences.)
Primarily concentrated on managing luxury and upscale hotels, Gemstone’s contribution is an eclectic group of properties that includes The Tivoli Lodge, CO; The Mosaic Hotel, Hotel Durant and The Mayfair Hotel, CA; Hyde Resort & Residences, FL; Topnotch Resort, VT; and the Ames Boston Hotel, MA, which Gencom, in partnership with Gemstone, acquired last December.
In June 2015, a Gencom affiliate acquired an ownership interest in Gemstone Hotels & Resorts, making it the preferred management company for hotels Gencom would acquire that contractually did not require management by the brand.
Such management also is appealing to the merged company, according to Cabañas, who noted the entity is able to accommodate not only independent properties but also soft brands with such players as Preferred Hotels & Resorts, Leading Hotels of the World, Starwood’s Tribute Portfolio, Hilton’s Curio Collection, Marriott’s Autograph Collection, etc.
“We are looking to be leaders in that particular space, which is growing. We’ve already got several Curio projects. We’re working on many others and have relationships with that segment of the business— which each of us was dipping our toes in over the past few years as the soft brands have grown—and have very strategically talked about that being a major growth segment for us,” said the CEO.
“We’ve done Autograph in our history, seven or eight Preferred hotels, we have Leading Hotels of the World already in the portfolio. People are bringing us deals and when we think one of those soft brands can be applied to a project and add incremental value to it then we will go to them, and we’ll open the dialogue. It’s a case-by-case basis,” said McIntyre.
For example, the Ames Boston, housed in a 1893 building that’s on the National Register of Historic Places, is undergoing a multimillion-dollar renovation. In the fall, it will reopen as Ames Boston Hotel, Curio Collection by Hilton.
In terms of how Benchmark’s Personal Luxury Resorts & Hotels division may be affected, Davis said while there’s nothing definitive, “there’s tremendous likeness in product” between those and the ones from Gemstone’s portfolio. “Everything’s on the table, but those two ‘brands’ will need to merge in some fashion and have a new name. Our gut tells us today it may lean toward Gemstone, but I think we’ll let the process tell us that information,” said Davis.
The CMO did not expect any culling of the aggregate portfolio but discussed additional offerings. “We have talked about the possibility of further segmentation, meaning smaller boutique versus larger or starting a lifestyle brand. Some of those conversations are in the mix; it’s a future discussion,” he said.
“We are positioned and funded to be able to acquire hotels going forward,” added McIntyre. “Our growth, whether it’s in management contracts or acquisitions, will be measured and carefully done so the focus on the existing portfolio and our owners, and the performance of those assets, is never compromised, and only enhanced.”
Co-President/Co-COO Greg Champion noted, “The feedback we’ve received from the people we’ve done business with, friends, partners, has been nothing short of phenomenal. We’ve got a pretty good thing here and we’re going to be rewarded for pulling this off.”
“Each company individually is profitable and it allows the profit to escalate. Again, when you start to look at the efficiencies and redundancies we’re going to identify, it’s really going to take it to the next level,” said Jones, the new CFO.
The new entity does have some growth targets, like New York City, Chicago and Houston. “We’re in the process of combining our growth strategies and growth planning. Internationally, it will be opportunistic. We don’t have a particular target or region of the world we’re looking toward,” said Cabañas, adding, “Things we could not have ever done apart are now going to happen as a result of being together.” HB
Following the merger, the combined company has a bulked-up portfolio. The following property list shows what’s now in the mix and from where. [Note: Some privately held conference facilities are not listed.]
Benchmark Resorts & Hotels (B)
Personal Luxury Resorts & Hotels (P)
Gemstone Hotels & Resorts (G)
The Nautical Beachfront Resort (G)
Chaminade Resort & Spa (B); Forest Suites Resort (G); Hotel Durant (G); Hotel Zelos San Francisco (P); Maison 140 (G); Mosaic Hotel (G); Spanish Garden Inn (P); The Inn at Rancho Santa Fe (P);
The Mayfair Hotel (G)
Cheyenne Mountain Resort (B); Garden of the Gods Club & Resort (G); Tivoli Lodge (G)
Beachwalk Resort (G); Cardozo Hotel (B); Costa d’Este Beach Resort & Spa (P); Gilchrist Club (B); Hyde Resort & Residences (G); Marenas Beach Resort (P); The Grove Resort & Spa (B); Villas of Grand Cypress (P)
The Cottages & Villas at Turtle Bay Resort (P);
Turtle Bay Resort (B)
Eaglewood Resort & Spa (B)
Santa Barbara Beach & Golf Resort, Curaçao (B); Sea Traditions at Santa Barbara Beach & Golf Resort, Curaçao (P); Tokyo Conference Center Ariake (B); Tokyo Conference Center Shinagawa (B)
Ames Boston Hotel (G); Copley Square Hotel (G)
The Heldrich (B)
Doral Arrowwood (B); Downtown Conference Center (B); Edith Macy Conference Center (B)
Dollywood’s DreamMore Resort (G);
The Chattanoogan (B); The Tennessean Hotel (P)
Hotel Contessa (B)
The Homestead Resort (G)
The Essex (G); Topnotch Resort (G)
Hotel Roanoke & Conference Center (B); The Inn at Virginia Tech (B)
Willows Lodge (P)
Stonewall Resort (B)
Snow King Hotel & Grand View Lodge (B)